When the Fed Makes a Discount Loan, the Impact on the Fed's

question 78

Multiple Choice

When the Fed makes a discount loan, the impact on the Fed's balance sheet will reflect:

• A) no change in liabilities but an increase in assets.
• B) a decrease in assets and liabilities.
• C) an increase in assets and liabilities.
• D) an increase in assets and a decrease in liabilities.

---

Definitions:

Mutually Beneficial Trade

Trade agreements between parties that provide gains or advantages to all involved, enhancing each party's welfare.

Relative Cheaper

The comparison of the cost of one product or service to another, indicating that the former is less expensive.

Labor-Intensive

Describing a process or industry that requires a large amount of labor to produce its goods or services.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, which enhances efficiency in international trade.