the Federal Reserve decided to increase the reserve requirement in banks.what vould their goal most likely be? Increase price levels through expansionary monetary policy Decrease unemployment through expansionary fiscal policy. Increase unemployment through contractionary fiscal policy Decrease price levels through contractionary monetary policy

## Step 1<br />The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It has several tools at its disposal to manage the economy, one of which is the reserve requirement. The reserve requirement is the amount of funds that a bank must hold in reserve against specified deposit liabilities.<br /><br />## Step 2<br />When the Federal Reserve increases the reserve requirement, it means that banks must hold a larger portion of their deposits in reserve and have less money available to lend. This action is a form of contractionary monetary policy.<br /><br />## Step 3<br />The goal of this action is to decrease the money supply in the economy, which can lead to a decrease in inflation or price levels. This is because with less money available to spend, the demand for goods and services decreases, which can lead to lower prices.<br /><br />## Step 4<br />The other options provided, such as increasing price levels through expansionary monetary policy, decreasing unemployment through expansionary fiscal policy, and increasing unemployment through contractionary fiscal policy, are not the goals of increasing the reserve requirement. These options are not directly related to the reserve requirement and are not the typical goals of the Federal Reserve when it increases the reserve requirement.