When the Fed sells $100 million of securities to a commercial bank the
A)required reserve ratio decreases.
B)money supply increases.
C)bank's reserves decrease.
D)monetary base increases.
E)bank's reserves do not change.

Question

Quizplus · Accepted Answer

When the Fed sells securities to a commercial bank, the bank pays for these securities by using its reserves, which decreases the bank's reserves.

When the Fed Sells $100 Million of Securities to a Commercial