4. (Mishkin 17.1) Classify each of these transactions as an asset, a liability,

Question

4. (Mishkin 17.1) Classify each of these transactions as an asset, a liability, or neither for each of the "players" in the money supply processthe federal reserve, banks, and depositors a. b. c. d. e. You get a $10,000 loan from the bank to buy an automobile. You deposit $400 into your checking account at the local bank. The Fed provides an emergency loan to a bank for $1,000,000. A bank borrows $500,000 in overnight loans from another bank. You use your debit card to purchase a meal at a restaurant for $100.

Explanation / Answer

A) a $10,000 loan is an neither for federal reserve and assets for banks but it is a liability for depositors

b) Deposit of $400 in to checking account , is a liability for banks and assets for depositors and neither for federal reserves.

C) Fed provides an emergency loan to a bank .- is an asset for Federal reserves and a liability for a bank and neither for a depositors.

D) A bank borrow $5,000,000 in overnight loans form another bank, - it is a laiabilty for a bank who borrow and assets for bank who gives $5,000,000 . and neither for federal reserves and depositor.

E) neither for federal reserves and assets for depositor and a liability for a bank.

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