What action by the Federal Reserve would lead to a decrease in the money supply?

Selling securities in the open market is a key tool used by the Federal Reserve to influence the money supply. When the Fed sells securities, it effectively takes money out of circulation because buyers pay for these securities, which reduces the amount of money that banks and the public have available. The transaction decreases reserves in the banking system, leading to a contraction in the overall money supply.

This action is part of the Fed's open market operations and is typically employed in an effort to curb inflation or cool off an overheating economy. By reducing the money supply, the Fed aims to manage economic growth and stabilize prices. Therefore, selling securities in the open market directly leads to a decrease in the money supply, making it the correct action in this context.