After a Banking Crisis, When the Federal Reserve Buys Government

Multiple Choice

After a banking crisis, when the Federal Reserve buys government securities to increase the money supply and decrease interest rates:

A) consumers and businesses may not respond by increasing their spending because of debt overhang.
B) consumers and businesses usually borrow too much and spend too much, causing inflation.
C) banks may fear runs, so they hold on to excess reserves rather than lending them to consumers and businesses.
D) consumers and businesses may not respond because the recession has increased the value of their assets so much that they don't need to borrow money to buy more.