The Federal Reserve System has the power to:

A) raise or lower federal income tax rates.
B) balance the federal government budget.
C) increase or decrease federal government spending.
D) compete with commercial banks in making loans to business firms.
E) buy and sell federal government securities.

The Federal Reserve System has the power to buy and sell federal government securities. This is a crucial tool in the Fed's monetary policy, as it allows them to influence the money supply and interest rates in the economy. The other choices (A, B, C, and D) are not within the purview of the Federal Reserve System.