Table 13-1
EFFECTS OF AN OPEN MARKET TRANSACTION ON THE BALANCE SHEETS OF BANKS AND THE FED (In millions of dollars)

-After the transaction in Table 13-1 is completed, what happens to actual reserves, required reserves, and excess reserves?
Assume the required reserve ratio is 25 percent.
A)Actual reserves increase by $10 million, required reserves increase $2.5 million, and excess reserves increase by $7.5 million.
B)Actual reserves decrease by $10 million, required reserves decrease $2.5 million, and excess reserves decrease by $7.5 million.
C)Actual reserves increase by $10 million, required reserves are unchanged, and excess reserves increase by $10 million.
D)Actual reserves decrease by $10 million, required reserves decrease by $10 million, and excess reserves are unchanged.

Question

Table 13-1
EFFECTS OF AN OPEN MARKET TRANSACTION ON THE BALANCE SHEETS OF BANKS AND THE FED (In millions of dollars)

-After the transaction in Table 13-1 is completed, what happens to actual reserves, required reserves, and excess reserves?
Assume the required reserve ratio is 25 percent.
A)Actual reserves increase by $10 million, required reserves increase $2.5 million, and excess reserves increase by $7.5 million. 
B)Actual reserves decrease by $10 million, required reserves decrease $2.5 million, and excess reserves decrease by $7.5 million. 
C)Actual reserves increase by $10 million, required reserves are unchanged, and excess reserves increase by $10 million. 
D)Actual reserves decrease by $10 million, required reserves decrease by $10 million, and excess reserves are unchanged.

Quizplus · Accepted Answer

The Answer of Table 13-1
EFFECTS OF AN OPEN MARKET TRANSACTION ON THE BALANCE SHEETS OF BANKS AND THE FED (In millions of dollars)

-After the transaction in Table 13-1 is completed, what happens to actual reserves, required reserves, and excess reserves?
Assume the required reserve ratio is 25 percent.
A)Actual reserves increase by $10 million, required reserves increase $2.5 million, and excess reserves increase by $7.5 million. 
B)Actual reserves decrease by $10 million, required reserves decrease $2.5 million, and excess reserves decrease by $7.5 million. 
C)Actual reserves increase by $10 million, required reserves are unchanged, and excess reserves increase by $10 million. 
D)Actual reserves decrease by $10 million, required reserves decrease by $10 million, and excess reserves are unchanged.

Table 13-1 EFFECTS OF AN OPEN MARKET TRANSACTION ON THE BALANCE SHEETS