Unit 2: The dilemma in setting interest rates (monetary policy)

A good clip from Ch4 on the dilemma facing the BoE in setting interest rates

http://link.brightcove.com/services/player/bcpid1184614595?bctid=1773162851

a) Explain the dilemma faced by the BoE when setting interst rates in terms of conflicting macroeconomic objectives
b) Use AD/AS diagrams to in each case to explain how the BoE could use interest rates to resolve the problems