Change In Federal Reserve's Balance Sheet

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Change In Federal Reserve's Balance Sheet

1. Suppose the Federal Reserve instructs the Trading Desk to purchase $1 billion of securities. Show result of this transaction on the balance sheets of the Federal Reserve System and commercial banks.
> Change in Federal Reserve's Balance Sheet Assets Liabilities
Securities + $1 billion Reserve acct. of securities dealers' banks + $1 billion

_____________________________________________________________________________________________ …show more content…
of securities dealers' banks - $850 million
_____________________________________________________________________________________________
Change in Commercial Bank Balance Sheets Assets Liabilities
Reserve accts. at - $850 million Securities dealers' demand - $850 million Federal Reserve deposit accts. at banks

1. Suppose the Federal Reserve instructs the Trading Desk to purchase $1 billion of securities. Show result of this transaction on the balance sheets of the Federal Reserve System and commercial banks.
> Change in Federal Reserve's Balance

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