The largest item on the liability side of the Federal Reserve's balance sheet is
A) commercial bank deposits.
B) U.S. government securities.
C) cash items in the process of collection.
D) Federal Reserve notes outstanding.

Question

Quizplus · Accepted Answer

Federal Reserve notes outstanding refers to the physical currency in circulation that is issued by the Federal Reserve. This item represents the largest liability on the Federal Reserve's balance sheet as it reflects the amount of money that has been issued by the central bank and is currently in the hands of the public. Other liabilities on the balance sheet include commercial bank deposits, cash items in the process of collection, and U.S. government securities, but these are typically smaller in magnitude compared to the amount of currency in circulation.

The Largest Item on the Liability Side of the Federal