When the U.S. Treasury purchases gold and then replenishes its deposit in the Fed the effect is that __________ and __________.
A) reserves increase; gold certificates increase
B) reserves decrease; gold certificates increase
C) gold certificates increase; Treasury deposits increase
D) gold owned by the Fed increases; Treasury deposits increase

Question

Quizplus · Accepted Answer

When the U.S. Treasury purchases gold and replenishes its deposit in the Fed, gold certificates increase as they represent the gold held by the Treasury, and Treasury deposits increase as the Treasury replenishes its account at the Fed.