The central bank in Norland raises its interest rate from 3% to 5%. The table shows new household borrowing in the year before and the year after the increase.
| Measure | Year before the increase | Year after the increase |
|---|---|---|
| New household borrowing | £8.0 billion | £6.5 billion |
Explain how the figures support a prediction that demand-pull inflation may fall.
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.