Under Which of the Following Circumstances Would the Federal Reserve

Multiple Choice

Under which of the following circumstances would the Federal Reserve System want to decrease the money supply by increasing the reserve requirement?

A) The economy is experiencing severe inflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing.
B) The economy is experiencing severe inflation, yet market activity has been extremely high and erratic.
C) The economy is experiencing severe deflation, and market activity is very low, yet the financial institutions have a great deal of M-1 resources at their disposal that they are not investing.
D) The economy is experiencing severe deflation, yet market activity has been extremely high and erratic.
E) The economy is experiencing severe deflation, market activity is very low, and most financial institutions are low on M-1 resources.