Ans 1) Option B
The People's bank of china buys securities as it needs to expand the money supply in the economy which is referred to as expansionary monetary policy.
In order to increase the money supply, the government of a country purchases the bonds and securities and gives money to banks in return.
Ans 2) When the bank of China buys securities worth 20 billion yuan, the value gets added as the securities on the asset side of the balance sheet.The same amount (20 billion yuan) gets included on the liabilities side as the reserves because the ICBC being a commercial bank would keep its reserves with central bank of china.
Balance sheet of People's bank of china
Assets Amt. Liabilities Amt
Securities 20 Reserves of ICBC 20
Similarly, as ICBC bank sells securities, its securities get reduced by the amount of 20 billion yuan and reserves increase by the same amount.
Balance sheet of ICBC
Assets Amt Liabilities Amt
Securities - 20
Reserves 20
China conducts open market operations The People's Bank of China buys 20 billion yuan of government...
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Question 1 3 pts The Federal Open Market Committee (FOMC), buys and sells securities on a market. O primary O product O factor O secondary Next Not saved Submit Quiz D Question 2 3 pts Which of the following terms is used to describe the proportion of deposits that banks are legally required to deposit with the central bank? Time Attemp 59 Mi O discount requirements O reserve requirements O monetary requirements O deposit requirements Next Previous Not saved Submit...
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