If the Federal Reserve Sells Securities to Depository Institutions, One

Multiple Choice

If the Federal Reserve sells securities to depository institutions, one of the following events is not likely to occur, according to the discussion in your text. Which event is not likely to occur?

A) Total reserves of depository institutions will fall
B) Interest rates will fall
C) Excess reserves will decline, at least temporarily
D) Loans and investments will decrease
E) All of the above are likely to occur following the open-market sales described