An Open Market Sale of U

question 34

Multiple Choice

An open market sale of U.S. Treasury securities by the Fed will cause the Fed's balance sheet to show:

• A) a decrease in the asset of securities and a decrease in the liability of reserves.
• B) an increase in the liability of reserves.
• C) no change in the size of the balance sheet, just the composition of assets will change from securities to cash.
• D) an increase in the asset category of securities and the liability category of reserves.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, but not control those policies.

Share Ownership

Denotes holding equity in a company, representing a claim on part of the company's assets and earnings.

Policy Decision Making

The process by which governments or organizations establish rules, directives, and guidelines to influence and determine present and future decisions.