Which statement is true about the Monetary Policy Committee?

Which statement is true about the Monetary Policy Committee?

• A. The MPC has 6 voting members.
• B. There is a representative from HM Treasury who can vote.
• C. It aims to maximize government revenue.
• D. Its main aim is to keep inflation within a range set each year by the Chancellor.

Answer: (D)

Inflation control is what the Monetary Policy Committee is all about. The MPC operates with a remit from the government to keep inflation close to the target the Chancellor sets, using tools like interest rate decisions to steer the economy toward that goal. That target is defined by the government and is typically a CPI inflation rate with a defined permitted range. So the statement that its main aim is to keep inflation within a range set by the Chancellor matches how the MPC is guided in its policy work. The other points don’t fit. The MPC has more voting members than six, and there isn’t a voting seat for a representative from HM Treasury on the committee. Its purpose isn’t to maximize government revenue; it’s to maintain price stability in line with the government’s inflation target.

Inflation control is what the Monetary Policy Committee is all about. The MPC operates with a remit from the government to keep inflation close to the target the Chancellor sets, using tools like interest rate decisions to steer the economy toward that goal. That target is defined by the government and is typically a CPI inflation rate with a defined permitted range. So the statement that its main aim is to keep inflation within a range set by the Chancellor matches how the MPC is guided in its policy work.

The other points don’t fit. The MPC has more voting members than six, and there isn’t a voting seat for a representative from HM Treasury on the committee. Its purpose isn’t to maximize government revenue; it’s to maintain price stability in line with the government’s inflation target.