When the Fed buys securities,it decreases the money in circulation.

Name: When the Fed buys securities,it decreases the money in circulation.
Brand: Quizplus
Rating: 4.7 (42 reviews)

Question

Quizplus · Accepted Answer

When the Fed buys securities,it writes a check on its own account to the seller of the investments.When the seller of the investments (usually a large bank)deposits the check,the Fed transfers the balance from the Federal Reserve account into the seller's account,thus increasing the supply of money in the economy and,ideally,fueling economic growth.

When the Fed Buys Securities,it Decreases the Money in Circulation