Asked by Colleen Tercek on May 01, 2024
Verified
Most of the Fed's liabilities are in the form of:
A) Federal Reserve notes.
B) checkable deposits.
C) U.S.Treasury deposits.
D) loans to member banks.
E) certificates of deposit.
Fed's Liabilities
The financial obligations of the Federal Reserve, including currency in circulation and the deposits of commercial banks held at the Fed.
Federal Reserve Notes
Federal Reserve Notes are the banknotes issued by the United States Federal Reserve System, serving as the primary form of paper currency in the U.S., backed by the trust in the government rather than physical commodities.
Checkable Deposits
Deposits in financial institutions that can be withdrawn by writing a check or using a debit card.
- Identify the primary assets and liabilities of the Federal Reserve and their significance in monetary policy implementation.
Verified Answer
KL
Kevin LeonardMay 03, 2024
Final Answer :
A
Explanation :
Federal Reserve notes, also known as currency, make up the majority of the Fed's liabilities. This is because the Fed is responsible for regulating the money supply and controlling inflation, and currency is one of the main ways that people conduct transactions and hold wealth. Checkable deposits and U.S. Treasury deposits are also part of the Fed's liabilities, but they are much smaller in terms of total value compared to Federal Reserve notes. Loans to member banks and certificates of deposit are assets for the Fed, not liabilities.
Learning Objectives
- Identify the primary assets and liabilities of the Federal Reserve and their significance in monetary policy implementation.