What is the primary role of the Federal Reserve System?

The primary role of the Federal Reserve System, often referred to simply as the Fed, is to manage the United States' monetary policy. This includes controlling the money supply and interest rates to achieve macroeconomic objectives such as stable prices, maximum employment, and moderate long-term interest rates. By influencing these economic factors, the Fed can help steer the economy toward growth and stability.

The Federal Reserve employs various tools to implement monetary policy, including open market operations, the discount rate, and reserve requirements. These tools allow the Fed to adjust the availability of credit in the economy, which can impact inflation and employment levels.

In contrast, other roles mentioned in the options do not align with the core responsibilities of the Fed. For example, managing international trade is typically the purview of the U.S. Department of Commerce or the Office of the U.S. Trade Representative, not the Federal Reserve. Similarly, while the Fed may have some involvement in financial sector regulation, directly regulating the stock market falls to other entities such as the Securities and Exchange Commission (SEC). Lastly, the collection of taxes is solely the responsibility of the Internal Revenue Service (IRS), which operates independently of the Fed. Thus, the correct identification of the Federal Reserve's primary role as managing the monetary