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EXAM-STYLE QUESTIONS

Questions on inflation and the bank rate

Steve Stoddard presents a series of exam-style questions on topics covered in articles featured in this issue of ECONOMIC REVIEW. Answers to these questions can be found online at EconomicReviewExtras

Table 1 UK CPI inflation and the bank rate, selected periods 2015–2022

1  Using Table 1, calculate the mean rate of CPI inflation over the period shown. Give your answer to one decimal place. (2 marks)

2  With the help of a diagram, explain how the transmission mechanism of monetary policy works when the bank rate is increased. (9 marks)

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