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If the Federal Reserve Sells a $2,000 Bond to a Bond

Question 160

Multiple Choice

If the Federal Reserve sells a $2,000 bond to a bond dealer who pays with a check written on an account at Second National Bank,what changes will occur on the bank's balance sheet after the check clears?


A) Reserves and total assets will increase by $2,000;demand deposits and total liabilities will decrease by $2,000.
B) Reserves,demand deposits,total assets,and total liabilities will all increase by $2,000.
C) Reserves and total assets will decrease by $2,000;demand deposits and total liabilities will increase by $2,000.
D) Reserves,demand deposits,total assets,and total liabilities will all decrease by $2,000.
E) Reserves will decrease by $2,000;demand deposits,total assets,and total liabilities will all increase by $2,000.

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