Assuming the Federal Reserve makes an open-market purchase of a government security worth $10,000.By writing a check to pay for this security,the Federal Reserve

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When the Federal Reserve makes an open-market purchase of a government security and pays for it by writing a check, it does not reduce its assets or liabilities by $10,000. Instead, it swaps one asset (the government security) for another (the central bank reserves credited to the bank's account). This action creates a new $10,000 liability for the Federal Reserve, as the bank's reserves at the Fed increase by $10,000, which the bank can use or lend out.

Assuming the Federal Reserve Makes an Open-Market Purchase of a Government