Question: (b). If the prevalling inflation rate increased, would the target interbank rate be set higher or lower? Briefly explain [2 marks] Qn 3_4. [4 marks]

(b). If the prevalling inflation rate increased, would the target interbank rate be set higher or lower? Briefly explain [2 marks] Qn 3_4. [4 marks] In country M, the economy is currently at point E in the aggregate demand and supply model. Suppose country M country then faces an increase in inflation (may be due to rise in price of imported goods)

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