The correct answer is Erythropoietin (EPO). This is a hormone produced by the kidneys that stimulates the formation of red blood cells in the bone marrow. The kidney cells that produce EPO are specialized and are sensitive to low oxygen levels in the blood coming into the kidney. These cells release EPO when the oxygen level is low in the kidney. EPO stimulates the bone marrow to produce more red blood cells which in turn increases the oxygen - carrying capacity of blood