Homework SourseOn July 30th 2009 The Federal Reserve through the Federal Re
On July 30th 2009, The Federal Reserve through the Federal Reserve Bank of New York purchased $6.496 billion of Treasury Securities. This open market purchase of securities will:
a)
Increase interest rates to small businesses
Increase bank reserves in the Federal Reserve system
Increase the debt of the U.S.government
Shrink the money supply
| Increase interest rates to small businesses | ||
| b) | Increase bank reserves in the Federal Reserve system | |
| c) | Increase the debt of the U.S.government | |
| d) | Shrink the money supply |
Solution
b) Increase bank reserves in the Federal Reserve system , this open market purchase of securities transaction will bring the liquidity as well as increase in bank reserves
