Which of the following best describes the correct order of processes through which the Fed conducts monetary policy?

Question

Quizplus · Accepted Answer

The correct order of processes through which the Fed conducts monetary policy is that open market operations influence reserves, changes in reserves influence lending, and changes in lending influence credit availability, money supply, deposit creation, and interest rates. This is because the Fed's primary tool for conducting monetary policy is through manipulating the reserves of commercial banks, which in turn influences their lending behavior and ultimately affects the broader economy.

Which of the Following Best Describes the Correct Order of Processes