9. The major asset of the Federal Reserve is A. loans to domestic banks B. depos

Question

9. The major asset of the Federal Reserve is A. loans to domestic banks B. depository institution reserves. C. US. Treasury Securities D. vault cash of commercial banks. E. gold and foreign exchange. 2 10. Durine the curent time when there isa lurge umount of excessreserves in the banking system, how A open market purchases B. open market sales C. mise the discount rate D. raise the interest rate paid on reserves E. increase the reserve requirement ratio Problem solving/short answer (Show all work to receive credit) 11. Suppose a country is facing an economic crisis and is likely to default on its obligations. How will the supply of loanable funds be affected by the crisis? What effect will the crisis likely have on interest rates if you only consider the effect of the loanable funds supply curve (Gignore any shift in demand curve)

Explanation / Answer

The major asset of the Federal Reserve is U.S. Treasury securities The major asset of the Federal Reserve is U.S. Treasury securities and the major liabilities are Federal Reserve notes (U.S. paper currency) and the deposits that thousands of depository institutions. During the current time when there large amount of excess reserves in the banking system how feb will choose to increase fed fund rate Raise the interest rate paid on reserves It will raise the interest rate it pays on required and excess reserves. It will raise the interest rate on reverse repos

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