If the Federal Reserve purchases a $2,000 bond from a bond dealer who deposits the check in a bank, what changes will occur on that bank's balance sheet?
a. Reserves, demand deposits, total assets, and total liabilities will all increase by $2,000.
b. Reserves and assets will increase by $2,000 . demand deposits and total liabilities will decrease by $2,000.
c. Reserves and total assets will decrease by $2,000 . demand deposits and total liabilities will increase by $2,000.
d. Reserves and total liabilities will decrease by $2,000 . demand deposits and total assets will increase by $2,000.
e. Reserves and assets will increase by $2,000 . demand deposits and total assets will decrease by $2,000.
A
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Suppose the market clearing price is $15 and the price ceiling is $17. The price that prevails in the market will be
A) $17. B) $15. C) less than $15. D) more than $17.
In the aggregate expenditures model, equilibrium occurs if:
a. aggregate expenditures (AE) are greater than GDP. b. aggregate expenditures (AE) are less than GDP. c. there is no unplanned inventory depletion or accumulation. d. consumption equals investment.
All large financial institutions have to hold a reserve of almost ___% of their demand deposits.
A. 2 B. 10 C. 12 D. 20
Which one of the following will shift the consumption function upward?
A. higher interest rates B. expectations that the economy will grow in the future C. a decrease in money holdings D. higher capacity utilization rates