Make use of a T-account to show the effect of the Fed's sale of $500 million worth of government securities on the Fed's balance sheet. (assume the Fed receives a check from the sale of securities)
What will be an ideal response?
The Fed's assets decline as it has less foreign assets (international reserves) fall by $500 million and its liabilities decrease since reserves fall by $500 million.
Economics
You might also like to view...
In a perfectly competitive market, if market price is lower than the average total cost of production:
A) new firms will enter the market. B) existing firms will leave the market. C) all existing firms will earn positive economic profits. D) all existing firms will earn zero economic profits.
Economics
A central bank can help stop a bank panic by
A) calling in consumer loans. B) raising the required reserve ratio. C) acting as a lender of last resort. D) decreasing income taxes.
Economics