Suppose the Fed Sells $1,000 of Government Securities to Commercial

Multiple Choice

Suppose the Fed sells $1,000 of government securities to Commercial Banks.Which pair of the T-accounts below shows this transaction?

A) $$\begin{array} { | c c | l c l |} \hline { \text { Federal Reserve } } && { \text { Commercial Banks } } \\\hline \text { Assets } & \text { Liabilities } & \text { Assets } & { \text { Liabilities } } \\\text { Reserves }&-1,000 & \text { Reserves }&-1,000 \\\text { Securities }&-1,000 & \text { Securities }&+1,000 \\\hline\end{array}$$
B) $$\begin{array} { | c c | l c c | } \hline{ \text { Federal Reserve } } &&{ \text { Commencial Banks } } \\\hline \text { Assets } & \text { Liabilities } & \text { Assets } & & \text { Liabilities } \\\hline \text { Securities } + 1,000 & \text { Commercial Banks' } & \text { Reserves } & - 1,000 & \text { Securities } + 1,000 \\& \text { Reserves } + 1,000 & & & \\\hline\end{array}$$
C) $$\begin{array} { | c c | l c | } \hline { \text { Federal Reserve } } &&{ \text { Commercial Banks } } \\\hline \text { Assets } & \text { Liabilities } & \text { Assets } & \text { Liabilities } \\\hline \text { Securities } - 1,000 & \text { Commercial Banks' } & \text { Government } & \text { Checkable } \\& \text { Reserves } - 1,000 & \text { Securities } + 1,000 & \text { Deposits } + 1,000 \\\hline\end{array}$$
D) $$\begin{array} { | c c | l c c | } \hline { \text { Federal Reserve } } &&{ \text { Commercial Banks } } \\\hline \text { Assets } & \text { Liabilities } & \text { Assets } & \text { Liabilities } \\\hline \text { Securities } - 1,000 & \text { Commercial Banks' } & \text { Reserves } & - 1,000 & \\ &\text { Reserves } - 1,000 & \text { Securities } &+ 1,000 \\\hline\end{array}$$