What Was the Purpose of the Federal Reserve Act

question 75

Multiple Choice

What was the purpose of the Federal Reserve Act?

• A) to end the Great Depression, which had begun during the end of Roosevelt's last term as president
• B) to nationalize the banking system so that all banks became public institutions rather than private corporations
• C) to promote the gold standard in such a way that the banking system of the United States was identical to that of the Civil War
• D) to require every state-chartered bank to become a member of the Federal Reserve system and regulate them closely
• E) to adjust the nation's currency supply and create a national banking system to promote growth and ensure the stability of member banks

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Definitions:

Annual Coupon

The yearly interest payment made to bondholders, typically expressed as a percentage of the bond's face value.

Par Value

The nominal or face value of a stock or bond. The par value of a bond generally represents the amount of money that the firm borrows and promises to repay at some future date. The par value of a bond is often $1,000 but can be $5,000 or more.

Fiscal Policy

The use of government purchases, transfer payments, taxes, and borrowing to influence economy-wide variables such as inflation, employment, and economic growth.

Monetary Policy

Regulation of the money supply to influence economy-wide variables such as inflation, employment, and economic growth.