The Fed Has Opted to Buy Securities and Lower the Reserve

Multiple Choice

The Fed has opted to buy securities and lower the reserve requirement. What will most likely happen as a result of this course of action?

A) The money supply will increase thereby stimulating the economy.
B) The money supply will increase thereby reducing inflation.
C) The money supply will increase thereby causing disinflation.
D) The money supply will decrease thereby reducing the possibility of a recession.
E) The money supply will decrease thereby reducing deflation.