If the Fed Were to Reduce the Legal Reserve Ratio

Multiple Choice

If the Fed were to reduce the legal reserve ratio, we would expect

A) lower interest rates, an expanded GDP, and a higher rate of inflation.
B) lower interest rates, an expanded GDP, and a lower rate of inflation.
C) higher interest rates, a contracted GDP, and a higher rate of inflation.
D) higher interest rates, a contracted GDP, and a lower rate of inflation.