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Decrease the interest rates in the economy

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a) The Central Bank of China would like to decrease the interest rates in the economy. What open market operation (OMO) action should the Central Bank of China take? Explain in detail the OMO process and its implications for the cash rate, interest rates, inflation and GDP. Draw by hand the effect of the OMO process using the MD-MS diagram.

Reference no: EM131974570

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