Question

An open market sale of U.S. Treasury securities by the Fed will cause the Banking System's balance sheet to show: Group of answer choices no net change in assets or liabilities, only a change in the composition of assets with securities decreasing and reserves increasing. only an increase in liabilities. only a decrease in assets. no net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing.

Answer 1

no net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing.

Step-by-step explanation:

The Federal Reserve System ( popularly referred to as the 'Fed') was created by the Federal Reserve Act, passed by the U.S Congress on the 23rd of December, 1913. The Fed began operations in 1914 and just like all central banks, the Federal Reserve is a United States government agency.

Generally, it comprises of twelve (12) Federal Reserve Bank regionally across the United States of America.

The buying and selling of bonds owned by government by the Federal Reserve is generally referred to as open market sales.

An open market sale of U.S. Treasury securities by the Fed will cause the Banking System's balance sheet to show no net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing.

Basically, an open market sales increase money supply and as such making more money to be in circulation and in the economy.