During 2001-2004, the Fed Injected Additional Reserves into the Banking

Multiple Choice

During 2001-2004, the Fed injected additional reserves into the banking system, which reduced the federal funds rate and other short-term interest rates. Other things constant, what is the most likely short-run impact of this policy?

A) an increase in the rate of unemployment
B) a reduction in the growth of employment
C) an increase in aggregate demand and real GDP
D) a reduction in the long-run rate of inflation