How did the consolidated balance sheet of the 12 Federal Reserve banks change during the severe recession of 2007–2009?
What will be an ideal response?
The total Fed assets increased from $885 billion in February 2008 to $2317 billion in March 2010 because of the purchase of securities, mortgage-backed securities and other financial assets. Liabilities also increased from $43 billion in February 2008 to $1148 billion in March 2010. This increase came because banks often had the Fed hold their proceeds from the sale of securities to the Fed and the Fed began paying interest on reserves held at the Fed. By March 2010, the Fed held more bank reserves than the total of check able deposits held by banks. This change gave banks extensive lending capacity should they become more certain about financial stability in the future and decide to increase lending. By May 2013, the Fed’s balance sheet had reached $3.3 trillion and was continuing to grow as QE3 continued.
You might also like to view...
The current account records all transactions below EXCEPT for
A) net exports of goods and services. B) net interest income. C) net foreign investment. D) net transfers.
Which of the following can a firm use to defend a successful product's brand name?
A) The firm can apply for a trademark to ban other firms from using the product's name. B) The firm can increase the amount it spends on advertising for the product. C) The firm can obtain a patent on the brand name. D) The firm can attempt to copyright the brand name.
Refer to Figure 14.1. Other things equal, a decrease in the target inflation rate is best represented as a movement from
A) point A to point B. B) point C to point B. C) point A to point C. D) point B to point C.
In the classical model, markets clear
a. in the short run b. every month c. immediately d. in the long run e. as soon as any shock occurs