#543 Suppose the Federal Reserve instructs the Trading Desk to purchase

Suppose the Federal Reserve instructs the Trading Desk to purchase - Accounting

ChemistryExplain daily providing Q&A content “#543 Suppose the Federal Reserve instructs the Trading Desk to purchase" in Economics, 10 principles of economics, Accounting vs economic profit, Aggregate economics, American institute for economic research, Bachelor of economics

Get the Free Online Chemistry Q&A Questions And Answers with explain. To crack any examinations and Interview tests these Chemistry Questions And Answers are very useful. Here we have uploaded the Free Online Chemistry Questions. Here we are also given the all chemistry topic.

 ChemistryExplain team has covered all Topics related to inorganic, organic, physical chemistry, and others So, Prepare these Chemistry Questions and Answers with Explanation Pdf.

For More Chegg Questions

• Inorganic Chemistry
• Organic Chemistry
• Physical Chemistry

Join Our Telegram Channel for Covers All Update by ChemistryExplain:- Click Now

Free Chegg Question

Suppose the Federal Reserve instructs the Trading Desk to purchase $1 billion of securities. Show the result of this transaction on the balance sheets of the Federal Reserve System and commercial banks.

Free Chegg AnswerFor More Chemistry Notes and Helpful Content Subscribe Our YouTube Chanel - Chemistry Explain  

Free Chegg Answer

1. Step 1 of 5

   Purchase of securities by the federal bank

   To purchase any securities the trade dealers at the desk firstly call to government securities dealers of major commercial and investment banks. The govt. securities dealers provide the list of securities they want to sell.

   This list also shows the maturity, denomination, and prices of securities. The FRNBY traders purchase securities at the lowest prices. They will notify the government bond agencies for the payment to selling dealers for the securities.

2. Step 2 of 5

   Show the effect on the balance sheet, if Federal Reserve Bank purchases $1 billion of securities as below.

   

3. Step 3 of 5

   The result of the above is as follows:

   

   The above balance sheet is showing the assets and liabilities of the Federal Reserve System after buying $1 billion of securities from commercial banks. Now Fed has $1 billion of assets and $1 billion of liabilities.

4. Step 4 of 5

   The balance sheet of the commercial bank is prepared as follows:

   

5. Step 5 of 5

   The result of the above is as follows:

   

   The above balance sheet is showing the assets and liabilities of commercial banks after selling $1 billion of securities to Federal Reserve Bank. Now commercial banks have an equal balance of $10 billion.