Central banks sell treasury bills to the public to
A. increase cash in the banking system B. raise revenue for commerical banks C. raise revenue for private investors D. reduce cash in circulation
Correct Answer: D
Explanation
Hence, by issuing treasury bills, central banks can raise short-term fund for governments and absorb surplus liquidity from financial markets simultaneously. Therefore, when there is too much money in circulation, the central bank will sell securities to reduce money surply in the economy.
