If the Fed Sells U

Multiple Choice

If the Fed sells U.S.government securities to drain reserves from banks,which of the following is most likely to occur?

A) The demand for money will increase and the interest rate will rise.
B) The money supply will increase and the interest rate will fall.
C) The interest rate will rise and the quantity of money demanded will fall.
D) The money supply will decrease and the interest rate will fall.
E) The interest rate will fall and the quantity of money demanded will increase.