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The Federal Reserve is the central bank of the United States. Its core function is to conduct monetary policy—influencing money and credit conditions—to help achieve stable prices, maximum sustainable employment, and moderate long-term interest rates. It does so via tools such as setting the federal funds rate target, open market operations, and reserve requirements, and by acting as lender of last resort to promote financial stability. Option B captures this remit. Option A is the IRS’s role, not the Fed’s. Option C involves state legislatures; tax rates vary by state and locality. Option D belongs to the President and Senate (nomination and confirmation). On GED Social Studies, match institutions to functions: Treasury/IRS (fiscal policy, taxes/spending), Federal Reserve (monetary policy), Congress (laws, budget), Executive (enforcement, appointments), Judiciary (interpretation). Distinguishing monetary from fiscal policy is a frequent test point.