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Contact Mary Suiter
mary.c.suiter@stls.frb.org
314-444-4662

Posted: 04/30/2007
Fed resource: Open and Operating
Short description: Cause and Effect of Policies
   
Lesson time: 15 minutes
Materials: Write the following economic indicators on sheets of paper in large letters: "Unemployment," "Inflation," "Money Supply," "Consumer Spending" and "Interest Rates"
Audience: High School
Grades: 9, 10, 11, 12
Subjects: Economics, Federal Reserve, Money and Banking, Personal Finance
Concepts: Economics - Fiscal Policy, Inflation, Unemployment
Federal Reserve - Monetary Policy, Monetary Policy Tools
Money and Banking - Inflation, Interest
Personal Finance - Spending
Documents: None
Tip/Tool:
       After my students watched Open and Operating and after they had read the Fed's booklet, In Plain English, I distributed a sheet of paper to each student with one of the following terms written on it: unemployment, inflation, money supply, interest rates, and consumer spending.

       Students stand in a circle with the paper in their hands. I or another student calls out a possible monetary or fiscal policy action, such as: the Fed buys Treasury securities, the Fed sells Treasury securities, the Federal government raises taxes, the Federal government lowers taxes, the Fed increases the required reserve ratio, the Fed lowers the required reserve ratio, the Federal government increases spending, and the Federal government reduces spending.

       By showing "thumbs up" or "thumbs down," students have to indicate whether a particular action will cause their economic indicator to increase or decrease.

       Then I tell the students to look around the circle at one another's answers and discuss whether they think everyone has the correct answer.

       Next, I tell them if everyone is correct or if some are incorrect. However, I do not tell them who is incorrect. They must figure out who is incorrect and correct that/those answers. Once all of the answers are correct, I call out a different monetary or fiscal policy.

       After each round, I make the students exchange sheets so they practice with each of the economic indicators, not just one.

Submitted by: Megan Meyers
Alpharetta High School