Indiana Social Studies GE.7.2

Social StudiesGrades 9–12Economic Stabilization

The Standard

Define and explain monetary policy and its tools.

2026 Indiana Academic Standards: K-12 Social Studies

Teacher's field guide

What Students Need to Do: Monetary policy is how the Federal Reserve uses interest rates and bond trades to influence borrowing, spending, inflation, and jobs. Students explain what happens when the Fed raises rates or buys and sells government bonds.
What Mastery Looks Like: Given rising inflation, a student recommends raising the Fed's target interest rate and explains why borrowing may slow. They can explain that a Fed bond purchase adds reserves to banks and can help lower interest rates.
Common Misconceptions: Students may confuse Fed actions with Congress changing taxes or spending. They may think a Fed bond purchase removes reserves from banks, or that a rate change immediately changes every loan rate.
How to Assess It: Exit ticket: Inflation is rising. Should the Fed raise or lower its target interest rate? Name one bond trade that could also slow borrowing, and explain why.

Lesson moves

Give pairs paper bonds and bank-reserve tokens; act out a Fed bond purchase, then record the change in bank reserves.
Ask students: Why might the Fed raise its target rate when prices rise, even if car loans become more expensive?
Sort cards labeled tax cut, bond sale, rate increase, and school spending into Fed actions and government budget actions.
Read a Fed rate announcement, then check a credit card's variable-rate terms to predict how its interest charge might change.

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