Test: GED Social Studies

The following question refers to the information contained in this passage.

The Federal Reserve is the central banking system of the United States. The roles of the Federal Reserve include regulating the monetary policy and supply, preventing financial panics, and supervising banking institutions. The Federal Reserve was created early in the twentieth century primarily in response to the frequent financial panics that would cripple the U.S. economy, most prominent of which was the Panic of 1907. The powers of the Federal Reserve have expanded throughout the years, usually in response to other financial disasters like the Great Depression. Recent evidence suggests the Federal Reserve is essentially powerless to prevent the destabilizing force that is our boom and bust economy.

1.

Why was the Federal Reserve created?

To regulate the United States’ monetary policy

To regulate the United States’ monetary supply

To provide additional funds to the American government

To ensure that America paid off its international debts

To try to prevent financial panic

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