What is the primary function of the Federal Reserve?

The primary function of the Federal Reserve is to manage monetary policy, which involves controlling the supply of money and the availability of credit in the economy. This is crucial for maintaining economic stability, influencing interest rates, and achieving goals such as maximum employment, stable prices, and moderate long-term interest rates. Through various tools, including open market operations, the discount rate, and reserve requirements, the Federal Reserve can influence inflation and economic growth. While the Federal Reserve may have some involvement in regulating financial institutions, its overarching mission revolves primarily around monetary policy, making it an essential institution for shaping the economy's overall environment.

The other choices listed do not encompass the core mission of the Federal Reserve. Regulating the stock market, for example, falls under different regulatory bodies like the Securities and Exchange Commission. Issuing new currency is just a function of the broader monetary policy role and is not its primary purpose. Additionally, governing international trade is outside the Federal Reserve’s jurisdiction, which focuses on domestic economic conditions.