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If the Fed Sells Government Securities to the Public in the Open

Question 19

Multiple Choice

If the Fed sells government securities to the public in the open market:


A) the Fed gives the securities to the public; the public pays for the securities by writing checks that when cleared will increase commercial bank reserves at the Fed.
B) the Fed gives the securities to the public; the public pays for the securities by writing checks that when cleared will decrease commercial bank reserves at the Fed.
C) the public gives the securities to the Fed; the Fed pays for the securities by check, which when deposited at commercial banks will increase their reserves at the Fed.
D) the public gives the securities to the Fed; the Fed pays for the securities by check, which when deposited at commercial banks will decrease their reserves at the Fed.

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