Bank reserves will increase over time when:
A) the Fed sells government securities on the open market.
B) the Treasury sells government securities on the open market.
C) depositors take funds out of their checkable deposit accounts.
D) the Fed buys government securities on the open market.

Question

Quizplus · Accepted Answer

Bank reserves will increase when the Fed buys government securities on the open market. This is because when the Fed buys securities, it pays for them by adding reserves to the banking system.

Bank Reserves Will Increase Over Time When