When the Fed buys U.S. government securities, the money supply

A) increases because there is an increase in transaction deposits at the bank of the bond dealer but there is no decrease in transaction deposits at any other bank.
B) decreases because there is an increase in the reserves of the bond dealer's bank.
C) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a reduction in transaction deposits at the Fed.
D) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a fall in transaction deposits at another bank.


A

Economics

You might also like to view...

A household consists of only related family members like a father, mother, and children and not unrelated members like two students sharing a rented apartment

a. True b. False Indicate whether the statement is true or false

Economics

Gross domestic product equals the sum of consumption, investment, and government purchases.

Answer the following statement true (T) or false (F)

Economics

The desired reserve ratio helps determine the amount of money banks can create

Indicate whether the statement is true or false

Economics

If Japan and the United States engage in trade, and Japan gains as a result of the trade, does that mean the United States has lost in some manner?

Economics