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.

-Refer to the scenario above.After this transaction,Bank A's total assets equal ________.
A) $110 million
B) $120 million
C) $130 million
D) $140 million

Question

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.
 
-Refer to the scenario above.After this transaction,Bank A's total assets equal ________.
A) $110 million 
B) $120 million 
C) $130 million 
D) $140 million

Quizplus · Accepted Answer

When a bank lends $10 million, it creates a loan asset of $10 million. If Bank A's total assets were $110 million before the transaction, adding the $10 million loan to its assets increases the total to $120 million.

Scenario: the Following Table Shows the Initial Balance Sheets of Bank