Chapter 17 The Central Bank Balance Sheet and the Money Supply Process102.If the Fed sells euros valued at $100 million to commercial banks, will this change the size of the Fed's liabilities and assets? Explain.
LOD: 2 Page: 434 A-Head: Changing the Size and the Composition of the Balance Sheet.103.The Treasury usually requires most businesses to regularly deposit taxes withheld from employees into accounts at designated commercial banks. On a regular basis, the funds in these accounts are transferred to the Treasury's account at the Fed. Discuss what is happening to the balance sheet of the banking system as the businesses are making deposits and these tax accounts are increasing. What happens to the Banking system's balance sheet when the funds are transferred to the Fed?