-The Figure Above Shows the Market for Bank Reserves in Futureland

Multiple Choice

-The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market purchase of government securities that changes the quantity of reserves by $100 billion and the federal funds rate remains within the corridor, then the federal funds rate will

A) rise to 8 percent a year.
B) remain at 6 percent a year.
C) fall to 4 percent a year.
D) None of the above answers is correct.