4. Problems and Applications Q2 When the Fed buys bends in openmarket operationsr it 1! the mnney supply. If the Fed wants to decrease the money supply, it can 1r the reserye requirement. When the Fed increases the interest rate it pays an naser'l.resr the money supply will When the FDMC increases its target for the federal funds rate, the meney supply will increases decreases If pedple decide ta held less currency after a rash of pickpecketing, the money supply 1r