Suppose That Banks Decide to Hold Fewer Excess Reserves Relative

Multiple Choice

Suppose that banks decide to hold fewer excess reserves relative to deposits.Other things the same,this action will cause the

A) money supply to fall.To reduce the impact of this the Fed could sell Treasury bonds.
B) money supply to fall.To reduce the impact of this the Fed could buy Treasury bonds.
C) money supply to rise.To reduce the impact of this the Fed could sell Treasury bonds.
D) money supply to rise.To reduce the impact of this the Fed could buy Treasury bonds.