Suppose the Fed purchases $1,000 of government securities from the general public who then deposit the proceeds into their checking accounts in commercial banks. Which pair of the T-accounts below shows this transaction?

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In this transaction, the Fed is making a purchase of government securities, so the Fed's Securities (assets) account increases by $1,000. The general public receives payment for the securities, so their Deposits (assets) account increases by $1,000. As a result of the deposit, the commercial bank's Reserves (assets) account increases by $1,000, and the general public's Deposits (liabilities) account also increases by $1,000. Only option B shows these changes in the respective T-accounts.

Suppose the Fed Purchases $1,000 of Government Securities from the General