Unit 3: Economic growth, interest rates and inflation in China

This BBC article and video clip explain the conflicting macroeconomic objectives China appears to be facing

http://news.bbc.co.uk/1/hi/business/6915190.stm
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_6900000/newsid_6907100?redirect=6907123.stm&news=1&nbram=1&bbram=1&bbwm=1&nbwm=1 >

a) What effect will the rising value of the Yuan have on China's exports and imports?
b) What effect should the rise in China's interst rates have on the value of the Yuan?

The economy is said to be overheating and as a result inflation is rising
c) Using an AD / AS diagram, explain the possible cause of this rise in inflation
d) What action should the cental bank take to reduce the rate of inflation?
e) Use an AD / AS diagram to show how this policy should reduce inflation