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