The Fed sells $1 million in bonds to a bond dealer. The bond dealer's bank experiences
A) a decrease in assets of $1 million as its reserves decrease and an increase in liabilities of $1 million as its deposits rise.
B) a decrease in assets of $1 million as its reserves decrease and a decrease in liabilities of $1 million as its deposits fall.
C) an increase in assets of $1 million as its deposits fell by $1 million, and a decrease in liabilities as its reserves fell by $1 million.
D) no change in assets or liabilities.
Correct Answer:
Verified
Q398: If a $1 million open market purchase
Q399: A sale of securities by the Fed
Q400: Open market operations are conducted by the
Q401: A purchase of U.S. government securities by
Q402: When the Fed buys U.S. government securities,
Q404: When the Fed sells a U.S. bond
Q405: When the Fed buys government securities
A) reserves
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Q407: Open market operations are
A) the buying and
Q408: The reserve ratio is 10 percent. If
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