Classroom Lesson: Removing the "Punch Bowl" : Inflation and the Federal Reserve’s Use of Contractionary Monetary Policy

Kaiman, Mike; Johnston, Eva

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Classroom Lesson: Removing the "Punch Bowl" : Inflation and the Federal Reserve’s Use of Contractionary Monetary Policy

GRADE LEVEL: 10-12

OVERVIEW: This lesson focuses on contractionary monetary policy by analyzing a 1955 primary source document of a speech Federal Reserve Chair William McChesney Martin Jr. gave. In his speech, Martin made the famous analogy that in times of economic expansion the Fed should "remove the punch bowl" before the party gets out of hand. Students will develop critical thinking skills through this primary document analysis and develop data literacy skills through FRED® graph analysis.

KEY TOPICS: monetary policy, Federal Reserve System functions, inflation/deflation, economics, history, civics/government, data literacy

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NOTE: This lesson aligns with the AP Macroeconomics Curriculum Alignment Economic Skills Interpretation 2A, Manipulation 3C, Graphing & Visuals 4B, and Unit Alignment Topic 4.6 Monetary Policy.

This lesson aligns with the AP Government & Politics Curriculum Alignment Disciplinary Practices Concept Application 1E, Data Analysis 3D, Source Analysis 4C, and Unit Alignment 4.9 Ideology & Economic Policy.

This lesson aligns with the AP US History Curriculum Alignment Historical Thinking Skills Sourcing & Situation 2C, Making Connections 5A, Argumentation 6C, and Unit Alignment Topics 8.4 Economy After 1945 and 9.4 A Changing Economy.

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