The sale and purchase of government securities by the Fed would leave reserves unchanged.
The Fed is the Central Bank of the United States. One of the duties of the Fed is to conduct monetary policies. Monetary polices are used to affect the level of money supply in the economy.
One of the monetary policy tools of the Fed is open market operation. When the Fed sells government securities, it is known as an open market sales which reduce money supply. When the Fed buys government securities, it is known as an open market purchase which increases money supply.
Reserve ratio is the percentage of deposits that is required of commercial banks to keep as reserves. Reserve ratio is determined by the Fed.
Change in reserve = ( value of government securities bought / reserve ratio) - (value of government securities sold / reserve ratio)
($500 / 0.2) - (500 / 0.2) = 0
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