Economics (AS & A Level) · Oct / Nov 2021 · Paper 12 · Question 29

What would make a policy of raising interest rates less likely to be effective in reducing inflation?

1. AAggregate supply is increasing faster than aggregate demand.
2. BConsumers expect prices to rise even faster in the future.
3. CConsumers’ spending is largely paid for on credit.
4. DInterest rates are still higher abroad.

As printed in the paper