Final answer:
The Federal Reserve's most important function is to conduct the nation's monetary policy, which involves managing interest rates and credit conditions. One of the tools used for this is open market operations.
Step-by-step explanation:
The Federal Reserve's most important function is to conduct the nation's monetary policy. This involves managing interest rates and credit conditions, which influences the level of economic activity.
One of the tools used by the Federal Reserve to implement monetary policy is open market operations, which involves buying and selling government securities to influence the money supply and interest rates.