Which of the following does the Federal Reserve use to regulate the nation's money supply? A Fiscal policy Proposing legislation Monetary policy Regulations 19

## Step 1<br />The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It is responsible for regulating the nation's money supply. The options provided are fiscal policy, proposing legislation, monetary policy, and regulations.<br /><br />## Step 2<br />Fiscal policy involves government spending and taxation, which is not a function of the Federal Reserve. Therefore, fiscal policy is not the correct answer.<br /><br />## Step 3<br />Proposing legislation is a function of the legislative branch of the government, not the Federal Reserve. Therefore, proposing legislation is not the correct answer.<br /><br />## Step 4<br />Monetary policy is the correct answer. The Federal Reserve uses monetary policy to regulate the nation's money supply. This involves controlling the amount of money in circulation and the cost of borrowing money, which is the interest rate.<br /><br />## Step 5<br />Regulations are rules or directives made and maintained by an authority. While the Federal Reserve does use regulations to some extent, they are not the primary tool used to regulate the money supply. Therefore, regulations is not the correct answer.