AP Macro Lecture Guide: How the Fed Implements Monetary Policy

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The Federal Reserve (Fed) is the central bank of the United States. Its congressionally mandated objectives are to promote maximum employment and price stability. This lesson begins with a description of how the Federal Open Market Committee (FOMC) conducts monetary policy to achieve this dual mandate. Then, using the College Board’s reserve market graph, the discussion shifts to how a central bank might use monetary policy tools to influence market interest rates and, ultimately, employment and inflation outcomes. Finally, examples of how a central bank responds to various economic shocks are presented to reinforce the key concepts covered in this lesson.

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Education Level: 9-12
Subjects: AP Economics Economics
Concepts: Federal Reserve System-functions Monetary Policy Business Cycle
Resource Types: Lesson PowerPoint
Languages: English