Indiana Social Studies GE.6.3

Social StudiesGrades 9–12Money and the Role of Financial Institutions

The Standard

Demonstrate how banks create money through the principle of fractional reserve banking.

2026 Indiana Academic Standards: K-12 Social Studies

Teacher's field guide

What Students Need to Do: Students trace a deposit, a loan, and the next deposit across banks. They calculate how lending adds to bank deposits under a stated classroom reserve rule.
What Mastery Looks Like: With a $100 deposit and a hypothetical 10% reserve rule, students show a $90 loan followed by an $81 loan. They explain that deposit balances grow, but no new paper bills are printed.
Common Misconceptions: Students may think banks print cash when they lend, or that the same $100 can be lent repeatedly without being recorded as deposits. They may mistake the classroom reserve percentage for a rule every bank must follow.
How to Assess It: Exit ticket: A bank receives a $100 deposit and keeps 10% under a classroom rule. Show the next two loans if each loan is deposited at another bank, then name what increases.

Lesson moves

Give three groups bank ledgers and deposit slips; have them record a $100 deposit, then $90 and $81 loans under a hypothetical 10% rule.
Ask: “When a bank makes a $90 loan, did it print $90 in cash?” Have students explain where the deposit appears.
Run a bank relay: teams calculate the next loan from a deposit card using a 10% classroom rule, then check another team’s ledger.
Draw how a mortgage loan becomes the home seller’s bank deposit when the buyer pays for the house.

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A ready-to-print activity worksheet aligned to GE.6.3, with an answer key for the teacher on its own page. No account needed.

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