From 1979 to 1982, the Fed targeted bank reserves as the monetary policy tool. One side effect of this strategy was: ?

Question

From 1979 to 1982, the Fed targeted bank reserves as the monetary policy tool. One side effect of this strategy was: ?

Quizplus · Accepted Answer

During this period, by targeting bank reserves, the Federal Reserve inadvertently caused interest rates to rise significantly. This was part of their effort to combat inflation by making borrowing more expensive, thereby reducing spending and slowing down the economy.

From 1979 to 1982, the Fed Targeted Bank Reserves as the Monetary