Assume the Reserve Ratio Is 25 Percent and Federal Reserve

Assume the reserve ratio is 25 percent and Federal Reserve Banks buy $4 million of U.S. securities from the public, which deposits this amount into checking accounts. As a result of these transactions, the supply of money is

A) not directly affected, but the money-creating potential of the commercial banking system is increased by $12 million.
B) directly increased by $4 million and the money-creating potential of the commercial banking system is increased by an additional $16 million.
C) directly reduced by $4 million and the money-creating potential of the commercial banking system is decreased by an additional $12 million.
D) directly increased by $4 million and the money-creating potential of the commercial banking system is increased by an additional $12 million.