Which of the following best describes the function of the Federal Reserve?

The Federal Reserve, often referred to as the Fed, primarily serves as the central bank of the United States and plays a critical role in controlling the country's monetary policy. This involves managing the money supply, setting interest rates, and ensuring financial stability. By adjusting these levers, the Fed aims to influence economic activity, control inflation, and promote maximum employment.

Monetary policy is implemented through various tools, such as open market operations, the discount rate, and reserve requirements. For instance, when the Fed wants to stimulate the economy, it may lower interest rates, making borrowing cheaper and encouraging spending. Conversely, to combat inflation, the Fed might raise interest rates, cooling off spending and investment.

The other options do not accurately reflect the primary responsibilities of the Federal Reserve. Providing financial aid for businesses is not a core function of the Fed; rather, the organization focuses on broader economic stability. Likewise, the Fed does not engage in direct investments in public infrastructure or manage personal bank accounts, as these activities fall outside of its mandate and role within the financial system.