a) On 3 November 2022, the Bank of England raised the interest rate (Bank Rate) by 0.75 percentage points. Why did the Bank of England raise the interest rate? What are the conventional monetary policy tools that the Bank of England can use to change the interest rate?
b) Compared with other monetary policy tools, what are the advantages of Open Market Operations?
c) On 23 September 2022, the Chancellor of the Exchequer, Kwasi Kwarteng, delivered a Ministerial Statement entitled "The Growth Plan" to the House of Commons of the United Kingdom. Widely referred to in the media as a "mini-budget". It contained a set of economic policies and tax cuts such as bringing forward the planned cut in the basic rate of income tax from 20% to 19%. If the long-run aggregate supply curve does not change, how does a tax cut influence the AD-AS equilibrium? Please illustrate your answer using a diagram.