ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Federal Reserve System, often referred to as the Federal Reserve or simply “the Fed, ” is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.

Detailed explanation-2: -It is responsible for managing monetary policy and regulating the financial system. It does this by setting interest rates, influencing the supply of money in the economy, and, in recent years, making trillions of dollars in asset purchases to boost financial markets.

Detailed explanation-3: -The Federal Reserve, as America’s central bank, is responsible for controlling the supply of U.S. dollars. The Fed creates money by purchasing securities on the open market and adding the corresponding funds to the bank reserves of commercial banks.

Detailed explanation-4: -Instead of a single central bank, the framers of the Federal Reserve Act provided for a central banking “system” with three main features: (1) a central governing Board, (2) a decentralized operating structure of regional reserve banks, and (3) a combination of public and private characteristics.