Question

QUESTION 1

On July 30^th 2009, The Federal Reserve through the Federal Reserve Bank of New York purchased $6.496 billion of Treasury Securities. This open market purchase of securities will:

		Shrink the money supply
		Increase bank reserves in the Federal Reserve system
		Increase the debt of the U.S.government
		Increase interest rates to small businesses

QUESTION 42

Reserves are equal to the sum of

		vault cash reserves and total reserves.
		required reserves and vault cash reserves.
		required reserves and excess reserves.
		excess reserves and vault cash reserves.

QUESTION 3

Reserves that Bank XYZ holds at a Federal Reserve Bank would be an asset of Bank XYZ.

True

False

QUESTION 4

The Federal Reserve of the United States has done which of the following to its balance sheet in response to the financial crisis of 2007-2009:

		Created inflation
		Made loans to the U.S. Treasury
		Decreased bank reserves by selling treasury securities.
		Increased its assets and its liabilities

Answer 1

On July 30^th 2009, The Federal Reserve through the Federal Reserve Bank of New York purchased $6.496 billion of Treasury Securities. This open market purchase of securities will Increase bank reserves in the Federal Reserve system as the federal reserves bank will now have securities worth $6.496 billion

Reserves are equal to the sum of required reserves and excess reserves the total reserves that a bank has consists of required and total reserves.

Reserves that Bank XYZ holds at a Federal Reserve Bank would be an asset of Bank XYZ = True as the bank now holds reserves with the Federal reserve bank and any kind of reserves are an asset for a bank.

.The Federal Reserve of the United States has done which of the following to its balance sheet in response to the financial crisis of 2007-2009 Increased its assets and its liabilities, it had to create more assets and increase its assets side of the balance sheet to deal with the crises