Suppose the Fed Buys $100,000 of U

Multiple Choice

Suppose the Fed buys $100,000 of U.S. Treasury bonds from Bill Gates. If the reserve requirement is 10 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be

A) an increase by $100,000.
B) an increase by $1,000,000.
C) a decrease by $100,000.
D) a decrease by $1,000,000.