44. The practice of monetary policy: a model of the reserve market

Interacting with graphs to learn more about the practice of monetary policy

The Federal Reserve conducts monetary policy mainly through open market operations – buying and selling of U.S. government securities. Let's see how the Federal Reserve affects short-term interest rates and bank reserves by looking at a simple model of the market for reserves.

Objective

• Illustrate the practice of monetary policy through the market for reserves

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