Question

One of the primary purposes of the Federal Reserve System (the Fed) is to

a. guard against national gasoline shortages by maintaining large stores of oil at the country's military bases.
b. guard against state governments defaulting on their debt obligations by limiting budget expenditures.
c. guard against the federal government defaulting on its debt obligations by limiting budget expenditures.
d. guard against bank failures during a sudden economic scare by making sure that banks do not overextend themselves.

Answer 1

The primary purpose of the Federal Reserve System is to guard against bank failures by monitoring and ensuring banks maintain adequate reserves and to stabilize the financial system through effective monetary policy and financial regulation.

Step-by-step explanation:

One of the primary purposes of the Federal Reserve System (the Fed) is to guard against bank failures during a sudden economic scare by making sure that banks do not overextend themselves. This is accomplished through various means, such as conducting monetary policy, regulating financial institutions, and ensuring that banks maintain adequate reserves. The Fed aims to promote stability in the financial system, which includes overseeing the nation's money supply and credit conditions, providing services to the government, maintaining the payments system, and enforcing consumer protection laws.