In an opinion column in the Washington Post written during the Covid-19 pandemic, former Federal Reserve...
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In an opinion column in the Washington Post written during the Covid-19 pandemic, former Federal Reserve Bank of New York President Bill Dudley noted, "The Federal Reserve's balance sheet is exploding...The amount of reserves and bank deposits will have increased sharply. The ability to pay interest on reserves allows the Fed to have a balance sheet as large as it desires, without necessarily leading to an uncontrolled expansion of bank credit." Source: Bill Dudley, "A $10 Trillion Fed Balance Sheet Is Coming," Washington Post, June 22, 2020. a. What does Dudley mean when he refers to the Federal Reserve's balance sheet? A. The financial statement that lists the various Fed interest rates it charges on bank loans. B. The financial statement that lists all of the US government's bond and asset holdings. OC. The financial statement that lists all the assets and liabilities of the Fed. D. The financial statement that lists the Fed's loans to banks and private citizens. b. Why would the Fed increasing its balance sheet lead to an increase in bank reserves? O A. The Fed sells Treasury bills to increase its balance sheet; this increases the reserves banks hold. B. By increasing the interest rate on bank reserves, the Fed encourages banks to lend more to its customers, increasing their reserves and the Fed's balance sheet. C. The Fed buys Treasury bills to increase its balance sheet; this increases the reserves banks hold. D. By decreasing the interest rate on bank reserves, the Fed encourages banks to keep more in reserve at the Fed, increasing the Fed's balance sheet. c. What does Dudley mean by "bank credit"? A. Banks holding deposits from its customers. B. Interest paid by banks on their borrowing from the Fed when meeting their reserve requirement. C. Banks extending loans to consumers and businesses. D. The amount of money the Fed loans to individual banks to meet their reserve requirements. In an opinion column in the Washington Post written during the Covid-19 pandemic, former Federal Reserve Bank of New York President Bill Dudley noted, "The Federal Reserve's balance sheet is exploding...The amount of reserves and bank deposits will have increased sharply. The ability to pay interest on reserves allows the Fed to have a balance sheet as large as it desires, without necessarily leading to an uncontrolled expansion of bank credit." Source: Bill Dudley, "A $10 Trillion Fed Balance Sheet Is Coming," Washington Post, June 22, 2020. a. What does Dudley mean when he refers to the Federal Reserve's balance sheet? A. The financial statement that lists the various Fed interest rates it charges on bank loans. B. The financial statement that lists all of the US government's bond and asset holdings. OC. The financial statement that lists all the assets and liabilities of the Fed. D. The financial statement that lists the Fed's loans to banks and private citizens. b. Why would the Fed increasing its balance sheet lead to an increase in bank reserves? O A. The Fed sells Treasury bills to increase its balance sheet; this increases the reserves banks hold. B. By increasing the interest rate on bank reserves, the Fed encourages banks to lend more to its customers, increasing their reserves and the Fed's balance sheet. C. The Fed buys Treasury bills to increase its balance sheet; this increases the reserves banks hold. D. By decreasing the interest rate on bank reserves, the Fed encourages banks to keep more in reserve at the Fed, increasing the Fed's balance sheet. c. What does Dudley mean by "bank credit"? A. Banks holding deposits from its customers. B. Interest paid by banks on their borrowing from the Fed when meeting their reserve requirement. C. Banks extending loans to consumers and businesses. D. The amount of money the Fed loans to individual banks to meet their reserve requirements.
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