When the Fed Makes a Discount Loan, the Impact on the Banking

question 67

Multiple Choice

When the Fed makes a discount loan, the impact on the Banking System's balance sheet is:

• A) an increase in liabilities with no change in assets.
• B) an increase in assets and a decrease in liabilities.
• C) a decrease in assets and an increase in liabilities.
• D) the same as that of an open market purchase.

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Definitions:

Vertebral Canal

The cylindrical space within the vertebral column that houses and protects the spinal cord.

Lateral

Positioned on or directed towards the side; relating to the sides of an organism or structure.

Midline

An imaginary line drawn vertically through the middle of the body, dividing it into right and left halves.

Medial

Pertaining to or situated toward the midline of the body or a structure.