Why does the fed rarely increase reserve requirements?

A) It is not an effective way to manipulate the money supply

B) It can be disruptive to the whole banking system

C) It might not have a significant effect on the money available

D) It is too complicated as a way to make minor adjustments

The correct answer is B) it can be disruptive to the whole banking system.

The Fed rarely increases reserve requirements because it can be disruptive to the whole banking system.

In financial terms in the United States banking system, the banks must have a reserve of funds every time it closes its operation at night. This reserve of money is a percentage of deposits that were made during the day. This is the purpose of the reserve requirement. It is the Federal Reserve that controls and oversees this requirement for its members

B. It can be disruptive to the whole banking system