In an open market purchase, the Fed _________government securities, which __________bank reserves.
A) sells, increases
B) sells, decreases
C) buys, decreases
D) buys, increases

Question

Quizplus · Accepted Answer

In an open market purchase, the Fed buys government securities from the public, which increases the reserves of banks. This is because the purchase injects money into the economy, which banks can hold as reserves that can be used to make loans.

In an Open Market Purchase, the Fed _________Government Securities, Which