Government and the Economy
Session 3: Stabilizing the Economy: The Federal Reserve System

Materials

• Internet access
• Resource materials on the Federal Reserve System

Instructional Activities

NOTE: The following Web site may be helpful in the study of the Federal Reserve System: <http://www.federalreserve.gov/>.

1. Review the content from the previous session.
   
   
2. Explain that the United States government has a Federal Reserve System that serves as the central bank. Divide students into groups of three or four, and instruct each group to develop a chart that indicates how the Federal Reserve System operates. Provide resource material or assign students to use computers. This activity may take two or more sessions to complete. Explain that their chart should indicate an understanding of the following instruments of monetary policy:
   •    Reserve requirements
   •    Discount rates
   •    Open-market operations
   
   
3. Further explain that their chart must reflect the steps the Federal Reserve Board takes to control monetary policy by changing availability of funds or adjusting interest rates. In addition, the use of fiscal policies that change taxing, spending, and the issuance of government bonds to influence activity should be reflected in their project.
   
   
4. Assign groups to present their completed charts to the class.