Table 29-1 Effects of an Open-Market Transaction on the Balance Sheets of Sheets

Multiple Choice

Table 29-1
Effects of an open-market transaction on the balance sheets of banks and the fed (in millions of dollars) ​
-Assume the required reserve ratio is 20 percent and the FOMC orders an open-market purchase of $100 million in government securities from member banks.If the oversimplified money multiplier is assumed, then the money supply will

A) increase by $500 million.
B) increase by $100 million.
C) decrease by $100 million.
D) decrease by $500 million.