At this stage, when the bank makes a loan, the money supply rises by more than the amount of the open-market operation.

FORBES: How Has The Fed Evolved?

The monetary expansion following an open-market operation involves adjustments by banks and the public. (To find out more, see Formulating Monetary Policy.) The bank in which the original check from the Fed is deposited now has a reserve ratio that may be too high.

FORBES: How Has The Fed Evolved?