Progressive Movement Practice Exam

The main goal of the Federal Reserve System is to:

1. Protect consumers from fraud

2. Manage the nation's supply of currency and interest rates

3. Provide military support for the armed forces

4. Maintain a national petroleum supply

The correct answer is: Manage the nation's supply of currency and interest rates

The main goal of the Federal Reserve System is to manage the nation's supply of currency and interest rates. Established in 1913, the Federal Reserve, often referred to as the Fed, plays a crucial role in the U.S. economy by regulating the money supply, overseeing financial institutions, and facilitating a stable financial system. By adjusting the interest rates and influencing the availability of money, the Federal Reserve can help control inflation and stabilize the economy. For instance, lowering interest rates typically encourages borrowing and spending, which can stimulate economic growth during a recession. Conversely, raising interest rates can help curb inflation by making borrowing more expensive and slowing down economic activity. This function is significant in maintaining overall economic balance, allowing the Fed to respond to changing economic conditions and ensure that the overall financial system remains secure and efficient. While protecting consumers from fraud, providing military support, and maintaining a national petroleum supply are important issues, they do not fall under the primary purview of the Federal Reserve, which specifically focuses on monetary policy and financial stability.