This BBC article and clip explains why interest rates have risen to 5.75%
http://news.bbc.co.uk/1/hi/business/6272776.stm
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_6270000/newsid_6272100?redirect=6272166.stm&news=1&nbwm=1&bbram=1&bbwm=1&nbram=1 >
a) What sort of policy is raising interst rates?
b) How is the increase meant to decrease aggregate demand?
c) Draw a digram to show and explain how this increase in interest rates is meant todecrease inflation
d) How do time lags confuse the decision the MPC has to take on setting interest rates?
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