LESSON PLAN TEMPLATE

PART A: PRE-LESSON PREPARATION

Your Name: Jennifer Ferris

Course title: 8th Grade United States History

Unit title: Money, Banking, and Taxes

Unit questions:
1. Why does money have value?
2. How do the different sectors of the economy interact?
3. How does the flow of money in the economy affect spending and production?

Lesson Title and Number: Lesson 2: The Federal Reserve and Monetary Policy

Materials to be used: SmartBoard, Lesson 2 PowerPoint, circular flow quiz, “Federal Reserve
and You” video, video questions handout, large Post-Its, small Post-Its, “Banking and Monetary
Policy” booklets, “Banking and Monetary Policy” graphic organizer, “Making Money in
Middlevillage” PowerPoint, simulation handout, two articles on electronic currency, persuasive
writing/electronic currency handout

Lesson Assessment Charts

LIST EACH LESSON QUESTION FOR WHERE WAS THIS QUESTION

THIS LESSON.
1. How does the Federal Reserve use
monetary policy to influence the money
supply?
2. How does the creation of money affect
production, spending, and saving in the
economy?
3. What are the advantages and
disadvantages of using electronic currency?
ADDRESSED IN THIS LESSON?
“The Federal Reserve and You” video questions,
categorizing activity, “Making Money in
Middlevillage” simulation, simulation reflection
“The Federal Reserve and You” video questions,
“Making Money in Middlevillage” simulation,
simulation reflection
Persuasive writing activity on electronic
currency

LIST EACH LESSON OBJECTIVE HOW WAS THIS OBJECTIVE MET IN

FOR THIS LESSON.
1. Students will be able to explain how
banks create money.
2. Students will analyze how the creation
of money affects all sectors of the
economy.
3. Students will create and defend an
THIS LESSON?
“Making Money in Middlevillage” simulation,
simulation reflection
“The Federal Reserve and You” video questions,
“Making Money in Middlevillage” simulation
Persuasive writing activity on elecronic currency
argument based on the lesson topic.
LIST EACH NCSS STANDARD IN
THIS LESSON
VII: Production, Distribution and
Consumption
 Assist learners to see the
relationships among the various
economic institutions that
compromise economic systems
such as households, businesses,
banks, government agencies, labor
unions and corporations
 Guide learner analysis of the role of
specialization and exchange in
economic processes
VIII: Science, Technology, and Society
 Enable learners to identify,
describe, and examine both current
and historical examples of the
interaction and interdependence of
science, technology, and society in
a variety of cultural settings
 Encourage learners to formulate
strategies and develop policy
proposals for influencing public
discussions associated with
science/technology-related issues
LIST EACH DELAWARE STANDARD
IN THIS LESSON
Economics Standard Two 6-8a: Students
will analyze the role of money and banking
in the economy, and the ways in which
government taxes and spending affect the
functioning of market economies.
IF APPLICABLE, LIST THE
COMMON CORE IN THIS LESSON
Writing Standard I. TEXT TYPES AND
PURPOSES
1. Write arguments to support claims
in an analysis of substantive topics
or texts using valid reasoning and
relevant and sufficient evidence
HOW DID YOUR STUDENTS MEET THIS
STANDARD?
 Day 1: circular flow quiz, “Federal
Reserve and You” video questions,
categorizing activity Day 2: “Making
Money in Middlevillage” simulation
 Day 2: “Making Money in Middlevillage”
simulation, persuasive writing about
electronic currency
 Day 2: persuasive writing about electronic
currency
 Day 2: persuasive writing about electronic
currency
HOW DID YOUR STUDENTS MEET THIS
STANDARD?
Students gained an understanding of the role of
the Federal Reserve in conducting monetary
policy through the “Fed” video questions, Federal
Reserve reading graphic organizer, and “Making
Money in Middlevillage” simulation.
HOW DID YOUR STUDENTS MEET THIS
STANDARD?
Simulation reflection – students will create an
argument as to why an increase in the money
supply is beneficial.
Persuasive writing assignment – students will
create and defend an argument about whether or
 not paper currency should become obsolete

PART B: DAILY LESSON

(one to three days)

The Federal Reserve and Monetary Policy

Day 1

Lesson Focus (3 minutes)

 Remind students that last class, we discussed how the economy as a whole functions.
There are four sectors of the economy that money flows through. Ask for student
volunteers to name the four sectors of the economy. (Students should respond with
“government,” “households,” “banks and financial institutions,” and “businesses”.)
 Tell students that these four sectors are interdependent. Ask for a student volunteer to
define “interdependence.” (Student should respond by saying that all parts of the
economy depend on each other, and decisions made by consumers, producers, and
government impact a nation’s standard of living.
 On the SmartBoard, project the following lesson question:
o How does the Federal Reserve use monetary policy to influence the money
supply?
 Tell students that we will be focusing on this question today, and they will be able to
answer it by the end of class.

Intro Activity (5 minutes)

 On the SmartBoard, project the following quote:
o “Money is to an economy like oil is to an engine.” – Barbara Emery
 Students will have three minutes to respond to the following prompt:
o Based on what you know about money, what do you think this quote means?
 Answers will then be discussed as a class.
 Tell students that today we will be exploring what the Federal Reserve is, and how it is a
crucial piece of that “engine.”
 Remind students that before they get into today’s lesson, they have a brief quiz on the
circular flow.

Developmental Section (65 minutes)

 Circular Flow Quiz (7 minutes)
o Students will have seven minutes to complete the quiz.
o The quiz is identical to their handout on the circular flow from Lesson 1. A word
bank is provided, and students must put the correct words on their correct spots
on the circular flow model.
o This will be counted for a quiz grade, and will be worth twelve points (one for
each arrow on the circular flow model.)
 o Collect quizzes, and tell students that they will be returned by next class.
 Think-Pair-Share (5 minutes)
o Give students three minutes to brainstorm what they know about banks.
o Students will then share what they have with a partner for two minutes.
o Bring the class back together, and ask for a few student volunteers to share what
they know about banks.
o Ask students what they think the purpose of a bank in the economy is. Tell them
to discuss this question with a partner before the entire class discusses it.
o Bring the class back together, and ask for a few student volunteers to share their
answers.
o Flip to the next slide, and tell students that the purpose of a bank is to transfer
money from savers to borrowers in the form of loans.
 Mini-lecture on Federal Reserve (5 minutes)
o Ask students to name a few banks they know of or might have an account with.
Follow that up with, “How do you know your money is safe there?”
o Tell students that today, we take it for granted that our assets are safe in banks,
but about a century ago, this was not the case.
o Tell students that there was a financial crisis at the turn of the twentieth century
that caused many banks to fail. People did not trust that their money was safe at
the bank, so “runs” on the banks occurred. Many savers withdrew their money
from the banks, leaving them with nothing to lend, and the banks failed.
o Millionaire J.P. Morgan ultimately rescued the economy, giving millions to the
U.S. government.
o The Panic of 1907 made it clear that something had to be done to promote
economic stability and prevent a situation like this from happening again. The
Federal Reserve Act was passed in 1913, which established the Federal Reserve,
or the central bank of the United States.
o Tell students that we will now watch a video on what exactly the Federal Reserve
is and what it does.
 “The Federal Reserve and You” Video (23 minutes)
o Distribute video questions handout. On the reverse side of the handout, there is a
grid with each letter of the alphabet in it.
o Direct students’ attention to the large Post-It notes placed around the room. They
read: “Payments System,” “Supervision and Regulation of Banks,” and
“Monetary Policy.”
o Tell students that as they watch the video, they should identify as many key
concepts/ideas pertaining to these topics as possible, writing them down in the
box that corresponds with their first letter.
o Have students preview the two key questions for the video, which they will
answer after the video is finished:
 What are the goals of the Federal Reserve?
 How does the Federal Reserve conduct monetary policy?
o Watch the video.
o Give students a few minutes to answer the two key questions. Then, review them
as a class.
 o Explain to students that the goals of the Federal Reserve are to keep prices stable
and to promote maximum employment. It does this through three means:
regulating the payments system, supervising and regulating the banks, and
conducting monetary policy.
 Categorizing Activity (20 minutes)
o Give each student five small Post-It notes. Tell them to choose the five concepts
they wrote down that they thought were most important, and to write down one
key concept on each small Post-It.
o Tell students to place each small Post-It on the large Post-It they think it best
corresponds with.
o Once students have finished categorizing their concepts, the teacher will read the
small Post-Its in each category to the class. Some concepts may not fit in a
category that the student has chosen. When coming across these, ask the class
which category they think it fits best in, and rearrange the small Post-Its as
necessary.
o After the small Post-Its have been put in their correct place, tell students to walk
around the room and look at the collection of words in each category. Based on
this, they are to write a definition of the payments system, supervision and
regulation of banks, and monetary policy at the bottom of their video questions
handout.
o Students will then return to their seats. Ask for a student volunteer or two to
share their definitions of each concept.
o Give students the definitions of payments system, supervision and regulation of
banks, and monetary policy. These will be projected on the SmartBoard.
Students should copy them down on their video notes. This handout will be kept
in the notebook as part of students’ Marking Period 3 notebook check.
 “Money, Banking, and Monetary Policy” reading (12 minutes)
o Each student will receive a copy of the Federal Reserve’s publication of “Money,
Banking, and Monetary Policy.” Students will also receive a graphic organizer to
accompany the reading. On the reverse side of the graphic organizer is the
simulation activity for next class, so students should put it in a safe place at the
end of class.
o The graphic organizer is divided into five sections: “What is money?,” “The
Fed’s Role,” “How Banks Create Money,” “Monetary Policy and the Economy,”
and “The Fight Against Inflation.” In the first column, students will record
something they already knew about the topic. In the second column, students will
record important points from the reading.
o Students may work with a partner on this activity, but each student needs to
complete a graphic organizer individually.
o The teacher will monitor the room to ensure that students are completing it.
Students will be told that the graphic organizer will be collected next class along
with the simulation activity.

Wrap Up/Closure/Culminating Experience (5 minutes)

 The students will respond to the following exit slip prompt:
 o 3 things you learned about the Federal Reserve
o 2 questions you still have
o 1 thing you found interesting
 The exit slip will be handed in for classwork credit.

Day 2

Lesson Focus (3 minutes)

 Remind students that in the first part of the lesson, we discussed what the purpose of the
Federal Reserve is, and how it influences the economy’s money supply.
 Ask students what the two goals of the Federal Reserve are. Students should respond
with “to keep prices stable” and “to maximize employment.”
 Remind students that the Federal Reserve influences the money supply by buying and
selling government securities. Ask students, “Which rate is the Federal Reserve
influencing when it does this?” Students should respond with “the interest rate.”
 Project the following lesson questions on the SmartBoard:
o How does the creation of money affect the production, spending, and saving in
the economy?
o Why are banks necessary for economic growth?
 Tell students that they will be able to answer these questions by the end of the lesson.
We will first discuss how banks create money, and how that affects the whole economy.

Developmental section ( minutes)

 Do Now (7 minutes)
o Students will be presented with the following scenario, and will determine how
the Federal Reserve can combat the economic situation:
 The attacks of September 11, 2001 took the lives of almost 3,000 people
and shocked the nation. After the attacks, economic activity in the U.S.
significantly declined.
 Was this a recession or inflation?
 What could the Fed do to try to stabilize the economy?
o Explain to students that the 9-11 attacks exacerbated a recession. Economic
activity declined because people were afraid to travel or even do daily activities.
The New York Stock Exchange was closed for three days.
o In response, the Fed dramatically increased the money supply and lowered the
federal funds rate to try to stimulate economic activity. Ask students what a
greater money supply and lower interest rates would lead to. (Students should
say that banks will give out more loans.)
o Tell students that today we will look at how loans stimulate economic growth and
lead to the creation of more money. In the next activity, we will see how this
process works.
 “Making Money in Middlevillage” simulation (25 minutes)
o Students should refer to the reverse side of the “Money, Banking, and Monetary
Policy” graphic organizer for this activity.
 o The teacher will guide the class through a simulation that shows how banks create
money through loans. The simulation has an accompanying PowerPoint.
o As the simulation progresses, the teacher will guide students through simple
mathematic equations that demonstrate how an initial loan of $10,000 eventually
becomes $100,000 in the economy.
o Students will hand the worksheet in for a classwork grade. This grade includes
the “Money, Banking, and Monetary Policy” graphic organizer and the
simulation.
 Simulation reflection (7 minutes)
o Students will respond to the following writing prompt:
 Mr. Sampson, the local convenience store owner in Middlevillage, is upset
by today’s headline – “Federal Reserve Chairman Will Seek to Increase
the Money Supply.” How would you explain to Mr. Sampson that an
increase in the money supply by the Federal Reserve may help him?
o Students should respond to the prompt in 4-5 sentences.
 Transition to electronic currency/anticipatory activity (5 minutes)
o For this activity, students will refer to a popular Internet image (“meme”) that has
been modified for the lesson. The image features Morpheus, a character from
The Matrix movies, saying: “What if I told you that banks create money out of
nothing by typing numbers into a computer?”
o In a think-pair-share format, students will have time to consider the following
question individually: “Based on what you know about how banks create money,
what do you think this quote means?”
o Students will then share their ideas with a partner before the whole class discusses
it.
o Tell students that money is transferred between financial institutions largely
through computers. This is known as electronic funds transfer, a transaction
conducted with electronic money.
 Mini-lecture on history of electronic money (5 minutes)
o Distribute “The Debate on Electronic Money” handout.
o Students should copy the definition of electronic money on the PowerPoint. Ask
a student volunteer or two to rephrase the definition in their own words.
o Today, all transactions between the Federal Reserve and banks are done
electronically through a system called FedWire. Additionally, only eight percent
of the world’s money is in physical cash form.
o Western Union developed this system for electronic transfer in 1860. It was done
through a telegraph. The Federal Reserve adopted this system in 1918. Clerks
would change numbers in their books accordingly, and there was no physical
transfer of money, much like how electronic transactions occur today.
o In 1950, the first credit card was available to consumers, called the Diners Club.
It no longer exists today, but was purchased by Discover Card.
o The Federal Reserve established the automated clearinghouse system (ACH) in
1972 as a way to expedite check processing. Financial institutions no longer had
to receive physical checks in order to make transactions.
 o By the early 1990s, nearly all world banking systems relied mainly on electronic
funds transfer.
o While banks had the ability to electronically transfer funds for decades, these
services were not available to the public until the early 1990s. America On-line
was established in 1992, which revolutionized the way that data was sent between
individuals and institutions. By 1994, some take-out food vendors offered
Internet pay services. Amazon was established in 1995, marking the birth of the
online shopping market. PayPal was established three years later.
o Tell students that while electronic currency is widely used and accepted, there is
still a debate as to whether or not it should replace cash. Some people see
electronic currency as the “future of money,” while others fear it could have
potentially adverse effects on the global economy.
o Ask students to brainstorm a few ideas for either side of the debate based on what
they know about monetary policy, money supply, and inflation. Students will
have three minutes to brainstorm before the entire class discusses their ideas.
 Persuasive writing activity (25 minutes)
o Extrapolating information from article (15 minutes)
 Students will receive one of two articles: “Pros and Cons of Paper
Money” or “The Pros and Cons of Electronic Money.”
 Students will read the article individually and identify the arguments the
author provides for and against either paper money or electronic money
(e-money). Students will complete the top half of the article graphic
organizer on the “The Debate on Electronic Money” handout.
 Students will then discuss their findings with a partner; each student is to
be the “expert” on advantages and disadvantages of the type of currency
discussed in their article. While discussing the articles with a partner,
students will complete the bottom half of the graphic organizer. Students
will then have pros and cons listed for both paper money and e-money.
 Review the graphic organizer as a class.
o Scaffolded writing activity (10 minutes)
 Students will weigh the pros and cons of each type of currency for
themselves. They will then decide on their position on the issue based on
the evidence presented in the two articles.
 Students will then identify three arguments to support their view and
provide evidence to back them up. Students will also identify two
counter-arguments against their view, and provide brief rebuttals.
 Now that they have finished identifying their position and arguments,
students will compose a thesis they would use in writing a persuasive
letter to the government explaining their view.
 If time does not allow for students to complete the assignment, it will be
assigned for homework.

Wrap up/Closure/Culminating Experience (5 minutes)

 Students will draw a doodle representing how they visualize how banks create money.
 Students will also provide an explanation of why creating money is important to
economic growth.
 This will be handed in for classwork credit.