Chapter 17, Problem 1Q

To determine

Classification of each of these transactions as an asset, a liability, or neither for each of the "players"in the money supply process-the Federal Reserve, banks, and depositors.

1. You get a $10,000 loan from the bank to buy an automobile
2. You deposit $400 into your checking account at the local bank.
3. The Fed provides an emergency loan to a bank for $1,000,000
4. A bank borrows $500,000 in overnight loans from another bank.
5. You use your debit card to purchase a meal at a restaurant for $100

Concept introduction:

1. Assets: Things that are resources owned by a company and which have future economic values that can be measured and can be expressed in terms of money are called assets.
2. Liabilityis an obligation and it is reported on a company's balance sheet.