What is the primary function of the Federal Reserve?

The primary function of the Federal Reserve is to control monetary policy, which involves managing the nation's money supply and interest rates to promote economic stability and growth. By adjusting these factors, the Federal Reserve aims to achieve goals such as maximum employment, stable prices, and moderate long-term interest rates. This control helps influence economic activities by affecting how much money is available for lending and spending, thereby impacting inflation and overall economic health.

In contrast, regulating state banks, managing federal taxes, and issuing government bonds do not represent the main responsibilities of the Federal Reserve. While the Fed may have some influence in these areas, its core mission focuses on monetary policy to ensure a stable and thriving economy.