Depository institutions serve as the primary conduit through which monetary policy actions impact the economy.

Question

Quizplus · Accepted Answer

Depository institutions (such as banks and credit unions) play a crucial role in the implementation of monetary policy set by central banks. By adjusting interest rates or through open market operations, central banks can influence the amount of money that depository institutions have available to lend, which in turn affects overall spending and economic activity. Therefore, changes in monetary policy have a direct impact on the behavior of depository institutions and the overall economy.

Depository Institutions Serve as the Primary Conduit Through Which Monetary