Which act created the Federal Reserve System in 1913?

• A. The Sherman Antitrust Act
• B. The Clayton Antitrust Act
• C. The McKinley Tariff Act
• D. The Federal Reserve Act

Answer: (D)

The main idea here is understanding how the United States forged a centralized, government-backed way to manage money and banks during the Progressive Era. The Federal Reserve Act created the Federal Reserve System, a central bank made up of the Board of Governors and twelve regional banks. Its purpose was to regulate the currency and supervise member banks, especially to prevent and respond to financial crises, like the Panic of 1907, by acting as a lender of last resort and smoothing out money supply fluctuations. The other laws listed address breaking up monopolies or regulating trade, not central banking, so they don’t establish the nation’s central banking framework. This act represents a key reform that gave the government greater oversight over the economy to promote stability and prevent banking panics.