Related Capstone Lessons

Unit 6: Lesson 34 - Money and Monetary Policy

The concept of money creation by banks is often not intuitive for students, but it is important to their understanding of the role of the Federal Reserve. In this lesson, students first discuss money, its functions, and why the money supply is important in the economy. The they take part in a short activity to learn how banks create money and affect the money supply. They then apply the concepts from the activity to an analysis of monetary policy.

Concepts:

  • Money Supply
  • Monetary Policy
  • Money
  • Federal Reserve
  • Fractional Reserve Banking System
Standards:
  • Standard #10: Institutions
  • Standard #20: Fiscal and Monetary Policy

Unit 6: Lesson 37 - Can Government Manage the National Economy?

Although economists agree much more often than they disagree, the opinions of prominent economists on economic policy often conflict. This lesson seeks to clarify why economists disagree. Understanding the reasons for disagreement among experts may help students to make their own judgments about economic policies. The lesson concludes by having students compare and contrast the major macroeconomic theories, which are Keynesian and New Classical. New Classical economics includes the Monetarist and Rational Expectations theories.

Concepts:

  • Aggregate Demand (AD)
  • Aggregate Supply (AS)
  • Fiscal Policy
  • Monetary Policy
  • Assumptions
  • Keynesian Theory
  • Monetarist Theory
Standards:
  • Standard #18: Economic Fluctuations

Unit 6: Lesson 38 - Aggregate Demand and Aggregate Supply

Students build their understanding of aggregate demand and aggregate supply. They use their new skills to analyze the effects of events and government monetary and fiscal policies on inflation, unemployment, and economic growth. In the first two Activities, students identify different components of AD and AS and the factors that shift AD and AS. In the last two Activities, students use AD and AS analysis to predict the effect of events and government monetary and fiscal policies on inflation, unemployment, and economic growth.

Concepts:

  • Aggregate Demand (AD)
  • Aggregate Supply (AS)
  • Price
  • Fiscal Policy
  • Monetary Policy
  • Macroeconomic Equilibrium
  • Price Level
Standards:
  • Standard #18: Economic Fluctuations

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