Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Fed's balance sheet will specifically show:
A. Only an increase in the asset of securities of $2 billion.
B. Only show an increase in the liability of reserves of $2 billion.
C. Show no change in the size of the balance sheet, just the composition of assets will change from cash to securities.
D. Show an increase in the asset category of securities and the liability category of reserves by $2 billion.
Answer:D
Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Fed's balance sheet will specifically show:
A. Only an increase in the asset of securities of $2 billion. B. Only show an increase in the liability of reserves of $2 billion. C. Show no change in the size of the balance sheet, just the composition of assets will change from cash to securities. D. Show an increase in the asset category of securities and the liability category of reserves by $2 billion.