In this lesson, you will learn about the role and functions of the Federal Reserve System. You will participate in an activity to learn how the purchase or sale of U.S. Treasury securities affects the supply of money and credit in the economy. Finally, you will discover what the Fed learned about implementing monetary policy as a result of the Great Depression.

When you have finished this lesson, you should be able to:

• Explain the functions of the Federal Reserve.
• Define monetary policy.
• Explain that the Fed conducts monetary policy by buying and selling Treasury securities.
• Identify what the Fed learned about responding to financial crises such as the Great Depression.