When the Fed buys Treasury securities

Name: When the Fed buys Treasury securities
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When the Fed buys Treasury securities, it increases the money supply by injecting new cash into the economy. This is because the Fed pays for these securities by creating electronic credits in the bank accounts of the securities dealers who sold them. This increases the reserves of the banks, allowing them to make new loans and investments, which in turn increases the money supply.

When the Fed Buys Treasury Securities