Diane de Freitas
Fresno City College
Materials Contributed through SERC-hosted Projects
T-Account Contest: Using Cooperative Learning to Understand Fractional-Reserve Banking and Monetary Policy part of Starting Point: Teaching and Learning Economics:Starting Point: Economics in Two-Year Colleges:Activities
In this activity, students will work in pairs to complete the T-accounts for two banks given a set of transactions and follow-up questions. Students will need to account for deposits, bank and nonbank loans, and open market operations on the T-accounts. Students will answer questions regarding excess reserves, growth in the money supply, and the federal funds rate. Students will gain a deeper understanding of bank assets and liabilities, how the money supply grows, why banks borrow from each other and why the federal funds rate would change in response to open market operations. The activity is administered as a competition and the first pair to turn in the assignment with 100% accuracy (or closest to 100%) wins the contest.