Question

Federal Reserve Notes in circulation are

a.an asset as viewed by the Federal Reserve Banks
b.a liability as viewed by the Federal Reserve Banks
c.neither an asset nor a liability as viewed by the Federal Reserve Banks
d.part of M1 but not of M2

Answer 1

Federal Reserve Notes in circulation are a liability as viewed by the Federal Reserve Banks.

Step-by-step explanation:

Federal Reserve Notes in circulation are a liability as viewed by the Federal Reserve Banks. When the Federal Reserve Banks issue currency, it becomes a liability on their balance sheet because they owe the currency to the public. This means that the Federal Reserve Notes are an obligation for the Federal Reserve Banks to exchange them for other forms of money when demanded by the public.