Have you heard of the Federal Reserve? Perhaps you have seen a news report about the Fed and heard references to interest rates, inflation, and unemployment. What have you heard about monetary policy and how it affects interest rates, inflation, and unemployment?

In an effort to provide the nation with a safer, more flexible, and more stable monetary and financial system, Congress created the Federal Reserve in 1913. The Fed has two primary goals for the economy—price stability and maximum employment. The Fed uses monetary policy to help achieve these goals.In this module, you will learn how the Fed uses its monetary policy tools to promote the economic goals of price stability and maximum employment.