The Federal Reserve was established in 1913 to Group of answer choices prevent inflation by decreasing the money supply. stimulate the economy by increasing bank reserves. stop bank panics by acting as a lender of last resort. prevent bad loans by requiring banks to hold reserves.

The main purposes behind establishment of the Federal Reserve was to stabilize the economy and increase the banking reserves; being a lender of last resort and prevention of bad loans in the commercial banks.

What is Federal Reserve?

Federal Reserve acts as a central bank for the United States of America. It is one of the largest central banks in the world. It was established in the year 1913.

One of the main reason for the establishment of the Federal Reserve was bringing stability in the economy by the way of increasing bank reserves. It also helped in the prevention of bad loans for national banks.

In case of defaults in repayment of national debts, Federal Reserve would act as a lender of last resort after all the ways have been unsuccessful.

Hence, options B, C and D state the correct purpose behind the establishment of the Federal Reserve in 1913.

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