Question

Which of the following is not a function of the Federal Reserve​ System? A. Taking deposits of small lenders to pool savings and make loans. B. Acting as a lender of last resort to commercial banks. C. Providing​ payment-clearing systems. D. Regulating the money supply and supervising banks. E. Supplying the economy with currency.

Answer 1

The correct answer is option A.

Step-by-step explanation:

The federal reserve system plays several functions that are crucial for the working of the economy. It regulates the supply of money in the economy. It issues currency and controls the flow of currency in the market.

The federal reserve system also acts as the banker for the government and bankers for commercial banks. It acts as the lender of last resort for commercial banks. It also provides payment clearing systems.

The federal reserve system though does not accept deposits or extend loans to small lenders. The function of accepting deposits and extending loans is played by commercial banks.