Chapter 15: The Fed and Monetary Policy
"The Fed and Monetary Policy"
Students have already learned that Congress created the Federal
Reserve System, or Fed, as America's central bank. The Fed
has substantial regulatory and service responsibilities as
well as control over monetary policy. In this activity students
will learn more about the Federal Reserve and its role in
our modern economy.
Students will use information from the Federal Reserve Board
Web site to find out more about the structure of the Federal
Previous Knowledge Expected
Students should be familiar with the following terms:
member bank: bank belonging to the Federal Reserve
monetary policy: actions by the Federal Reserve System
to expand or contract the money supply in order to affect
the cost and availability of credit
open market operations: monetary policy in the form of bond sales
or purchases in bond markets
Applied Content Standards (from the National Council on
Standard 10: Institutions evolve in market economies
to help individuals and groups accomplish their goals. Banks,
labor unions, corporations, legal systems, and not-for-profit
organizations are examples of important institutions. A different
kind of institution, clearly defined and well-enforced property
rights, is essential to a market economy.
Standard 20: Federal government budgetary policy and
the Federal Reserve System's monetary policy influence the
overall levels of employment, output, and prices.
1. Students will describe the Board of Governors of the Federal
2. Students will list the current members of the Board of
Governors of the Fed.
3. Students will describe the decision making process of the
Federal Open Market Committee (FOMC).
Web Activity Answers
1-4: Teacher may prepare an answer sheet from information
obtained from the Web site.
Encourage students to read further information provided on
the Web site. For example, the site provides information about
the Federal Reserve Banks and the Board of Directors. The
Federal Reserve also provides many free informational publications
Conduct a simulation of a Federal Open Market Committee meeting
with the students. Assign specific roles for each student.
Student Web Activity