37. The Federal Reserve lowers the reserve requirements from 6 percent to 5 percent. Banks then do not have to set aside as much money to meet the reserve requirements. This gives banks more money to lend to their customers at a lower interest rate. These conditions make it less expensive for people and businesses to borrow money. Because they can borrow more, they can spend more. If people are spending more, prices go up. With this action, the Fed has lessened the likelihood of Recession Inflation Economic expansion Deflation