Suppose the Fed Sells $1,000 of Government Securities to Commercial

question 173

Multiple Choice

Suppose the Fed sells $1,000 of government securities to Commercial Banks.Which pair of the T-accounts below shows this transaction?

• A)\[\begin{array} { | c c | l c l |}
• \hline { \text { Federal Reserve } } && { \text { Commercial Banks } } \\
• \hline \text { Assets } & \text { Liabilities } & \text { Assets } & { \text { Liabilities } } \\
• \text { Reserves }&-1,000 & \text { Reserves }&-1,000 \\
• \text { Securities }&-1,000 & \text { Securities }&+1,000 \\
• \hline
• \end{array}\]
• B)\[\begin{array} { | c c | l c c | }
• \hline{ \text { Federal Reserve } } &&{ \text { Commencial Banks } } \\
• \hline \text { Assets } & \text { Liabilities } & \text { Assets } & & \text { Liabilities } \\
• \hline \text { Securities } + 1,000 & \text { Commercial Banks' } & \text { Reserves } & - 1,000 & \text { Securities } + 1,000 \\
• & \text { Reserves } + 1,000 & & & \\
• \hline
• \end{array}\]
• C)\[\begin{array} { | c c | l c | }
• \hline { \text { Federal Reserve } } &&{ \text { Commercial Banks } } \\
• \hline \text { Assets } & \text { Liabilities } & \text { Assets } & \text { Liabilities } \\
• \hline \text { Securities } - 1,000 & \text { Commercial Banks' } & \text { Government } & \text { Checkable } \\
• & \text { Reserves } - 1,000 & \text { Securities } + 1,000 & \text { Deposits } + 1,000 \\
• \hline
• \end{array}\]
• D)\[\begin{array} { | c c | l c c | }
• \hline { \text { Federal Reserve } } &&{ \text { Commercial Banks } } \\
• \hline \text { Assets } & \text { Liabilities } & \text { Assets } & \text { Liabilities } \\
• \hline \text { Securities } - 1,000 & \text { Commercial Banks' } & \text { Reserves } & - 1,000 & \\
• &\text { Reserves } - 1,000 & \text { Securities } &+ 1,000 \\
• \hline
• \end{array}\]

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Definitions:

Proboscis

An elongated appendage from the head of an animal, especially an insect, used for feeding or sensing.

Deuterostomes

A major group within the animal kingdom that includes organisms developing an anus from the first opening in the embryo, with subsequent formation of the mouth.

Protostomes

A group of animals characterized by developing the mouth before the anus during embryonic development, including mollusks and arthropods.

Deuterostomes

A category of animals characterized by their embryo development; the first opening (the blastopore) becomes the anus.