Suppose the money supply is currently $500 billion and the Fed wishes to increases it by $100 billion. Given a required reserve ration of 0.25, what should it do? If it decided to change the money...

Suppose the money supply is currently $500 billion and the Fed wishes to increases it by $100 billion.

1. Given a required reserve ration of 0.25, what should it do?


2. If it decided to change the money supply by changing the required reserve ratio, what change should it make? Why may the Fed be reluctant to change the reserve requirement?