If the Fed Makes a Discount Loan of $2 Million

question 89

Multiple Choice

If the Fed makes a discount loan of $2 million to a commercial bank, the Fed's balance sheet will show

• A)an increase in discount loans of $2 million and an increase in bank reserves of $2 million.
• B)an increase in discount loans of $2 million and a decrease in bank reserves of $2 million.
• C)a decrease in discount loans of $2 million and an increase in bank reserves of $2 million.
• D)a decrease in discount loans of $2 million and a decrease in bank reserves of $2 million.