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ERIC Number: EJ1225075
Record Type: Journal
Publication Date: 2015
Pages: 4
Abstractor: ERIC
ISSN: ISSN-0037-7724
Five Fundamental Misunderstandings Students Have about Money and the Fed and What to Do about It
Lopus, Jane S.; McDaniel, Kristen
Social Education, v79 n2 p78-81 Mar-Apr 2015
The Federal Reserve System (the Fed) is one of the most important financial institutions in the world. As the central bank of the United States, it influences the domestic money supply, credit, and interest rates with the goal of achieving stable prices and full employment for the world's largest economy. It provides a variety of services to foreign central banks and governments, and Federal Reserve monetary policy can affect exchange rates. Yet despite its importance and influence, the functions of the Fed, and how and why it performs these functions, are often widely misunderstood. Confusion and misinformation about the Fed may make it difficult for high school economics teachers to sort through available resources and decide how and what to present to students. The authors have experience teaching about money and the Fed from the high school level through the university master's degree level. They hope to correct what they perceive to be five of the most common and fundamental misunderstandings that lead to difficulties in teaching about money and the Fed. They also propose methods that high school economics teachers may use to help clarify these concepts in their classrooms. The misunderstandings that the authors identify relate to what money is and how it is created, monetary policy tools, and bond buying and selling by the Fed versus the federal government.
National Council for the Social Studies. 8555 Sixteenth Street #500, Silver Spring, MD 20910. Tel: 800-683-0812; Tel: 301-588-1800; Fax: 301-588-2049; e-mail:; Web site:
Publication Type: Journal Articles; Reports - Descriptive
Education Level: High Schools; Secondary Education
Audience: Teachers
Language: English
Sponsor: N/A
Authoring Institution: N/A