In Estmere, the central bank is considering raising its interest rate. Inflation is 5.2%, compared with the central bank's 2% target, and is mainly due to strong household spending. Economic growth is 2.4% and unemployment is 4.1%. Business investment fell last year because many firms are unsure whether demand for their products will last.
Evaluate whether Estmere should raise its interest rate.
116 exam-style questions on OCR GCSE Economics 3.6 Monetary policy, covering 3.6.1 What is monetary policy, 3.6.2 Monetary policy and macro objectives, and 3.6.3 Effects of monetary policy. Each one has a worked solution and a mark scheme showing where the marks go.