Explain what the Federal Reserve is and what it does ?

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farouk23 eNotes educator| Certified Educator

 The Federal Reserve or Federal Reserve System is the central bank of the United States responsible for managing the U.S monetary system. It was created by the Federal Reserve Act of 1913 in response to past financial crisis and disturbances, as a way to better manage the United States fiscal and monetary policy. The official mandate and responsibilities of the Federal Reserve are to:

  1. Manage interest rates
  2. Ensure stable commodity prices
  3. Ensure maximum unemployment
  4. Manage monitory policy
  5. Supervise banking and financial institutions
  6. Supervise and maintain the financial system