Norland's central bank raises interest rates from 2.5% to 4.5%. The table shows economic conditions before the rise.
| Indicator | Value |
|---|---|
| Annual growth in total spending | 4.8% |
| Annual growth in the economy's capacity | 2.0% |
| Share of household borrowing on variable interest rates | 68% |
| Share of planned business investment requiring a loan | 57% |
Using the information in the table, explain the likely short-run effects of the rise in interest rates on inflation and employment.
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.