Q1 Assess the likely impact on the UK economy of an 'increase in consumption' (Extract A, lines 5-6). Use an aggregate demand and aggregate supply diagram in your answer. (1 0) Extract A UK household consumption Despite the slow growth in real household disposable incomes, consumer spending rose in 2017. Annual spending per person increased by 589, when compared with 2016. This may have reected UK households' delay in adjusting to the increase in ination that was associated with the fall in the exchange rate of the British pound. The increase 5 in consumption has also been driven by low interest rates. In 2017 UK house prices increased by an average of 5.1%. UK consumers have nanced most of their spending by borrowing on credit cards in order to maintain their living standards. In 2017 borrowing on credit cards rose by 9.6%. the second-highest level since before the nancial crisis. This has increased the Bank of IO England's concerns about the sustainability of borrowing, given the slow growth in real incomes. The Bank has also indicated that the base interest rate was likely to rise faster than previously expected. More expensive credit could therefore constrain the ability of households to spend