When the Fed sells government securities to a bank, how are the Fed's assets affected?
A) The amount of the Fed's government securities decreases.
B) The amount of the Fed's government securities increases.
C) The amount of reserves held at the Fed increases.
D) The amount of reserves held at the Fed decreases.

Question

Quizplus · Accepted Answer

When the Fed sells government securities, it reduces its holdings of those securities, thus decreasing its assets.

When the Fed Sells Government Securities to a Bank, How