The twin responsibilities of the Federal Reserve are to:
A) maintain full employment and balance the federal budget.
B) ensure price stability and maintain full employment.
C) ensure price stability and regulate international trade.
D) print money and ensure price stability.

Question

Quizplus · Accepted Answer

The Federal Reserve's twin responsibilities are to ensure price stability (which is achieved through the control of inflation) and maintain full employment. These goals are often in conflict with each other, and the Federal Reserve must strike a balance between promoting economic growth and keeping inflation in check. Choice A is incorrect because the Federal Reserve has no responsibility for balancing the federal budget, which is the job of Congress. Choice C is incorrect because the Federal Reserve has no authority over international trade. Choice D is incorrect because the Federal Reserve's job is not simply to print money, but to manage the nation's money supply in order to achieve its policy goals.

The Twin Responsibilities of the Federal Reserve Are To