What is the primary role of the Federal Reserve?

The primary role of the Federal Reserve, also known as the Fed, is to manage U.S. monetary policy and ensure financial stability. This involves controlling inflation, managing employment levels, and overseeing interest rates to promote economic growth. The Fed implements policies that influence the availability and cost of money and credit, which in turn affects economic activity.

By adjusting the federal funds rate and using other monetary policy tools, the Federal Reserve seeks to maintain stable prices and moderate long-term interest rates. Through its influence on the banking system and the financial markets, it aims to support a stable financial environment, which is crucial for fostering consumer confidence and investment.

In contrast, the other options do not accurately reflect the central functions of the Federal Reserve. While the Fed does participate in creating money, it is primarily for the purpose of managing the economy rather than serving the government's spending directly. Regulation of the stock market and oversight of insurance companies falls under the jurisdiction of different regulatory bodies, such as the Securities and Exchange Commission (SEC) and state insurance regulators, rather than the Federal Reserve.