Which of the following is NOT a function of the Federal Reserve?

The correct answer is the choice that represents a function that does not belong to the Federal Reserve. The Federal Reserve, often referred to as the Fed, primarily focuses on monetary policy, which includes regulating banks, controlling inflation, and conducting monetary policy to maintain economic stability and growth.

Setting tax policy, on the other hand, is not a function of the Federal Reserve. This responsibility lies with the federal government, specifically Congress and the Department of the Treasury. The Fed does not have the authority to set tax rates or determine tax laws; its role is centered around managing the nation's money supply and interest rates to influence economic conditions.

Understanding the distinct roles of different government bodies helps clarify why the Fed's activities are primarily related to monetary functions and not fiscal policies like taxation. This distinction is crucial for grasping how the U.S. economy is managed and how various institutions contribute to its stability.