Teacher resources and professional development across the curriculum

Teacher professional development and classroom resources across the curriculum

Monthly Update sign up
Mailing List signup

The Economics Classroom
About the Workshops

Workshop Descriptions

1. How Economists Think
2. Why Markets Work
3. The Government's Hand
4. Learning, Earning, Saving
5. Trading Globally
6. The Building Blocks of Macroeconomics
7. Monetary and Fiscal Policy
8. Growth and Entrepreneurship

About the Teachers


Project Contributors

Production Credits

Site Map

Video Main Page  
Support Materials  

Workshop Seven: Monetary and Fiscal Policy


introduction to fiscal policy
the Federal Reserve System
how the Fed controls demand
how money works
the "Fed Challenge"

The government has two main macroeconomic policy tools at its disposal to keep aggregate demand growing at roughly the same rate as potential GDP: fiscal policy, which is a fancy word for tax and spending policy, and monetary policy, which involves the Federal Reserve and consists of increasing or decreasing the money supply through open-market operations, changes in the discount rate, and changes in reserve requirements. Changes in the money supply affect interest rates, and changes in interest rates affect investment, consumption, unemployment, inflation, and economic growth. Through lectures, simulations and exercises, this workshop addresses how the government tries to bring stability to the market.

Ted Hartsoe, at Choate Rosemary Hall, in Wallingford, Connecticut, introduces the basic concept of fiscal policy, while Greg Smith, at Hastings-on-Hudson High School, in New York, has his students make posters that demonstrate the three tools of the Federal Reserve Bank.

Eliot Scher, at White Plains High School in New York, teaches a class on the details of the Fed's Open Market Operations.

Ted Hartsoe, uses a stack of pennies to demonstrate to his class how money works.

In the final segments Eliot Scher coaches a student team from White Plains High School in "The Fed Challenge," a competition in which students role-play as members of the Federal Reserve Open Market Committee.

Eliot Scher
Eliot Scher

Teachers' Thoughts
"In the Monetary policy class, I thought about the approach and I reminded myself that it's highly complex and although I'm dealing with intelligent students, the idea of communicating something about monetary policy is an amazing transition for the kids to make. The idea of how the Fed might add money or delete money from the money supply is amazing to them.

So I try to think of the connections that have to be made. I say to them, 'Monetary policy is like the idea of driving a car. You need to be able to examine your environment, you need to be able to understand what the signals mean to you, what's a red light, what's a green light, what's a stop sign? Are you going too slowly? Are you going too quickly? Is there a danger you might go through a red light? You might have to speed up or slow down.' And so I suggest to them the Fed has some tools that the driver of the car has. And all of a sudden the light bulb goes off in their heads. 'Oh, I understand that, I drive a car.'"


© Annenberg Foundation 2017. All rights reserved. Legal Policy