Suppose the Fed decided to purchase $50 billion worth of government securities in the open market. What impact would this action have on the economy? Specifically, answer the following questions:

(a) How will M1 be affected initially?

Increase by $50 billion
Decrease by $50 billion
No initial change to M1
Not enough information to answer

(b) By how much will the banking systemâ€^TMs lending capacity increase if the reserve requirement is 25 percent?

Looks easy, but the response I gave was 37.5b (50b x .75), but the answer was incorect Please direct me