When an individual withdraws funds from a checking account the:

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When an individual withdraws funds from a checking account, the bank's balance sheet shrinks because the bank's liabilities decrease. However, the size of the Fed's balance sheet is not affected because the reserves held by the bank, which are the Fed's liabilities, decrease to offset the decrease in the bank's liabilities. Therefore, the size of the Fed's balance sheet remains the same.

When an Individual Withdraws Funds from a Checking Account The