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12. When the Treasury sells a security to a security dealer: a. increase the national debt b. decrease the national debt c. i
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Answer #1
When the treasury sells security to security dealer it is collecting funds from security dealer and at the same time undertaking an obligation to pay debts in future.
When future debts are payable it will ineffect result in reduction of reserves available for future. Therefore, answer to the question is
(f) - both (a) and (d)
i.e. it increases the national debt and also reduces reserves for banking system.
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