Chapter 27, Problem 2FRQ

To determine

The Four basic functions of the Federal Reserve System.

Explanation of Solution

The Four basic functions of the Federal Reserve System can be explained as follows:

1. Implementing national monetary policy by affecting the monetary as well as credit circumstances in the American economy in order to maintain a high level of jobs, price stability, and reasonable long-term rates of interest.
2. Managing and monitoring financial organizations to safeguard the stability of the American banking and financial system as well as to defend the interests of credit-seeking consumers.
3. Preserving the stability of the financial ecosystem and limiting systemic damage.
4. Supplying financial solutions to depository organizations, the national government, as well as foreign authorized institutions, at the same time playing a key role in running the national payments system.