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Question 1 An economy is experiencing demand pull inflation. Its Central Bank is of the opinion that the economy is growing too rapidly and has decided to take action. Outline the action it would take and describe with the aid of a diagram how it would help to slow down the overheated economy Your answer must include the decisions made by the Central Bank, the action by banks, money supply (and diagram), interest rate movement and the Money Multiplier. You must hand draw and scan in the necessary diagrams.

Question 1
An economy is experiencing demand pull inflation. Its Central Bank is of the opinion that the economy is growing too rapidly and has decided to take action. Outline the action it would take and describe with the aid of a diagram how it would help to slow down the overheated economy
Your answer must include the decisions made by the Central Bank, the action by banks, money supply (and diagram), interest rate movement and the Money Multiplier. You must hand draw and scan in the necessary diagrams.

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