单选题

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

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

【正确答案】 C

【答案解析】

Selling government bonds results in a reduction of bank reserves and reduces their ability to lend, causing a decline in money growth through the multiplier mechanism and hence a contraction in the economy.