In Lydora, commercial banks changed the interest rates charged on household loans. Table 1 records household borrowing plans and spending growth before the change and six months later.
| Measure | Before the change | Six months later |
|---|---|---|
| Average interest rate on household loans | 4% | 6% |
| Households planning to borrow for major purchases | 40% | 27% |
| Annual growth of household spending | 3.8% | 1.6% |
Using Table 1, explain how the evidence could affect the inflation rate.
104 exam-style questions on AQA GCSE Economics 2.3 How the government manages the economy, covering 2.3.1a Fiscal policy and income and expenditure, 2.3.1b Fiscal policy and government objectives, 2.3.1c The government budget, 2.3.2a The meaning of monetary policy, 2.3.2b Uses of monetary policy, 2.3.3a Supply-side policies and their trade-offs, 2.3.3b Using supply-side policies, and 2.3.4 Policies to correct positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.