Suppose that the required reserves ratio is 5%. Assume that all loans are deposited in checking accounts. If the Fed sells $1000 of US bonds to a commercial bank, we expect:
A. The money supply to fall by $1000.
B. The money supply to fall by $20,000.
C. The money supply to increase by $1000.
D. The money supply to increase by $20,000.
E. The money supply to be unchanged.