What effects does the Federal Reserve have on the economy?

Question

Select the three correct answers.

(2 points)
Responses

employment
employment

poverty rate
poverty rate

economic growth
economic growth

individual income tax rates
individual income tax rates

income distribution
income distribution

prices
prices
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Answer 1

The three correct answers regarding the effects of the Federal Reserve on the economy are:

1. employment
2. economic growth
3. prices

The Federal Reserve influences employment through monetary policy, which can affect economic growth and, in turn, impact the demand for labor. It also plays a significant role in price stability through its control over inflation and interest rates. The other options listed, such as poverty rate, individual income tax rates, and income distribution, are influenced by a variety of factors including fiscal policy and government programs, rather than directly by the Federal Reserve.