Which Statement Best Reflects the Fed's Approach to Expansionary Monetary

Multiple Choice

Which statement best reflects the Fed's approach to expansionary monetary policy before the mortgage debt crisis?

A) The Fed would announce a lower target for the federal funds rate, then increase the supply of reserves through a balanced combination of the monetary policy tools.
B) The Fed would quietly begin using open-market operations to increase the supply of reserves, with secrecy critical to not alarming securities markets.
C) The Fed would announce a lower target for the federal funds rate, then rely primarily on open-market operations to increase the supply of reserves.
D) The Fed would itself lower the federal funds rate and then use a varied combination of monetary policy tools to increase the supply of reserves.