What is the main responsibility of the Federal Reserve in the U.S. economy?

The main responsibility of the Federal Reserve, the central bank of the United States, is conducting monetary policy and regulating banks. This role includes managing the money supply, influencing interest rates, and ensuring stability in the financial system. By adjusting the federal funds rate, the Federal Reserve can influence economic activity—lowering rates to stimulate growth during economic downturns or raising them to cool off an overheating economy.

Additionally, the Federal Reserve supervises and regulates banking institutions, ensuring they operate safely and soundly, which helps maintain public confidence in the financial system. This regulatory oversight is crucial to prevent bank failures and systemic risks that could impact the broader economy.

Other options like conducting fiscal policy pertain to government spending and tax policies, which fall under the purview of Congress and the Executive Branch rather than the Federal Reserve. Providing financial education is important but is not the primary function of the Federal Reserve. Monitoring international trade agreements relates to trade policy, which is managed by the Department of Commerce and the Office of the U.S. Trade Representative, rather than the Federal Reserve. Thus, conducting monetary policy and regulating banks is indeed the core responsibility of the Federal Reserve in the U.S. economy.