When the Fed Sells Government Securities, the Banks

When the Fed sells government securities, the banks':

A) reserves will increase and lending will expand, causing an increase in the money supply.
B) reserves will decrease and lending will contract, causing a decrease in the money supply.
C) reserve requirements will increase and lending will contract, causing a decrease in the money supply.
D) reserves/deposit ratio will increase and lending will expand, causing an increase in the money supply.When the Fed sells government securities in the open market, there is less currency in the hands of the banking community, as some money must be used buy these bonds.As a consequence the amount of bank reserves decreases, which contracts bank lending and causes a decrease in the money supply.