If Commercial Banks Increase Their Borrowing from the Fed at a Time

Multiple Choice

If commercial banks increase their borrowing from the Fed at a time when the Fed is selling government securities, the borrowing of the commercial banks from the Fed will tend to:

A) reinforce the Fed's contractionary policy.
B) increase the unemployment rate in the country.
C) counteract the Fed's contractionary policy.
D) counteract the Fed's expansionary policy.
E) increase the credibility of the Fed.