Scenario: Assets and Liabilities of the Banking System Assets Liabilities Loans $900,000 Deposits $1,000,000 Reserves 100,000 Suppose that the reserve ratio is 10% and the Federal Reserve sells $11,000 worth of U.S. Treasury bills to the banking system. If the banking system does NOT have any excess reserves, will be the money supply. A. $110,000; added to B. $110,000; subtracted from C. $250,000; subtracted from O D. $250,000; added toInterest rate, r M H Equilibrium Equilibrium E interest -rE rate - M MH M ML Quantity of money Refer to Figure: Money Market I. If the money market is initially in equilibrium at point E and the central bank sells Treasury bills, then the interest rate will: A. move toward rH. O B. move toward rL O C. remain at rE. O D. shift rightward