If the South African Reserve Bank sells R50 billion worth of short-term S.A.Treasury securities to the public, other things held constant, what will this tend to do to short-term security prices and interest rates?

Question

Quizplus · Accepted Answer

When the South African Reserve Bank sells R50 billion worth of short-term S.A.Treasury securities to the public, the supply of securities in the market increases, and this leads to a shift in the demand and supply curve. This increase in the supply of the securities will cause a decline in prices, and since prices and interest rates have an inverse relationship, it will lead to an increase in interest rates. Therefore, prices will decline, and interest rates will rise. The correct answer is D.

If the South African Reserve Bank Sells R50 Billion Worth