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Suppose that the Federal Reserve decides to increase the money supply with a $300 purchases of Treasury bills. Complete the tables that represent the financial position of the Federal Reserve and commercial banks after this open-market operation. Be sure to use a negative sign for reduced values. Assets LiabilitiesFederal reserves $A $B Commercial Banks Assets Liabilities Treasury bills C no change Reserves D

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Answer:

FEDERAL RESERVE

Assets=$300 (A)

Liabilities =$300 (B)

COMMERCIAL RESERVE

Assets:

Treasure Bills =$-300 (C)

Reserves=$300

Liabilities

No change

Explanation:

To Complete the tables that represent the financial position of the Federal Reserve and commercial banks

FEDERAL RESERVE

Assets=$300 (A)

Liabilities =$300 (B)

COMMERCIAL RESERVE

Assets:

Treasure Bills =$-300 (C)

Reserves=$300

Liabilities

NO change in liabilities

Therefore the Federal Reserve assets will be TREASURY BILLS While the liabilities for Federal Reserves will be MONETARY BASE