When the Fed buys Treasury bills from the public, which of the following may be the case?

Question

Quizplus · Accepted Answer

The Fed pays for Treasury bills by both creating funds out of thin air (through the process of open market operations) and by using a check drawn on itself from its account at a commercial bank. This is because the Fed is the issuer of the currency and has the authority to create money, but it still operates within the banking system and uses commercial banks as intermediaries for its transactions. The option of using U.S. Treasury gold certificates is not relevant to the current system of monetary policy.

When the Fed Buys Treasury Bills from the Public, Which