If the Federal Reserve Sells $50 Billion of Short-Term U

question 65

Multiple Choice

If the Federal Reserve sells $50 billion of short-term U.S. Treasury securities to the public, other things held constant, what will this tend to do to short-term security prices and interest rates?

• A)Prices and interest rates will both rise.
• B)Prices will rise and interest rates will decline.
• C)Prices and interest rates will both decline.
• D)Prices will decline and interest rates will rise.
• E)There will be no changes in either prices or interest rates.