Final answer:
The Federal Reserve increases the growth of the money supply by decreasing the reserve requirement, which allows banks to lend out more money and stimulate the economy.
Step-by-step explanation:
When the Federal Reserve implements a decrease in the reserve requirement, it increases the growth of the money supply. A decrease in the reserve requirement means that banks are required to hold a smaller percentage of their deposits as reserves, thus freeing up more money to lend out to the public. This action is one of the tools used by the Federal Reserve to conduct monetary policy, particularly expansionary monetary policy, which aims to stimulate the economy by increasing the money supply and lowering interest rates. Conversely, a contractionary monetary policy involves increasing reserve requirements or engaging in other actions to decrease the money supply and raise interest rates, which the Fed would implement to cool down an overheating economy and combat inflation.