One of the Main Liabilities on the Fed's Balance Sheet

question 58

Multiple Choice

One of the main liabilities on the Fed's balance sheet is reserves. Which of the following is the best definition of that item?

• A)Reserves represent foreign currencies held at the Fed.
• B)Reserves are deposits that banks hold at the Fed.
• C)Reserves represent gold and other precious metals held at the Fed.
• D)Reserves represent loans that the Fed has made to other countries.
• E)None of these is an appropriate definition.

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Definitions:

Statement Of Cash Flows

A financial report summarizing the amount of cash and cash equivalents entering and leaving a company.

Book Value

The net value of a company's assets as recorded on its balance sheet, minus its liabilities and intangible assets, such as goodwill.

Indirect Method

A cash flow statement reporting approach that adjusts net income for changes in balance sheet accounts to calculate cash from operating activities.

Operating Activities

Activities related to the day-to-day functions of a business that involve generating revenue, paying expenses, and the net cash flow from these operations.