In response to problems in financial markets and a slowing​ economy, the Federal Open Market Committee​ (FOMC) began lowering its target for the federal funds rate from 5.25 percent in September 2007. Over the next​ year, the FOMC cut its federal funds rate target in a series of steps. Writing in the New York Times​, economist Steven Levitt​ observed, ​"The Fed has been pouring more money into the banking system by cutting the target federal funds rate to 0 to 0.25 percent in December​ 2008."
​Source: Steven D.​ Levitt, "The Financial Meltdown Now and​ Then," New York Times​, May​ 12, 2009.
What is the relationship between the federal funds rate falling and the money supply​ increasing? A) Cutting the federal funds rate increases bank​ reserves, which increases the money supply.
B) Cutting the federal funds rate increases​ saving, which increases the money supply.
C) To decrease the federal funds​ rate, the Fed must increase the money supply. D) Cutting the federal funds rate increases the money supply.