In a commercial bank's T-account, reserves and outstanding loans are recorded as:
A. debts.
B. profits.
C. assets.
D. liabilities.
Answer: C
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Larry and Mike are equally skilled construction workers employed by the Brown and Root Company. Larry's job is riskier because he typically works on a scaffold 1,000 feet above ground. Larry's higher wage rate is the result of
A) economic discrimination. B) a negative feedback loop. C) a compensating differential. D) a higher marginal revenue product.
The process of asset transformation refers to the conversion of
A) safer assets into risky assets. B) safer assets into safer liabilities. C) risky assets into safer assets. D) risky assets into risky liabilities.
Under the Articles of Confederation,
a. only the federal government could issue paper money. b. only the federal government had the power to levy taxes. c. the federal government was ultimately responsible any debts incurred by the states. d. the federal government had a difficult time negotiating military and economic treaties with other nations. e. All of the above.
As a result of the given transactions, the supply of money in the economy will:
Answer the question on the assumption that the legal reserve ratio is 20 percent. Suppose that the Fed sells $500 of government securities to commercial banks (paid for out of commercial bank reserves) and buys $500 of securities from individuals, who deposit the cash in checking accounts. A. remain unchanged. B. rise by $500. C. fall by $100. D. fall by $500.