Students will be able to:
- Explain how the tools of the Federal Reserve are used to influence monetary policy.
- Judge the power of the Chair of the Federal Reserve Bank.
- Evaluate how the Fed’s tools are used to alter interest rates, aggregate demand, and the inflation rate.
In this economics lesson, students will learn about the powers of the Federal Reserve Chair.
Open the PowerPoint Slides and project them on a screen. Show slide 1 which poses the question, “Who are the most powerful people in the world today? Why?” Partner students and have each team make a list of their top five, including rationale. After five minutes, call on volunteers to share their responses and reasons supporting their answers. Write a summary of students’ responses on the whiteboard.
Begin the lesson by sharing with students that many people in the world assert that the Chair of the Federal Reserve Bank is one of the world’s most powerful people. During today’s lesson, we will investigate the merits and limitations of this premise. Begin with a look into the Federal Reserve Bank of the United States. Review slides 2-8 to give an overview of the Federal Reserve Chair, detailing how he/she is appointed and confirmed. Use the speaking notes in the PowerPoint to guide you through the slides.
Students will investigate how much power a Fed Chair actually possess. Sports fans often assign a power rating to teams and players to measure their strength. Students will research some of the most recent chairs of the Federal Reserve and assign them power ratings to express how truly influential they have been in the United States economy. Distribute a copy of Fed Chair Power Rating to each student. Instruct the students as follows:
- In this activity, we will judge each recent Fed Chair’s prerequisites and ability to play defense and offense.
- Prerequisites will be measured by academic background, research, and previous career qualifications. Offensive acumen will be evaluated using the chair’s major accomplishments while in office and whether he/she was successful in accomplishing the goals for which he/she was originally selected. Defensive strength will be determined by the chair’s ability to overcome obstacles, both in the economy and political pressures, while holding the chairmanship.
- The chair in question may receive 1-4 points for each category. The rubric for awarding points is as follows: 1- extremely weak, 2-relatively weak, 3-relatively strong, 4-extremely strong
- BONUS! Students may award up to 2 bonus points for other significant accomplishments not listed in the first three categories. Students may also choose to subtract up to 2 points for major blunders or problems that emerged as a result of the chair’s policies.
Divide students into four small groups. Assign each group a past Federal Reserve Chair: Yellen, Bernanke, Greenspan, or Volcker. Review instructions and where to find websites with information for each leader. Remind students that they are searching for information in each category in order to assign the past chair a power rating in each category. Distribute a copy of Resources for Fed Chairs to each student. Encourage students to record major details from the online resources provided in the Resources for Fed Chairs document. This will help students determine the power rating. Allow students ample time to research and discuss this assignment with group members.
Review the ratings as a class. Beginning with Janet Yellen, the most recent past Fed Chair, invite students to share the highlights of their research and power ratings with the class. Encourage students to actively listen to groups presenting by jotting down how each Fed chair exerted his/her power on the graphic organizer provided, detailing strengths, weaknesses, and overall impression.
After all power ratings have been shared, show slide 9 from the PowerPoint slides. Ask students to write a paragraph reflecting on the strengths and weaknesses of their assigned Fed Chair. Students should think about the following questions while composing their paragraph:
- In what ways did the Fed Chair exhibit his/her power?
- What factors limited his/her power?
- Did your Fed Chair make mostly positive or negative changes to the economy during his/her tenure?
Review the student answers as a class. Take a class vote: Which Fed Chair was most powerful? Write students’ responses on the whiteboard. Thumbs up or thumbs down: Do you believe the Fed Chair is one of the world’s most powerful people?
Use slide 10 in this lesson to display an Exit Ticket. Have students answer two questions on a sheet of paper and hand it in before the class period ends.
Have students work individually on a computer or laptop. Instruct students to open Chair the Fed: A monetary policy game. This game challenges students to walk in the shoes of the Federal Reserve chair, changing the interest rate to manage inflation and unemployment.
Have students complete the activity Analyzing CPI Data. Students will use the Federal Reserve of St. Louis’ CPI Economic Dashboard to interpret how the CPI is used to measure inflation and why the Federal Reserve targets a 2% rate of inflation. Review the answers as a class.