Question 6 Prior to the 2008 financial crisis, how did the selling of bonds by the Fed impact the economy? O It increased the amount of money circulating in an economy and increased the interest rate It decreased the amount of money circulating in an economy and increased the interest rate O It decreased the amount of money circulating in an economy and decreased the interest rate O It increased the amount of money circulating in an economy and decreased the interest rate

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Functions of the Federal Reserve System

The Federal Reserve System looks after the financial activities and operations of the banking system. It is the apex body that has complete control over the banking regulations. All the guidelines regarding the banking system, money supply, and formulation of the monetary policy come under the purview of the Federal Reserve System. The New York Fed also helps in drafting the monetary policy and supervising the financial system.

Elastic and Inelastic Markets

Measuring the change in percentage of an economic variable with respect to change in a different economic variable is known as elasticity. This change in percentage results in a change in price concerning changes in other factors. In simple terms, when one factor brings a change to another factor, it is called elasticity.