The Federal Reserve plays a crucial role in setting economic policy to stabilize the nation's economy. By adjusting interest rates, the Federal Reserve influences borrowing, spending, and investing activities, impacting overall economic growth. Through its monetary policy, the Federal Reserve aims to achieve full employment and stable prices. In times of economic downturn, it can lower interest rates to stimulate economic activity. However, during periods of inflation, it may raise interest rates to curb excessive borrowing and spending. Ultimately, the Federal Reserve's decisions significantly impact the financial well-being of individuals and businesses across the country, shaping the economic landscape.