Which of the Following Happens If the Fed Buys Bonds

question 132

Multiple Choice

Which of the following happens if the Fed buys bonds from a private bank?

• A) The private bank's total assets remain unchanged.
• B) The private bank's composition of assets remain unchanged.
• C) The Fed's total assets decrease.
• D) The Fed's total liabilities remain unaffected.

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Definitions:

Electrically Neutral

A state in which an object or system has an equal number of positive and negative charges, resulting in no overall net charge.

Electrons

Negatively charged subatomic particles orbiting the nucleus of an atom, involved in chemical reactions and electrical conductivity.

Neutrons

Electrically neutral subatomic particles found in the nucleus of an atom, contributing to the atom's mass but not its charge.

Protons

Positively charged particles located in the nucleus of an atom.