Copyright

Fiscal & Monetary Policy Activities for High School

Instructor: Tammy Galloway

Tammy teaches business courses at the post-secondary and secondary level and has a master's of business administration in finance.

Students may think that fiscal and monetary policy sounds difficult to understand. However, the following activities will help you introduce students to each economic policy and makes learning fun and competitive.

Fiscal & Monetary Policy Activities for High School

Students have heard the terms 'taxes,' 'interest rates,' and 'banks.' However, do they know how the terms are all related and which federal policies are responsible for each?

Fiscal policy outlines the government's approach to spending, borrowing, and taxation, while monetary policy focuses on the money supply, interest rates, and credit availability. The following activities introduces students to both policies and explores their impact on citizens.

Can Banks Run Out of Money?

Explain that banks must maintain a certain level of cash on hand for withdrawals and loans to ensure they do not run out of money. This requirement is called the reserve ratio. The reserve ratio fluctuates depending on several factors.

Ask students to discuss if the reserve ratio is higher or lower during the holiday seasons. Allow students to share their response then explain that the correct answer is higher since consumers make significant withdrawals and loans during this time. Now, explain that this activity simulates the reserve ratio.

Materials

  • Index cards
  • Pens/pencils
  • Container
  • Calculators or smart devices with calculator function

Instructions

  • Distribute an index card and a pen/pencil to each student and ask them to answer the following on the front of the card:
    • If you were the Federal Reserve, what reserve ratio would you require banks to keep on hand? Write the percentage on the top left corner of the index card.
    • Now in the top right corner of the index card, write a dollar amount of money a bank would be willing to loan to individuals and businesses (write one number).
    • In the middle of the index card, write a total dollar amount of cash the bank has on hand. The number must be at least three times higher than the loan amount.
  • Afterwards, collect the index cards, put them in a container, and pair students.
  • Give each pair a calculator or ask them to use their smart device calculators.
  • Then ask each pair to choose two index cards and calculate:
    • The dollar amount of the reserve requirement
    • The dollar amount the bank has on hand for withdrawals
  • Allow pairs to discuss their calculations and answers.
  • Afterwards, ask students to which policy (monetary or fiscal) does this activity apply? Require them to explain.

Why Do We Pay Taxes?

Paying taxes is a requirement for most who work in the United States. There are three types of federal taxes deducted from most paychecks: federal income tax, social security, and medicare. The question most ask at some point in their life is 'Where does all the money go?' This activity answers the question.

Materials

  • Chalk or dry-erase classroom board
  • Writing chalk or markers
  • Data printout from the Federal Office of Management and Budget's (OMB) website, listing the recipients of tax dollars and the percentages received

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support