18) The Federal Reserve System was created to A) make it easier to finance budget deficits. B) promote financial market stability. C) lower the unemployment rate. D) promote rapid economic growth.

Question

Rachel Patton

Business

15 July, 11:54

18) The Federal Reserve System was created to A) make it easier to finance budget deficits. B) promote financial market stability. C) lower the unemployment rate. D) promote rapid economic growth.

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Answers (1)

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Cameron Stuart · Answer 1

The correct answer is B) promote financial market stability.

Explanation:

The Fed was born in 1913 with the Federal Reserve Law in order to counteract the climate of financial instability that the country was going through then. The equivalent entity at European level would be the ECB or European Central Bank, a system with which it has many similarities and certain differences in its nature and operation.

Among its most important functions, the Federal Reserve protects the banking system and the credit rights of citizens. In addition, it is also usually applied as a lender for other international institutions.

Generally, the Fed acts within a framework established by the Government, which defines the economic objectives that this central bank should follow, which, however, operates independently.

As established by the Federal Reserve Law, the main objectives of this institution should be maximum employment, price stability and moderate long-term interest rates.