market segmentation open market reinvestment orrect Question 41 0/1 pts If the Federal Reserve sells $50 billion of short-term U.S. Treasury securities to the public, other things held constant, what will this tend to do to short-term security prices and interest rates? Prices and interest rates will both rise. Prices will rise and interest rates will decline. Incorrect. When the Fed sells securities, it decreases the amount of reserves in the banking system and decreases the money supply, on the market for securities, the supply of securities is increasing. See 5-4: Other Factors That Influence Interest Rate Levels Prices and interest rates will both decline. Prices will decline and interest rates will rise. There will be no changes in either prices or interest rates. structure.com numer a