Classify each of the tasks according to whether or not they are tasks of the Federal Reserve. Tasks of the Federal Reserve Not tasks of the Federal Reserve

Tasks of the Federal Reserve

Managing the U.S. Money Supply - one of the main functions of the Federal Reserve is managing the money supply: the quantity of money that there is in the economy. The Federal Reserve can either increase or contract the money supply.

Printing paper currency - when the Federal Reserve increases the money supply, part of that supply is printed as paper currency.

Acting as a lender of last resort - when commercial banks or governments do not have any other creditor, they turn to the Federal Reserve, which has the obligation to act as a lender of last resort.

Engaging in monetary policy - this is the reason why the Federal Reserve exists in first place. The main activity of the Fed is to engage in monetary policy, mainly with the goal of controlling inflation, and easing economic cycles.

Not tasks of the Federal Reserve

Creating the federal budget - the federal budget is developed by the president, and also by the Congress.

Engaging in fiscal policy - fiscal policy is responsability of the president, and the Congress.

Managing Europe's money supply - The Federal Reserve only manages the money supply of the United States. Europe's money supply is managed by the European Central Bank in the case of the Eurozone, and by different national central banks in the case of countries that are not part of the Euro.