Here Is How an Open Market Purchase Works: the Fed

Multiple Choice

Here is how an open market purchase works: The Fed __________ government securities to (from) a commercial bank,which raises the bank's deposits at the __________ and increases the bank's __________.

A) sells; Fed; reserves
B) buys; Fed; reserves
C) buys; Treasury; discount loans
D) sells; Treasury; required reserve ratio
E) buys; Fed; liabilities