Consider a bank that has $10 million as reserves, $5million as securities, and $100 million as transaction accounts. If a customer, who is a government securities dealer, sells $2 million in securities to the Fed
?
A. the bank's transaction accounts reduce to $98 million.
B. the bank's securities reduce by $4 million.
C. the bank's reserves increase to $12 million.
D. the bank's loans reduce by $2 million.?
Answer: C
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