Suppose the Fed Purchases $5,000 in U

question 138

Multiple Choice

Suppose the Fed purchases $5,000 in U.S.government securities from the Last National Bank and the Last National Bank's account at the Federal Reserve district bank increases by $5,000.Which of the following results from this transaction?

• A)The Last National Bank's balance sheet shows a change in the composition of its assets.
• B)Both the Last National Bank's assets and its liabilities rise by $5,000.
• C)Both the Fed's assets and its liabilities fall by $5,000.
• D)Only the Fed's liabilities change; its assets are unchanged.
• E)This transaction decreases the money supply.

---

Definitions:

Fault

A defect or imperfection, either in a physical system or in a line of reasoning.

Fear

An emotional response to perceived threats or danger, often causing physiological and behavioral changes.

De-emphasize

To reduce the significance or importance of something in comparison to other factors or elements.

Negative Information

Unfavorable facts or feedback that needs to be communicated, often requiring careful handling to mitigate its impact.