... multiplier, and decreases the money supply. Conversely, adecrease in reserve requirements lowers the reserve ratio, raises the money multi-plier, and increases the money supply.The Fed uses changes ... in-creases the money supply to an even greater extent because it increases reservesand, thereby, the amount of money that the banking system can create.To reduce the money supply, the Fed does ... reserve requirements only rarely because frequentchanges would disrupt the business of banking. When the Fed increases reserverequirements, for instance, some banks find themselves short of...