With the Economy in Long-Run Equilibrium, If the Fed Moves

Multiple Choice

With the economy in long-run equilibrium, if the Fed moves unexpectedly to raise aggregate demand by increasing the reserves of depository institutions through substantial open market purchases, what happens in the short-run?

A) Interest rates will fall.
B) Inventories will decline unexpectedly.
C) There will be upward pressure on output prices.
D) All of the above are correct.