If a person selling bonds to the Fed cashes the Fed's check,then reserves ________ and currency in circulation ________,everything else held constant.

Question

Quizplus · Accepted Answer

When a person sells bonds to the Fed, they receive a check from the Fed in exchange. If they cash the check, their bank's reserves increase, but there is no change in the currency in circulation. Therefore, reserves remain unchanged, and currency in circulation increases, leading to option B being the correct answer.

If a Person Selling Bonds to the Fed Cashes the Fed's