Increases in which of the following items from the Fed's balance sheet will result in decreases in the monetary base?
A)U.S. Treasury deposits
B)U.S. Treasury currency outstanding
C)Federal Reserve float
D)Discount loans

Question

Quizplus · Accepted Answer

When the Fed receives deposits from the U.S. Treasury, it essentially takes money out of circulation and holds it in its own accounts. This reduces the amount of currency and reserves available in the banking system, leading to a decrease in the monetary base. The other options listed would increase the monetary base: B) U.S. Treasury currency outstanding would inject more currency into circulation, C) Federal Reserve float refers to temporary funds that can be used to make purchases, effectively increasing the amount of reserves in the system, and D) Discount loans increase the amount of reserves available to banks.

Increases in Which of the Following Items from the Fed's