The Fed’s Balance Sheet. In pursuing its policies of quantitative easing, the Fed increased the size of its balance sheet through purchases of assets. Since balance sheets have to “balance,” where was...

The Fed’s Balance Sheet. In pursuing its policies of quantitative easing, the Fed increased the size of its balance sheet through purchases of assets. Since balance sheets have to “balance,” where was the Fed’s increase in liabilities? (Related to Application 1 on page 322.)