Chapter 15, Problem 3AA

To determine

To choose: The suitable word that best completes the sentence.

Explanation of Solution

The suitable word that best completes the sentence is function.

The Federal Reserve performs functions as follows:

• Clearing checks,
• Acting as fiscal agent for the Federal government,
• Supervising the banks,
• Holding the reserves,
• Supplying paper currency,
• Regulating the money supply.

One of the functions is check clearing, by which a check deposited in one institution is transferred to the depository institution of the issuer.

Economics Concept Introduction

Introduction:

Federal Reserve- The Federal Reserve was formed in the year 1913 by Congress to act as the central banking organization of nation. It is a system or network of banks. The Federal Reserve or Fed is the body responsible for forming the monetary policies in the United States.