On the Fed's balance sheet, assets include
A) depository institutions deposits at the Federal Reserve and loans to depository institutions.
B) Federal Reserve notes and loans to depository institutions.
C) U.S. government securities and loans to depository institutions.
D) Federal Reserve notes and depository institutions' deposits at the Federal Reserve.

Question

Quizplus · Accepted Answer

On the Fed's balance sheet, assets include U.S. government securities and loans to depository institutions. Option A is incorrect because it includes depository institutions' deposits at the Federal Reserve, which are considered liabilities on the Fed's balance sheet. Option B is incorrect because Federal Reserve notes are also liabilities on the Fed's balance sheet. Option D is incorrect because it only includes Federal Reserve notes and depository institutions' deposits at the Federal Reserve, but not the majority of the Fed's assets, which are U.S. government securities.

On the Fed's Balance Sheet, Assets Include