A non-bank private agent sells a £1000 bond in an open market purchase by the Central Bank. If the proceeds are held in ________, the open market transaction has no effect on reserves; if the proceeds are held as ________, reserves increase by £1000. A) a box in the house; deposits B) deposits; savings account C) deposits; currency D) a box in the house; currency Support your answer using T-account examples.

A non-bank private agent sells a £1000 bond in an open market purchase by the Central Bank. If the proceeds are held in , the open market transaction has no effect on reserves; if the proceeds are held as , reserves increase by £1000. A) a box in the house; deposits B) deposits; savings account C) deposits; currency D) a box in the house; currency Support your answer using T-account examples.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 12RQ: When a business borrows money from a bank on a non-interest-bearing note, how are the bank discount...

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