AS Paper 2, November 2020The UK Economy – Performance and Policies
AS Paper 2, November 2020, Q4(b)
Annotate the aggregate demand (AD) and short-run aggregate supply (SRAS) diagram below to show the possible impact of a rise in the base interest rate on the equilibrium level of real output and the price level.
Short answerAnnotate2 marks
Context
In August 2018 the Monetary Policy Committee of the Bank of England raised the UK’s base interest rate from 0.5% to 0.75%.
Original diagram required. See the original question paper for the diagram.