If the Fed sells $250 million of Treasury bills to commercial banks, the banks pay with their reserves.

Question

Quizplus · Accepted Answer

When the Fed sells Treasury bills to commercial banks, they receive payment in the form of reserves from the banks. This is because banks hold reserves at the Fed that they can use to purchase Treasury bills and other securities. Therefore, if the Fed sells $250 million of Treasury bills to commercial banks, the banks would pay with their reserves.

If the Fed Sells $250 Million of Treasury Bills to Commercial