It is estimated that half of Egyptian men smoke. This is one of the highest rates in the world. In recent years the Egyptian government has increased the tax on cigarettes. The government and central bank have also tried to reduce inflation and improve Egypt's international trade performance. The Egyptian government could use subsidies to reduce its deficit on the current account of its balance of payments. Analyse how a central bank could reduce inflation.

Coherent analysis which might include:
A central bank could use contractionary monetary policy (1).
A central bank could increase the rate of interest (1) increase
saving (1) reduce borrowing (1) reduce consumer
expenditure (1) reduce total (aggregate) demand (1) reduce
demand-pull inflation (1).
A central bank could reduce the money supply (1) print less
money / sell government bonds (1) restrict bank lending (1)
fewer loans may reduce investment (1) reduce consumer
expenditure (1).
Raising the exchange rate (1) may reduce the price of
imports (1) lowering cost-push inflation (1).
One effect of a lower interest rate might be to lower costs of
production (1) reduce cost-push inflation (1).