Economic-Banking system-thank you?

Question

If the Fed purchases government securities from commercial banks, the reserves of the banking system will immediately??

increase by the amount of the purchase.

increase by more than the amount of the purchase.

remain constant.

decrease by the amount of the purchase.

decrease by more than the amount of the purchase.

Answer 1

A. Increase by the amount of the purchase

Think of it this way: The Fed gives the banks cash, and the banks give the Fed government securities.

In reality, there's no cash involved: the Fed just increases the banks' reserve balances directly.  The change happens on a computer.