If the FOMC Orders a Purchase of Government Securities from Member

question 119

Multiple Choice

If the FOMC orders a purchase of government securities from member banks, where does the FOMC get the money to pay for the securities?

• A)It creates money to pay for the securities by adding the purchase amount to the banks' reserves.
• B)It pays for the securities with new Federal Reserve notes.
• C)It borrows the necessary funds from the Treasury.
• D)It auctions off part of the securities it already owns.

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