Suppose the Central Bank Sells Government Securities to Banks

Multiple Choice

Suppose the Central Bank sells Government securities to banks. What effect would that have on interest rates and inflation?

A) Prices and interest rates would both rise.
B) Prices would rise and interest rates would decline.
C) Prices and interest rates would both decline.
D) There would be no changes in either prices or interest rates.
E) Prices would decline and interest rates would rise.