What institution did the Federal Reserve Act establish?

• A. Created a new tax agency
• B. Established daylight savings
• C. Created the Federal Reserve System to serve as central bank
• D. Created ICC

Answer: (C)

The main concept tested here is recognizing that the Federal Reserve Act created a central banking system for the United States. In 1913 Congress established the Federal Reserve System, a network of twelve regional banks overseen by a Board of Governors, with the goal of stabilizing the financial system and providing a lender of last resort during crises. This central bank structure gave the United States tools to influence the money supply and interest rates through actions like reserve requirements and open-market operations, aiming to prevent the kind of banking panics that had repeatedly shaken the economy. The other options point to unrelated reforms or institutions (a tax agency, daylight savings, or the Interstate Commerce Commission), so they don’t fit.