When the Fed buys U.S. government securities on the open market

Name: When the Fed buys U.S. government securities on the open market
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When the Fed buys U.S. government securities on the open market, it pays for them by sending funds to the seller's bank, increasing the reserves of the banking system, which in turn leads to an expansion of the money supply. Therefore, the correct choice is A, the reserves of the banking system expand.

When the Fed Buys U