Question

For the Federal Reserve, what are assets? What are liabilities? The monetary base is an asset and reserves are liabilities. The monetary base is an asset and Treasury bills are liabilities. Reserves are assets and Treasury bills are liabilities. Treasury bills are assets and the monetary base is a liabilitiy.

Answer 1

For the Federal Reserve, Treasury bills are assets and the monetary base is a liability.

Step-by-step explanation:

Treasury bills are also known as T-bills issued by the Federal Reserve Bank. The investors of the T-bills are ensured to get a high rate of interest if they have the bill with a long maturity date. Therefore, it is considered as the assets for a reliable source of vested income for the Federal Reserve Bank and such funds are used for nation-building activities.

The Monetary Base refers to the usage of dollar currencies used by the public for routine activities. So it is referred to as liability of the Federal Bank which is connected with the regular liquid flow of money supply including bank deposits and loans and advances circulating in the whole economy of the US nation.