QUESTION 11 2 points Save Answer When the Fed buys U.S. govemment securities fro

Question

QUESTION 11 2 points Save Answer When the Fed buys U.S. govemment securities from a bank, the Fed pays for the securities by OA borrowing money from the U.S. Treasury. decreasing the amount of money in circulation. O Ccrediting the banks checking account at the Fed giving the bank gold. QUESTION 12 2 points Save Answer The monetary expansion process from an open market operation can continue until the discount rate is lower than market interest rates. required reserves are eliminated. the Federal Reserve takes actions to stop the process. lending has caused deposit liabilities to grow to the point where excess reserves zero. QUESTION 13 2 points Save Answer The table below represents the consolidated balance sheet of all banks combined. How would this balance sheet change if an individual were to withdraw S5,000 from his checking account at Bank of Whitman, then use that money to repay a $5,000 loan it owes to U.S. Bank? Assets Liabilities and Net Worth Reserves 10,000 Checkable Deposits 100,000 Loans 90,000 Other Assets 30.000 Net Worth 30,000 AReseres would not change, Loans would fall to S85,000 and Checkable Deposits would fall to $95,000 OB.Loans would fall to S85,000 and Net Worth would fall to S25,000 O C Reserves would rise to $15,000, Loans would fall to $85,000, and Checkable Deposits would remain the same. Reserves would rise to $15,000, and Checkable Deposits would rise to $105,000.Loans would remain the same

Explanation / Answer

11. The right answer is option c.

Explanation: When the Fed buys securities from a bank, the bank Fed write a check on itself and credit the checking account (reserve account) of the bank with the Fed.

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