单选题

In an effort to influence the economy, a central bank conducted open market activities by selling government bonds. This implies that the central bank is most likely attempting to:

A、 contract the economy by reducing bank reserves.
B、 expand the economy through a lower policy interest rate.
C、 contract the economy through a lower policy interest rate.

【正确答案】 A

【答案解析】

A is correct. Selling government bonds results in a reduction of banks' reserves and reduces banks' ability to lend, causing a decline in money growth through the multiplier mechanism and hence leading to a contraction in the economy.