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B) Suppose the central bank wishes to expand the level of economic activity in the economy
because it is expected that inflation will decrease, and unemployment is on rise. How does it
implement its decision? What role do households, firms and banks in the home country and
abroad play in this process?

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  • 1. B) Suppose the central bank wishes to expand the level of economic activity in the economy because it is expected that inflation will decrease, and unemployment is on rise. How does it implement its decision? What role do households, firms and banks in the home country and abroad play in this process?