A-LevelEconomicsGovernment macroeconomic intervention9708/12 · Oct/Nov 2021 · Q291 Mark
What would make a policy of raising interest rates less likely to be effective in reducing inflation?
AAggregate supply is increasing faster than aggregate demand.
BConsumers expect prices to rise even faster in the future.
CConsumers' spending is largely paid for on credit.
DInterest rates are still higher abroad.
✓ Correct answer
B: Consumers expect prices to rise even faster in the future.
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