When the Central Bank of Nigeria sells government securities in the open market, the immediate effect on the economy is that

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commercial banks' reserves decrease, leading to credit contraction. When the Central Bank sells government securities, buyers (commercial banks and the public) pay for them, which reduces the reserves held by commercial banks. With lower reserves, commercial banks have less capacity to extend credit, leading to a contraction in the money supply. This is a contractio

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A) commercial banks' reserves increase, leading to credit expansion

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B) commercial banks' reserves decrease, leading to credit contraction

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C) the money supply increases, stimulating economic activity

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D) interest rates fall, encouraging borrowing by households

When the Central Bank of Nigeria sells government securities in the open market, the immediate effect on the economy is that

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