Beginning Activities• Title today’s lesson: Monetary Policy• Beginning Activity: What is monetary policy?• Mission Statement: To prepare you for a life of responsible

citizenship• Daily Expectations:

– No one leaves once class has begun.– Come in quietly and get to work immediately– Pay attention and be respectful– No phones – No food or drinks other than water– Do your work– Give AP quality effort

• 5 bonus points for supplies

Extra Credit

• 5 points each 6 weeks for bringing supplies:– Paper clips– Pens– Paper – Staples– Tape

Monetary Policy

Chapter 15The Fed and Monetary Policy

Fractional Bank Reserves

• Banks have to keep a fraction of their deposits in the form of legal reserves.

• They loan out the rest which can go into the system and power the economy.

• The reserve requirement states that a percentage of every deposit be set aside as legal reserves.

Monetary Policy Tools

• Moral suasion – use of persuasion through press releases or news articles about possible moves by the Fed

• Selective credit control – credit rules pertaining to loans for specific commodities or purposes– Ex. minimum down payments on cars during

World War II

Ending Activity

• Page 414: Profiles in Economics• Make sure the floor is clean• Connect to our objectives: How does this

prepare you for life and the future?