Question

On the Fed's Balance Sheet, _______ would be an asset.

		government securities
		stock issued by the Fed
		currency in circulation
		bonds issued by the president

Answer 1

The Fed's Assets - Anything, for which the Fed has to pay money, becomes the Fed's asset.

• The Fed's assets have mainly consisted of government securities and loans extended to member banks through the repo and discount window.
• When the Fed buys government securities or extends loans through its discount window, it simply pays by crediting the reserve account of the member banks through a book entry. In case member banks wish to convert their reserve balances into hard cash, the Fed provides them dollar bills.

Therefore on the Fed's Balance Sheet, government securities would be an asset.