What Happens to the Fed's Balance Sheet When It Buys

question 162

Multiple Choice

What happens to the Fed's balance sheet when it buys $10 billion in government securities?

• A)The left-hand side of the Fed's balance sheet increases by $10 billion.
• B)The left-hand side of the Fed's balance sheet decreases by $10 billion.
• C)The right-hand side of the Fed's balance sheet decreases by $10 billion.
• D)Both the right-hand and left-hand sides of the Fed's balance sheet decrease by $10 billion.
• E)None of these.

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Definitions:

Wholesaler

A wholesaler is a person or company that sells goods in large quantities at lower prices, typically to retailers for resale to the end consumers.

Gross Margin Ratio

A financial metric calculated by subtracting the cost of goods sold from revenue and dividing that figure by revenue, representing the percentage of sales revenue retained after incurring direct production expenses.

Net Sales

The total revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts provided to customers.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries have been made, used to prepare financial statements.