If the Fed makes a discount loan of $2 million to a commercial bank, the Fed's balance sheet will show
A) an increase in discount loans of $2 million and an increase in bank reserves of $2 million.
B) an increase in discount loans of $2 million and a decrease in bank reserves of $2 million.
C) a decrease in discount loans of $2 million and an increase in bank reserves of $2 million.
D) a decrease in discount loans of $2 million and a decrease in bank reserves of $2 million.
Correct Answer:
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