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In the UK, it is expected that inflation will increase due to the increase in oil and energy prices caused by the war between Ukraine and Russia. The Bank of England is considering increasing interest rates to combat this inflation. Do you think this policy will be effective, why? (10 Marks) (Your word limit for answering this question: 45 words) Q3B (8 Marks) Payments for factors of production Factors of production Firms House holds Goods and services 1) In terms of this circular flow what would be expected to follow an increase in investment expenditure ? (2 Marks) (Your word limit for answering this question: 40 words) II) Why and how could such an increase in expenditure take place ? (2 Marks) (Your word limit for answering this question: 55 words) III) What would be expected to follow a decrease in investment and are there any policy measures which the government could adopt to offset the effects of a decrease in investment? (2 Marks) (Your word limit for answering this question: 33 words) iv) Suppose in this context there was an increase in the inward migration and hence an increase in the available labour force : think through how such an increase would affect the circular flow of income (2 Marks)