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Econ Focus Reading Q&A

Helicopter Money

Time required: 30 minutes

In Class Handouts

(Note: the answer key is available at the St. Louis Fed's Econ Lowdown Teacher Portal. See the online assignment section for more information.)

As an Online Assignment

Visit the Reading Q&As in the St. Louis Fed’s Econ Lowdown Teacher Portal, to assign an online version of the student materials and to collect student scores on the questions. The materials are still free—but having them in the portal keeps students from accessing the answer key.

Related Resources

Page One Economics: Quantitative Easing Explained

Traditional and Non-Traditional Monetary Policy Tools

Voluntary National Content Standards in Economics

Standard 16: There is an economic role for government in a market economy whenever the benefits of a government policy outweigh it costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also have direct or indirect effects on people’s incomes.

  • Benchmark 5, Grade 12: When a price fails to reflect all the benefits of a product, too little of the product is produced and consumed. When a price fails to reflect all the costs of a product, too much of it is produced and consumed. Government can use subsidies to help correct for insufficient output; it can use taxes to help correct for excessive output; or it can regulate output directly to correct for over- or under-production or consumption of a product.
  • Benchmark 9, Grade 12: Governments often redistribute income directly when individuals or interest groups are not satisfied with the income distribution resulting from markets; governments also redistribute income indirectly as side-effects of other government actions that affect prices or output levels for various goods and services.

Standard 20: Federal government budgetary policy and the Federal Reserve System’s monetary policy influences the overall levels of employment, output, and prices.

  • Benchmark 1, Grade 12: Fiscal policies are decisions to change spending and taxation levels by the federal government. As fiscal policies, these decisions are adopted to influence national levels of output, employment, and prices.
  • Benchmark 2, Grade 12: In the short run, increasing federal spending and/or reducing taxes can promote more employment and output, but these polices also put upward pressure on the price level and interest rates. Decreased federal spending and/or increased taxes tend to lower price levels and interest rates, but they reduce employment and output levels in the short run.
  • Benchmark 3, Grade 12: Over time, the interest-rate effects of an expansionary fiscal policy may lead to a decrease in private investment spending that offsets the output and employment effects of the policy.
  • Benchmark 7, Grade 12: Monetary policies are decisions by the Federal Reserve System that lead to changes in the supply of money, short term interest rates, and the availability of credit. Changes in the growth rate of the money supply can influence overall levels of spending, employment, and prices in the economy by inducing changes in the levels of personal and business investment spending.

    Common Core Standards

    Grades 6-12 Literacy in History/Social Studies and Technical Subjects

    Key Ideas and Details

    RH.11-12.1: Cite specific textual evidence to support analysis of primary and secondary sources, connecting insights gained from specific details to an understanding of the text as a whole.

    RH.11-12.2: Determine the central ideas or information of a primary or secondary source; provide an accurate summary that makes clear the relationships among the key details and ideas.

    Craft and Structure

    RH.11-12.4: Determine the meaning of words and phrases as they are used in a text, including analyzing how an author uses and refines the meaning of a key term over the course of a text (e.g., how Madison defines faction in Federalist No. 10).

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