2012 A Level H2 Economics Review: Macroeconomics Qn 5

During 2009 the Bank of England engaged in what is known as ‘quantitative easing; by pumping more than $200Billion into the economy. Record low levels of interest rates have also been maintained within the UK economy. Quantitative easing and low interest rates were also adopted by the US.

(a) Explain why exchange rates rather than interest rates are the preferred choice as the instrument of monetary policy in Singapore. [10]
(b) Discuss the likely impact on the Singapore economy of quantitative easing and low interest rates in the US and the UK. [15]

Since the last time I did a mindmap the response from readers was overwhelmingly positive, I thought that I will give the same format a try again.

Here’s my response to the question.

I would love to hear your views and response to this question as well.

Till next time, dream economics.