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When a commercial bank deposits funds with the Federal Reserve the deposit becomes an __________ for the Fed through an increase in cash, but the funds are also a Liability for the Fed to the commercial bank that made the deposit..

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jepessoa

Answer:

asset

Explanation:

This applies to any client that deposits money in a bank, or a savings and loan association, etc.

For example, I deposit $100 in my savings account. The bank's total cash reserves increase by $100 (this is an asset for the bank), but the bank also owes me $100 (this is a liability for the bank).

You can change the individual for a commercial bank, the bank for the Fed, and the $100 for $100 million, but the concept remains.

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