The Commercial Banking System Borrows from the Federal Reserve Banks

question 102

Multiple Choice

The commercial banking system borrows from the Federal Reserve Banks. As a result, the checkable deposits

• A) of commercial banks are unchanged, but their reserves increase.
• B) and reserves of commercial banks both decrease.
• C) of commercial banks are unchanged, but their reserves decrease.
• D) and reserves of commercial banks are both unchanged.

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Definitions:

Expenses Incurred

Costs that a company has become legally obligated to pay, often in the course of its normal business operations.

Capital

Financial assets or the financial value of assets, such as cash and securities, owned by an individual or organization, especially those used to start or operate a business.

Market Value

The current quoted price at which an asset or service can be bought or sold in a public marketplace.

Economic Condition

Refers to the current state of the economy in a particular area or globally, often evaluated based on factors like GDP, employment rates, and inflation.