Which of the following will NOT happen when the Federal Reserve buys bonds from the public in the open market and cash in the hands of the public does not change?

A) The required reserve ratio will increase.
B) The money supply will increase.
C) The deposits of commercial banks will increase.
D) Commercial bank reserves will increase.

Open Market

A marketplace with few restrictions on entry or trade, allowing goods and services to be bought and sold freely.

Bonds

Fixed-income investments representing a loan made by an investor to a borrower, often used by companies or governments to finance projects or operations.

Reserve Ratio

The fraction of deposits that a bank holds as reserves, either in its own vaults or at the central bank, affecting the bank's capacity to issue new loans.