[Section A] A country is experiencing a period of high inflation. To combat this, the central bank decides to significantly increase the base interest rate. What is the intended macroeconomic effect of this policy?

To decrease the cost of borrowing, encouraging consumers to spend more.

To increase the cost of borrowing, thereby reducing consumer spending and business investment, which cools down demand-pull inflation.

To increase government spending on public infrastructure projects.

To directly lower the cost of imported raw materials for domestic manufacturers.