Federal Reserve Board

Start Free Trial

The Federal Reserve manages the nation's money supply to keep _____ low and the ____ growing at a sustainable rate.

Expert Answers

An illustration of the letter 'A' in a speech bubbles

These blanks should be filled in using the words "inflation" and "economy."

The main job of the Federal Reserve is to manipulate the money supply of the United States.  The point of this is to allow the economy to grow at a rate that is not too fast and not too slow.  If the economy grows too slowly, the Fed should increase the money supply.  If the economy grows too fast, we can get excessive inflation.  In that case, the Fed should reduce the money supply to keep inflation low.

The Fed, then, manages the money supply in an effort to ensure low inflation and steady economic growth.

See eNotes Ad-Free

Start your 48-hour free trial to get access to more than 30,000 additional guides and more than 350,000 Homework Help questions answered by our experts.

Get 48 Hours Free Access
Approved by eNotes Editorial Team