If the Federal Government Runs a Deficit and Borrows from Commercial

question 32

Multiple Choice

If the federal government runs a deficit and borrows from commercial banks,​
1) total deposits are not affected
2) total deposits are increased
3) excess reserves are reduced
4) excess reserves are decreased

• A)​1 and 3
• B)​1 and 4
• C)​2 and 3
• D)​2 and 4

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Definitions:

Stockholders' Equity

The portion of a company's assets that belongs to the shareholders, represented by the company's common stock, preferred stock, and retained earnings.

Accrued Wages

Wages that have been earned by employees but have not yet been paid by the employer.

Accrued Revenues

Income that has been earned but not yet received; recorded to recognize revenue prior to cash receipt.

Depreciation Expense

The allocated expense of a tangible asset over its useful life, reflecting the use and wear and tear of the asset.