Arrange the following steps in the correct order to describe the effect of open market operations on the economy: A) Central Bank sells government bonds to financial institutions B) Reserves in the banking system decrease C) Interest rates increase D) Aggregate demand decreases due to reduced spending

Open market operations are actions taken by the central bank to control the money supply in the economy. First, the central bank sells government bonds to financial institutions, which means banks buy these bonds and pay for them using their reserves. As a result, the reserves in the banking system decrease, meaning there is less money available for banks to lend. This decrease in available money leads to higher interest rates because banks want to maintain their profits by charging more for loans. Finally, when interest rates increase, borrowing becomes more expensive, causing businesses and consumers to spend less, which decreases aggregate demand in the economy.