Question

Which of the following was the most significant contribution of the Federal Reserve Act of 1913 to America's economic policy?

Answer 1

The act allowed banks to lend more money

Answer 2

The Federal Reserve Act of 1913 instituted monetary policy as an instrument of control of the financial system. Through the compulsory reserve system, banks started to deposit a percentage of their loans with the Central Bank in order to guarantee the solvency of the financial system and reduce the risk of crises.

In this way, the banks had a decrease in their ability to lend money, as quoted in the fourth item (D).

It should be noted that this policy also allowed the Federal Reserve to control the interest rate charged in the banking system, bringing greater uniformity and stability in the system.