The Federal Reserve plays several critical functions in the U.S. economy, including monetary policy implementation, financial system oversight, and maintaining bank stability. It regulates money supply and interest rates to achieve goals such as maximum employment and stable prices. By adjusting the federal funds rate, the Federal Reserve influences borrowing, spending, and investment behaviors within the economy. Additionally, it provides services such as managing the nation’s currency and serving as a lender of last resort. These functions help promote overall economic stability and growth.