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Teaching Guide

Teaching Money & Banking

Dolla dolla bills, y'all.

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By this point, students know that money doesn’t grow on trees…but they might not know exactly where it comes from. Let’s plant some seeds of knowledge about currency and the economy.

In this guide you will find

  • an activity reviewing the power of the Federal Reserve Board.
  • lessons on alternative economies like the barter system.
  • modern resources on monetary policy and the recent financial collapse.

Make a bargain with your students: they do well on the lessons and activities you get from our teaching guide; you give them a good grade.

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Inside each guide you'll find quizzes, activity ideas, discussion questions, and more—all written by experts and designed to save you time. Here are the deets on what you get with your teaching guide:

  • 3-5 activities to complete in class with your students, with detailed instructions for you and your students. 
  • Discussion and essay questions for all levels of students.
  • Reading quizzes to be sure students are looking at the material through various lenses.
  • Resources to help make the topic feel more relevant to your 21st-century students.
  • A note from Shmoop’s teachers to you, telling you what to expect from teaching the topic and how you can overcome the hurdles.

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Instructions for You

In this activity, your students will review the power and political autonomy of the Federal Reserve Board and explore whether it is wise or dangerous to allow them such power and autonomy.

1. Review the term-length and selection process for the members of the Federal Reserve Board.

  • The Board consists of seven members serving fourteen-year terms.
  • Their terms are staggered so that a vacancy must be filled every two years.
  • Members are appointed by the president and confirmed by the Senate.
  • Members may not be removed for policy decisions.
  • A Chairman is appointed by the president to a renewable four-year term, from among the board members. The appointment must be confirmed by the Senate

2. Review the power the Fed exercises over the money supply.

  • The Fed exercises unilateral control over monetary policy. Its decisions require no presidential or congressional approval.
  • The Fed can increase or decrease money supply by manipulating interest rates and reserve requirements, and by engaging in open market operations.
  • The Fed may pursue monetary policies that contradict economic priorities set by president and Congress.
  • Congress may decide that the economy needs stimulus and then pursue policies aimed at expanding the amount of money in circulation.
  • The Fed might decide that congress's policies are inflationary and counter stimulus policies by pursuing policies aimed at reducing the money supply.

3. Lead a discussion surrounding the following questions:

  • How "democratic" is the Fed?
  • To what extent can the public influence its operations?
  • To what extent can the other branches influence and oversee the Fed’s operations?
  • Why do you suppose the Fed was given so much autonomy?
  • Should the Fed be this autonomous?
    • Should there be a board of non-politicians overseeing the money supply?
    • What sort of membership should this board have?
    • Should it consist only of bankers and economists?
  • What are the benefits of granting the Fed so much autonomy?
  • What are problems and risks attached to granting the Fed so much autonomy?

4. Ask your students to write a 1-2 paragraph summary of their views. Should the Fed’s autonomy be reduced? Should its decisions be subject to a system of checks and balances?

Instructions for Your Students

When people are too powerful, they go a little crazy. It is a fact of human nature that our nation's founders understood. From kings to churches to oligarchs, we have seen how uncontested authority spells trouble for the rest of us.

The Constitution’s framers therefore wove a carefully crafted web of checks and balances into the Constitution to ensure that no branch of our own government would become too powerful. Yet the Federal Reserve System exercises tremendous power with relatively no oversight or input from the president or Congress. Is this wise? Should these branches be granted some authority to check the decisions made by the Fed? Or are we better served by allowing the Fed to oversee banks and the money supply without political interference?

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