Question 42 Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that the Fed then buys $10 million in bonds from Bank A. Bank A Assets Bonds Reserves Total assets The Fed Assets Treasury bonds Other bonds Total assets $100 million $20 million $120 million $400 million $400 million $800 million Liabilities Deposits Shareholders' equity Total Liabilities Liabilities Reserves Currency Total Liabilities $90 million $30 million $120 million increase by $10 million; remain unchanged increase by $10 million; decrease by $10 million remain unchanged; decrease by $10 million. O remain unchanged; remain unchanged $ 500 million $ 300 million $800 million Refer to the scenario above. After this transaction, Bank A's assets. and liabilities.
Question 42 Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that the Fed then buys $10 million in bonds from Bank A. Bank A Assets Bonds Reserves Total assets The Fed Assets Treasury bonds Other bonds Total assets $100 million $20 million $120 million $400 million $400 million $800 million Liabilities Deposits Shareholders' equity Total Liabilities Liabilities Reserves Currency Total Liabilities $90 million $30 million $120 million increase by $10 million; remain unchanged increase by $10 million; decrease by $10 million remain unchanged; decrease by $10 million. O remain unchanged; remain unchanged $ 500 million $ 300 million $800 million Refer to the scenario above. After this transaction, Bank A's assets. and liabilities.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Question 42
Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that
the Fed then buys $10 million in bonds from Bank A.
Bank A
Assets
Bonds
Reserves
Total assets
The Fed
Assets
Treasury bonds
Other bonds
Total assets
$100 million
$20 million
$120 million
$400 million
$400 million
$800 million
Liabilities
Deposits
Shareholders' equity
Total Liabilities
Liabilities
Reserves
Currency
Total Liabilities
$90 million.
$30 million
$120 million
increase by $10 million; remain unchanged
increase by $10 million; decrease by $10 million
remain unchanged; decrease by $10 million
remain unchanged; remain unchanged
$
500 million
$ 300 million
$800 million
Refer to the scenario above. After this transaction, Bank A's assets.
and liabilities](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F64b2042a-5fb2-4689-b1d6-311c77703d80%2F7983f5c9-d3e7-4b48-bf2b-39a167862158%2Fly5gn3l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 42
Scenario: The following table shows the initial balance sheets of Bank A and the Fed. Suppose that
the Fed then buys $10 million in bonds from Bank A.
Bank A
Assets
Bonds
Reserves
Total assets
The Fed
Assets
Treasury bonds
Other bonds
Total assets
$100 million
$20 million
$120 million
$400 million
$400 million
$800 million
Liabilities
Deposits
Shareholders' equity
Total Liabilities
Liabilities
Reserves
Currency
Total Liabilities
$90 million.
$30 million
$120 million
increase by $10 million; remain unchanged
increase by $10 million; decrease by $10 million
remain unchanged; decrease by $10 million
remain unchanged; remain unchanged
$
500 million
$ 300 million
$800 million
Refer to the scenario above. After this transaction, Bank A's assets.
and liabilities
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