Federal Reserve Act established what?

Federal Reserve Act established what?

• A. A central banking system with twelve regional banks
• B. A federal income tax system
• C. Direct election of senators nationwide
• D. A federal agency to regulate unions

Answer: (A)

This question asks about the creation of a national central banking system in the United States. The Federal Reserve Act of 1913 established the Federal Reserve System, a decentralized network of twelve regional banks overseen by a central Board of Governors. The aim was to stabilize the banking system and create an elastic currency—letting the money supply expand or contract as needed—by acting as lender of last resort to banks and coordinating monetary policy. This expansion of federal involvement in finance was a hallmark of Progressive Era reforms addressing periodic banking panics and economic instability. Other reforms mentioned came from different moments: the federal income tax was made permanent by the 16th Amendment in 1913, not the Fed Act; direct election of senators came with the 17th Amendment; and federal regulation of unions was established later with the Wagner Act in the 1930s (creating the National Labor Relations Board).

This question asks about the creation of a national central banking system in the United States. The Federal Reserve Act of 1913 established the Federal Reserve System, a decentralized network of twelve regional banks overseen by a central Board of Governors. The aim was to stabilize the banking system and create an elastic currency—letting the money supply expand or contract as needed—by acting as lender of last resort to banks and coordinating monetary policy. This expansion of federal involvement in finance was a hallmark of Progressive Era reforms addressing periodic banking panics and economic instability.

Other reforms mentioned came from different moments: the federal income tax was made permanent by the 16th Amendment in 1913, not the Fed Act; direct election of senators came with the 17th Amendment; and federal regulation of unions was established later with the Wagner Act in the 1930s (creating the National Labor Relations Board).