If the Fed purchases $15 million worth of government bonds from Bank X, initially

Name: If the Fed purchases $15 million worth of government bonds from Bank X, initially
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Question

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When the Fed purchases government bonds from Bank X, it pays for them with money that didn't exist before. This increases the amount of reserves Bank X holds at the Fed, resulting in an increase in Bank X's deposits at the Fed. Therefore, the correct answer is B: the amount of Bank X's deposits at the Fed will increase by $15 million.

If the Fed Purchases $15 Million Worth of Government Bonds