Suppose That the Fed Undertakes an Open Market Sale,selling $1

Multiple Choice

Suppose that the Fed undertakes an open market sale,selling $1 million worth of securities to a bank.If the required reserve ratio is 8%,checkable deposits (or the money supply) ,would _______________ by ________________ million,assuming that there are no cash leakages and that banks hold zero excess reserves.

A) rise; $12.5
B) decline; $8
C) decline; $12.5
D) rise; $8