Indiana Social Studies GE.5.5

Social StudiesGrades 9–12Money and Banking: Role of Monetary and Fiscal Policies

The Standard

Analyze the effects that higher or lower interest rates can have on economic growth and inflation.

2026 Indiana Academic Standards: K-12 Social Studies

Teacher's field guide

What Students Need to Do: Students explain how interest rates change the cost of borrowing and the reward for saving. They connect those choices to spending, business investment, economic growth, and inflation.
What Mastery Looks Like: Given a rate increase, a student predicts less borrowing and slower spending, which can ease inflation but slow growth. They can explain the likely opposite effects of a rate cut without claiming either outcome is guaranteed.
Common Misconceptions: Students may think higher rates make loans cheaper or that lower rates always make prices fall. They may also assume a rate change affects every household and business at once.
How to Assess It: Exit ticket: A central bank raises interest rates. Explain one likely effect on borrowing, one on growth, and one on inflation.

Lesson moves

Give groups $1,050 in play money and car loan cards requiring $1,040 or $1,090 repayment. Have them decide which cars get bought.
Ask students to write: Why might a central bank raise rates even if some businesses would sell less?
Give pairs rate-change cards and outcome cards. Have them match each change to likely effects on borrowing, growth, and inflation.
Show two sample mortgage payment quotes at 4% and 7%. Ask which buyer might delay purchasing and how that could affect demand.

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