When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement.

Name: When the Federal Reserve acts to reduce inflation, they decrease the reserve requirement.
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Question

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The Federal Reserve typically increases the reserve requirement when they want to curb inflation, not decrease it. This policy requires banks to hold more money in reserves, which decreases the amount of money available for lending and spending, slowing down economic growth and reducing inflationary pressures.

When the Federal Reserve Acts to Reduce Inflation, They Decrease