chapter 17

How did the financial crisis of 2007-2009 affect the size and composition of the balance sheet of the Federal Reserve? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. ? The Fed broadened the range of assets held to include riskier instruments. The assets on the Federal Reserve's balance sheet increased by 2.5 times, mostly in the form of securitles. ?The assets on the Federal Reserve's balance sheet decreased by 2.5 times, mostly in the form of loans. ? On the liability side of the balance sheet, commercial bank deposits declined dramatically.. ? The Fed narrowed the range of assets held to include safer instruments. ? On the liability side of the balance sheet, commercial bank deposits rose dramatically The US. Treasury maintains accounts at commercial banks, What would be the consequences for the money supply if the Treasury shifted funds from one of those banks to the Fed? Instructions: In order to receive full credit, you must make a selection for each option, For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box ?The rise in bank reserves would increase in the quantity of money. The balance sheet for the bank would reflect an increase in reserves and an increase in deposits. The balance sheet for the bank would reflect a decrease in reserves and a decrease in deposits would be offset by an increase in the government's account. The decrease in reserves would also appear on the Fed's balance sheet, but 7The decline in bank reserves would decrease the quantity of money The increase in reserves would also appear on the Fed's balance sheet, but would be offset by a decrease in the government's account