Suppose the reserve requirement is 10%. a. If the Federal Reserve decreases the reserve requirement, banks can lend out: multiple choice 1 more reserves, thus decreasing the money multiplier and decreasing the money supply. fewer reserves, thus increasing the money multiplier and increasing the money supply. more reserves, thus increasing the money multiplier and increasing the money supply. fewer reserves, thus decreasing the money multiplier and decreasing the money supply. b. The Federal Reserve: multiple choice 2 rarely changes the reserve requirement and does not use the reserve requirement as a major monetary policy tool. does not have the ability to change the reserve requirement since banks determine the amount of reserves to lend. changes the reserve requirement frequently in order to make adjustments to the money supply. needs permission from the president before making changes to the reserve requirement.