The current NCEP operational four‐dimensional ensemble‐variational data assimilation system uses a control forecast at T1534 resolution coupled with an 80 member ensemble at T574 resolution. Given an increase in computing resources, and assuming the control forecast resolution is fixed, would it be better to increase the ensemble size and keep the ensemble resolution the same, or increase the ensemble resolution and keep the ensemble size the same? To answer this question, experiments are conducted at reduced resolutions. Two sets of experiments are conducted which both use approximately four times more computational resources than the control experiment that uses a control forecast at T670 and an 80 member ensemble at T254. One increases the ensemble size to 320 but keeps the ensemble resolution at T254; and the other increases the ensemble resolution to T670 but retains an 80 ensemble size. When ensemble size increases to 320, turning off the static component of the background‐error covariance does not degrade performance. When the data assimilation parameters are tuned for optimal performance, increasing either ensemble size or ensemble resolution can improve the forecast performance. Increasing ensemble resolution is slightly, but significantly better than increasing ensemble size for these experiments, particularly when considering errors at smaller scales. Much of the benefit of increasing ensemble resolution comes about by eliminating the need for a deterministic control forecast and running all of the background forecasts at the same resolution. In this “single‐resolution” mode, the control forecast is replaced by an ensemble average, which reduces small‐scale errors significantly.