Title: Classroom Lesson: How the Federal Reserve Implements Monetary Policy (Teacher Only)
Course: Alabama Economics Sample Syllabus > Section: Unit 10: The Federal Reserve System & Monetary Policy

Description: The Federal Reserve (Fed) is the central bank of the United States. Its congressionally mandated objectives are to promote maximum employment and price stability. This lesson focuses on how the Federal Open Market Committee (FOMC) conducts monetary policy to achieve this dual mandate. The discussion begins by tracing out the transmission of monetary policy from the FOMC’s setting of its policy interest rate target to market interest rates and, ultimately, employment and inflation outcomes. Students then learn about the tools the Fed uses to ensure that market interest rates are aligned with the FOMC’s target interest rate. The economic concepts of reservation rate and arbitrage are taught. Finally, examples of how the FOMC responds to various economic shocks are presented to reinforce the key concepts covered in this lesson.

Click HERE to go to the St. Louis Fed's Lesson Plan Page

Click HERE to download the lecture guide (PDF)

Click HERE to download the accompanying PowerPoint slides