Question

What is the Federal Reserve's role in helping to control inflation?

A) to keep the money supply lower than the rate of inflation
B) to keep the demand for money higher than the rate of inflation
C) to keep the money supply stable in order to maintain low inflation
D) to keep fiscal policy stable in order to maintain a low level of inflation

Answer 1

C) to keep the money supply stable in order to maintain low inflation

Answer 2

The correct answer is C) to keep the money supply stable in order to maintain low inflation.

The Federal Reserve's role in helping to control inflation is to keep the money supply stable in order to maintain low inflation.

The Fed is the central bank in the United States. Its role in the US economy is very important to maintain a healthy financial and monetary system. The monetary policy of the Fed allows the control and the supply of money to maintain the stability of the economy. This control is very important in order to maintain proper levels of inflation so prices do not increase.