Table 29-1 Effects of an Open-Market Transaction on the Balance Sheets of Sheets

question 71

Multiple Choice

Table 29-1
Effects of an open-market transaction on the balance sheets of banks and the fed (in millions of dollars) ​
-After the transaction in Table 29-1 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.

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Definitions:

Californios

The Hispanic residents of California, particularly those living there before it became a part of the United States.

Cattle Ranchers

Individuals or companies engaged in the raising and grazing of cattle, often for meat production, on extensive ranches.

1830s and 1840s

Decades in the 19th century characterized by significant social, political, and economic changes, including industrialization and the expansion of slavery in the United States, leading to increased tensions leading to the Civil War.

Reannexation

A term referring to the act of annexing something again or reclaiming territory that was once part of a country or jurisdiction.