Question

What is the Federal Reserve's role in helping to control inflation

Answer 1

Step-by-step explanation:

The primary job of the Federal Reserve is to control inflation while avoiding a recession. It does this with monetary policy. To control inflation, the Fed must use contractionary monetary policy to slow economic growth.

Answer 2

To keep the money supply stable to maintain low inflation.

Step-by-step explanation:

The primary role of the Federal Reserve is to bring inflation in control. The Federal Reserve System is the Central Bank of America and also the powerful institution of the economy. It helps in maintaining a healthy financial system.

The economic growth is brought in control by using contractionary economic policy. As excess demand can create inflation, the Federal Reserve controls it by securing the money supply.

So, the correct answer is that Federal Reserve controls inflation by keeping the money stable while, at the same time, avoiding recession.