By performing this exercise, students will explore the monetary tools available to the FOMC for creating an impact on the money supply. Of most importance is the ability of students to explain how their tool can impact the supply of money.

Divide the class into groups of three. Each group should construct a "directive" to increase the money supply in order to stimulate the economy. The members of each group will have a particular tool of monetary policy to discuss: one person is assigned the discount rate, another is assigned the reserve requirement, and the other member is assigned open market operations. Each member will announce to the group how his or her tool must be changed and how that change will lead to a greater supply of money.