If the Fed Buys $2 Billion of Short-Term Securities Issued

question 48

Multiple Choice

If the Fed buys $2 billion of short-term securities issued by the government of Japan and pays for them by writing a check for $2 billion

• A) its assets will rise by $2 billion and its liabilities will fall by $2 billion.
• B) its assets will fall by $2 billion and its liabilities will rise by $2 billion.
• C) its assets and liabilities will both fall by $2 billion.
• D) its assets and liabilities will both rise by $2 billion.