Use information in the extract to answer the questions below.

Fed raises rates by half a percentage point - the biggest hike in two decades - to fight inflation WASHINGTON - The Federal Reserve on Wednesday raised its benchmark interest rate by half a percentage point, the most aggressive step yet in its fight against a 40-year high in inflation.

"Inflation is much too high and we understand the hardship it is causing. We're moving expeditiously to bring it back down," Fed Chairman Jerome Powell said during a news conference, which he opened with an unusual direct address to "the American people." He noted the burden of inflation on lower-income people, saying, "we*re strongly committed to restoring price stability." www.cnbc.com 4 May 2022

(i) Identify and explain TWO (2) methods that the Fed (US Central Bank) can take to increase interest rate. Use the money market diagram to aid your explanation. (ii) Explain how the interest rate hike can help to "fight inflation". Use the AD-AS diagram to aid your explanation. (iii) Suggest ONE (1) reason why the interest rate hike may not be very effective in reducing the inflation rate. Explain your answer. (iv) Explain why the "burden of inflation" is felt more strongly by the lower-income people.