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Suppose the Fed Purchases $1,000 in U

Question 86
Multiple Choice
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Multiple Choice

Suppose the Fed purchases $1,000 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 $1,000. Which of the following is a result of this transaction?

A) The Last National Bank's balance sheet will show a change in the composition of its assets.
B) Both the Last National Bank's assets and its liabilities will rise by $1,000.
C) Both the Fed's assets and its liabilities will fall by $1,000.
D) Only the Fed's liabilities will change, while its assets will remain unchanged.
E) This transaction will decrease the money supply.

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