A non-bank private agent sells a £1000 bond in an open market purchase by the Central Bank. If the proceeds are held in ________, the open market transaction has no effect on reserves; if the proceeds are held as ________, reserves increase by £1000. A) a box in the house; deposits B) deposits; savings account C) deposits; currency D) a box in the house; currency Support your answer using T-account examples.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A non-bank private agent sells a £1000 bond in an open market purchase by the Central Bank. If the proceeds are held in ________, the open market transaction has no effect on reserves; if the proceeds are held as ________, reserves increase by £1000.

A) a box in the house; deposits

B) deposits; savings account

C) deposits; currency

D) a box in the house; currency

Support your answer using T-account examples. 

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