Question

Which sentence best describes the role of the Federal Reserve System? A. Its role is to monitor labor cycles and regulate resources. B. Its role is to regulate US unemployment cycles. C. Its role is to regulate the US financial system. D. Its role is to monitor politicians and make recommendations.

Answer 1

Among the options given on the question the correct answer is option C.

Its role is to regulate the US financial system.

Explanation: The central bank of United States of America is known as the Federal Reserve System. It was established by the Congress in 1913 for providing a safe, flexible monetary and financial system. Now a days the main role the Federal Reserve System is to regulate US financial system.

Basically, the Federal Reserve system works with the other banks of USA as the governor of them. Federal reserve system has many important task to do, They conduct the monetary policy in the buying and selling of US government securities on the open market to influence short-term interest rates and growth of money and credit.

Moreover, the Federal reserve system lends money to the other banks as their need. This control the money supply in the market to prevent the inflation.

Therefore, it can be said that the main role of the Federal Reserve System is to regulate the US financial system.