for both Federal Reserve and the commercial bank is that whether they should be positive or negative. There will be change to the balance sheet of both Federal Reserve and the commercial bank and it is important to clarify whether the change is positive or negative (cash inflow or outflow)

2. Suppose the Federal Reserve instructs the Trading Desk to sell $850 million of securities. Show the result of this trans- action on the balance sheets of the Federal Reserve System and commercial banks. (LG 4-3)