Classroom Guides >> Classroom Activities

Monetary Policy

This section introduces students to the Federal Reserve's role in the nation's economy. Students will learn the tools of monetary policy, how the tools work, how Federal Reserve decisions affect interest rates and how economic indicators are used to determine the health of the economy.

Extension Activity

Ask students to study the “How does the Fed create money?” link, “monetary policy basics” link and “economic indicators” link. Students choose from the following topics to use as a report of their research findings.

• Find a newspaper article about a Federal Reserve decision that impacted interest rates and provide an explanation of how, or why the rates were raised or lowered.
• Research the impact of inflation during the nation’s recent past and recommend what the Federal Reserve could have done to relieve this impact.
• Pretend you are the manager of a rock band and you have to make business decisions during two different periods of time: a period of high inflation and a period of low inflation. Indicate how you would handle decisions such as tour locations, transportation, new equipment purchases, profit sharing, etc.

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