Removing the “Punch Bowl”: Inflation and the Federal Reserve’s Use of Contractionary Monetary Policy, Lesson for Grades 10-12
This lesson focuses on contractionary monetary policy by analyzing a 1955 primary source document of a speech Federal Reserve Chair William McChesney Martin Jr. gave. In his speech, Martin made the famous analogy that in times of economic expansion the Fed should “remove the punch bowl” before the party gets out of hand. Students will develop critical thinking skills through this primary document analysis and develop data literacy skills through FRED® graph analysis.
Objectives of this lesson:
Students will be able to
- define contractionary monetary policy set by the Federal Reserve,
- provide examples of how monetary policy decisions have affected the economy,
- explain how Federal Reserve monetary policy has changed over time,
- analyze economic data to develop an economic argument, and
- analyze primary and secondary source material.
How does the Federal Reserve manage inflation?
This lesson plan is designed for teaching grades 10, 11, and 12.
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