The Fed has been reluctant to change the reserve requirement frequently because doing this can contribute to economic instability.

Question

Quizplus · Accepted Answer

Changing the reserve requirement frequently can lead to uncertainty in the banking system and potentially disrupt the flow of credit to consumers and businesses, causing economic instability. Therefore, the Fed typically only adjusts the reserve requirement as a last resort or in response to significant changes in financial conditions.

The Fed Has Been Reluctant to Change the Reserve Requirement