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Scenario: The following table shows the initial balance sheets of BankAand the Fed. Suppose that the Fed then buys $10 million in bonds from Bank
Scenario: The following table shows the initial balance sheets of BankAand the Fed. Suppose that the Fed then buys $10 million in bonds from Bank A. Bank A Assets Liabilities Bonds 8 100 million Deposits $90 million Reserves $20 million Shareholders' equity $30 million Total assets S l 20 million Total Liabilities til 20 million The Fed Assets Liabilities Treasury bonds $400 million Reserves 3 500 million Other bonds $400 million Currency 5 300 million Total assets $800 million Total Liabilities $800 million After this transaction, the Fed's Treasury bonds equal 0 A. $400 0 B. $390 0 c. $380 0 D. $410
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