Unit 3: What should the BoE do with interest rates?

This BBC clip shows the dilemma for the BoE when contemplating what to do with interest rates

http://news.bbc.co.uk/player/nol/newsid_7300000/newsid_7303700/7303730.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

a) Why should they raise interest rates? Using a AD/AS diagram, explain what the effects would be on the UK economy
b) Why should they decrease interest rates? Using a AD/AS diagram, explain what the effects would be on the UK economy