Future Business Leaders of America (FBLA) Securities and Investments Practice Test

Which of the following entities primarily conducts monetary policy?

1. Department of Treasury

2. Federal Reserve Bank

3. Federal Trade Commission

4. Office of Management and Budget

The correct answer is: Federal Reserve Bank

The Federal Reserve Bank is primarily responsible for conducting monetary policy in the United States. Its main roles include managing interest rates, regulating the money supply, and overseeing the banking system to promote economic stability and growth. Through tools such as open market operations, discount rates, and reserve requirements, the Federal Reserve influences the availability and cost of credit, which in turn impacts inflation and employment levels in the economy. The other entities listed have distinct roles unrelated to monetary policy. The Department of Treasury is focused on fiscal policy, particularly managing government revenue and expenditures. The Federal Trade Commission is tasked with protecting consumers and promoting competition, which does not involve the management of the money supply or interest rates. Lastly, the Office of Management and Budget assists the President in overseeing the federal budget and coordinating other agencies, although it does not engage in monetary policy actions. Thus, the specific responsibilities of the Federal Reserve align it uniquely with the formulation and implementation of monetary policy.