When the Fed Buys a U

Multiple Choice

When the Fed buys a U.S. bond in the open market

A) its action has no effect on the total reserves or the money supply because the check it writes increases reserves at one bank but they fall at another.
B) total reserves increase by the amount of the purchase but the money supply stays the same.
C) its action expands total reserves and the money supply.
D) its action contracts total reserves and the money supply.