Assume that the banking system has total reserves of $517 billion. Assume also that required reserves are 47 percent and that banks do not hold any excess reserves and households hold no currency. Now suppose that the Fed increased the required reserves to 56.4 . As a result of this new policy, by how much has the money supply changed? Hint If the Fed wishes to conduct expansionary monetary policy, it should Sell T-Bills. Decrease taxes. Increase the required reserve ratio. Buy T-bills. Suppose the Fed decreases required reserve ratio. As a result of this policy, what will happen to the interest rates? Interest rates will increase. Interest rates will decrease. Interest rates will stay the same