The purchase of government securities by someone other than the Fed results in
A)an overall increase in funds among commercial banks.
B)an overall decrease in funds among commercial banks.
C)offsetting changes in funds at commercial banks.
D)an increase in securities maintained by the Fed.

Question

The purchase of government securities by someone other than the Fed results in ​
A)an overall increase in funds among commercial banks.
B)an overall decrease in funds among commercial banks.
C)offsetting changes in funds at commercial banks.
D)an increase in securities maintained by the Fed.

Quizplus · Accepted Answer

When someone other than the Fed purchases government securities, it results in offsetting changes in funds at commercial banks because the buyer's bank account decreases while the seller's bank account increases by the same amount.

The Purchase of Government Securities by Someone Other Than the Fed