With the onset of the global financial crisis, assets on the Federal Reserves balance sheet increased dramatically,

Question:

With the onset of the global financial crisis, assets on the Federal Reserve’s balance sheet increased dramatically, from approximately $800 billion in 2007 to over $3 trillion in 2013. Many of the assets held are longer-term securities acquired through various loan programs instituted as a result of the crisis. In this situation, how could reverse repos (matched sale– purchase transactions) help the Fed reduce its assets held in an orderly fashion while reducing potential inflationary problems?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...