General Information

Title: The Money Supply

Subject Area: Social Studies/Economics

SOL 7.7 - Virginia Standards of Learning

The students will describe the role of the governments in the United States economy, with emphasis on:

• provision of public goods and services;
• protection of consumer rights, contracts, and property rights;
• the impact of government taxation, borrowing, and spending on individuals and on the production and distribution of goods and services; and
• the role of the Federal Reserve System and the impact of monetary policy on the money supply and interest rates.

Grade Level: 8

Lesson Topic: The affect of the Federal Reserve on the supply of money available.

Descriptive Overview: This lesson will explore the basic premise of the Federal Reserve System. It will explain how the reserve operates, its control of available funds, and the effects produced on the money supply such as inflation and recession.

Advantages of Medium: Students are able to use visual aids for comprehension and application of concepts.

Lesson Specifics

Lesson Objectives/Goals: The student will:

• determine the impact of reserves on the money supply.
• determine the relationship between recession and inflation.
• compare the impact of inflation and recession on our economy.

Assumed Skills or Prerequisite Skills:

• Students must know the terminology provided from day one of Federal Reserve Unit
• Students must also have a basic understanding of the concept of supply and demand.

Learning Environment:

• Computer lab or presentation computer
• Step- by-Step Money Supply chart (transparency)
• Federal Reserve and the Money Supply worksheet (transparency)
• Inflation/ Recession Circular Diagram handout (transparency)
• Inflation worksheet (transparency)
• Inflation -Real Estate worksheet
• Overhead

Instructional Set

Ask students to create a flow chart or diagram depicting what happens to money (ex: $50) once it has been deposited into an account. In creating the diagram, have students keep in mind the following questions: Does the bank "hold" the money in that account? How is a bank able to make loans without going bankrupt itself?

Gaining Attention: Not applicable

Orienting the Lesson: Not applicable

Stimulating Recall of Prerequisites: Not applicable

Key Questions: Not applicable

Teaching Strategies

1. Place Section I of notes on the overhead and have students copy into notebook.
2. Show Step- by-Step Money Supply Chart and allow students to compare and contrast the chart or diagram they made with the step- by step model.
3. Next, have students answer questions from the Federal Reserve and the Money Supply worksheet. Review and discussion answers as a class.
4. Show Section II of notes and the Inflation worksheet.
5. Review student responses as a class.

Terminology/Vocabulary:

Federal Reserve System
Reserve Requirement
Recession
Inflation

Practice: Not applicable

Assessment: Have students complete the Inflation- Real Estate worksheet as a homework or class activity.

Enhancements

Have students bring several dollar bills to class:

1.  Give a guided tour of the various markings on the front and back of the bill. http://www.techtrekers.com/dollar.htm
2. Survey the students regarding the different Federal Reserve Banks the bills originated from (using the Federal Reserve Boundaries map from Topic 3 Federal Reserve Lesson).
3. Theoretically, the majority of the bills should originate from the Federal Reserve District in which you live. Record the results on the board for each class and discuss!

Extensions

Not applicable