If the Fed purchases securities in the amount of $100,000 from First Union Bank, then the
A)assets of First Union Bank decrease by $100,000.
B)assets of the Fed decrease by $100,000.
C)liabilities of the Fed change in composition but not in amount.
D)assets of First Union Bank change in composition but not in the amount.
E)liabilities of First Union decrease by $100,000.

Question

Quizplus · Accepted Answer

When the Fed purchases securities from First Union Bank, the bank's assets change in composition (from securities to reserves or cash) but not in the total amount.

If the Fed Purchases Securities in the Amount of $100,000