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Suppose the Fed Purchases $5,000 in U

Question 59

Multiple Choice

Suppose the Fed purchases $5,000 in U.S.government securities from the Last National Bank and the Last National Bank's account at the Federal Reserve district bank increases by $5,000.Which of the following is a result of this transaction?


A) The Last National Bank's balance sheet shows a change in the composition of its assets.
B) Both the Last National Bank's assets and its liabilities rise by $5,000.
C) Both the Fed's assets and its liabilities fall by $5,000.
D) Only the Fed's liabilities change,while its assets remain unchanged.
E) This transaction decreases the money supply.

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