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Examine the current slide in oil prices and the pessimistic outlook for the China’s growth rate, which will impact globally.
Explain the likely “possible reaction” of the Central Bank (CB) in terms of policy response based on  :Scenario 1- A Deflationary Shock
:Scenario 2 – A negative Aggregate Demand shock
For each scenario address UK Central Bank policy and to start the examination assume the conditions for the UK economy are; the target rate of inflation rate is 2% and market base rates are 3% (this denotes point “A” for the examination).
For both scenarios’ explain how equilibrium in the model would be re-established by the Central Bank.
both scenarios provide a brief paragraph of recommendation for future policy use by the CB, based on these pessimistic scenarios continuing.
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                                         ,Outlook for the China’s growth rate