If the Treasury sells $2 million in gold, the Fed's gold and SDR certificate account will
A)fall by $2 million, as will the monetary base.
B)fall by $2 million, whereas the monetary base will rise by $2 million.
C)rise by $2 million, as will the monetary base.
D)rise by $2 million, whereas the monetary base will fall by $2 million.

Question

Quizplus · Accepted Answer

When the Treasury sells $2 million in gold, it receives $2 million in cash, which reduces the Fed's gold and SDR certificate account by $2 million. As a result, the monetary base, which is equal to the sum of the Fed's gold and SDR certificate account and its outstanding currency, will also fall by $2 million.

If the Treasury Sells $2 Million in Gold, the Fed's