If a member of the nonbank public purchases a government bond from the Federal Reserve in exchange for currency,the monetary base will ________,but reserves will ________.

Question

Quizplus · Accepted Answer

When the nonbank public purchases a government bond from the Federal Reserve using currency, the currency in circulation decreases, reducing the monetary base, while reserves remain unchanged as the transaction does not involve bank reserves.

If a Member of the Nonbank Public Purchases a Government