Ask Question
13 April, 10:16

A commercial bank buys a $50,000 government security from a securities dealer. the bank pays the dealer by increasing the dealer's checkable deposit balance by $50,000. the money supply has:

+2
Answers (1)
  1. 13 April, 10:33
    0
    Increased by $50,000

    Explanation:

    When the Federal Reserve or a any private bank buys government securities from another private company or investor, they "create" money in the same way as a loan creates money.

    Therefore, when the commercial bank bought government securities worth $50,000 from a private securities dealer, the money supply increased by $50,000.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A commercial bank buys a $50,000 government security from a securities dealer. the bank pays the dealer by increasing the dealer's ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers