If the Treasury borrows from the public and makes an expenditure of an equal amount, it will affect
A) the supply of currency.
B) the money supply.
C) the supply of government securities.
D) bank reserves.

Question

Quizplus · Accepted Answer

When the Treasury borrows from the public, it issues government securities, which increases the supply of these securities in the market. The other options are not directly affected by this action in the manner described.

If the Treasury Borrows from the Public and Makes an Expenditure