1. Federal Reserve's Balance Sheet: Go to www.federalreserve.gov/releases/h41/current/h41.pdf to see a recent balance sheet statement for the Federal Reserve System.

(a)Discuss the various components of the balance sheet, linking the bal- ance sheet to the various facilities discussed in the previous question. In a paragraph, discuss the moral hazard problems that may arise and discuss the problems with the quality of the collateral. What kind of risk is the Federal Reserve potentially taking on?

(b)What are the repurchase agreements on the asset side?

(c)What is Maiden Lane LLC? You will need to look at table 2.

(d)On the liabilities side, what are reverse repurchase agreements?

(e)What fraction of total assets is currency in circulation?

(f)What fraction of total assets is reserves?

(g)Look at the H.4.1 for December 2006 and December 2011. Discuss the differences among the balance sheets for December 2016, 2011 and January 2019.

(h)The Federal Reserve has been pursuing a policy of quantitative eas- ing. Describe the impact of quantitative easing on the Federal Re- serve's balance sheet.