2.6 Macroeconomic objectives and policies

To combat rapid overheating in the domestic economy, the Bank of England raised its bank rate from 0.75% to 3.00%.

Explain one likely impact of an increase in the official interest rate on the rate of inflation.

[3]

To combat rapid overheating in the domestic economy, the Bank of England raised its bank rate from 0.75% to 3.00%.

Explain one likely impact of an increase in the official interest rate on the rate of inflation.

[3]

2.6 Macroeconomic objectives and policies Questions