If the Fed Increases the Required Reserve Ratio at a Time

Multiple Choice

If the Fed increases the required reserve ratio at a time when banks are holding excess reserves,then:

A) the Fed's aim is to increase the money supply.
B) banks are likely to lend out more money than they would if the Fed left the reserve ratio alone.
C) banks are likely to earn higher profits than they would.
D) the money supply will not increase as much as it would if the Fed left the reserve ratio alone.
E) the Fed's aim is to conduct open market operations without changing the money supply.