One of the primary purposes of the Federal Reserve System (the Fed) is to guard against
A)national gasoline shortages by maintaining large stores of oil at the country's military bases.
B)state governments defaulting on their debt obligations by limiting budget expenditures.
C)the federal government defaulting on its debt obligations by limiting budget expenditures.
D)bank failures during a sudden economic scare by making sure that banks do not overextend themselves.

Question

Quizplus · Accepted Answer

The Fed's primary purpose is to maintain the stability of the banking system and guard against bank failures during economic downturns or sudden scares. This is achieved through various monetary policies and regulatory measures that ensure banks do not overextend themselves and maintain sufficient reserves for daily operations. The other options listed are not within the primary mandate of the Fed.

One of the Primary Purposes of the Federal Reserve System