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Lesson Plans
Why Does Money Have Value??

Overview Procedures for Teachers Organizers

Procedures for Teachers is divided into two sections:
  • Prep — Preparing for the lesson
  • Steps — Conducting the lesson
Prep

Media Components

  • Video:

    • "The Ascent of Money" segment

      The two-hour PBS documentary "The Ascent of Money" traces the evolution of money and demonstrates the significance of financial history. While the world economy struggles to overcome a meltdown in the financial markets, "The Ascent of Money" puts the meaning of money into context--where it came from, where it goes, and why it has always been (and always will be) the fulcrum of civilization. By learning how societies have continually created and survived financial crises, it suggests how solid solutions can be found to overcome today's worldwide economic emergency. Fundamental economic concepts are illuminated in discussions with some of the financial world's leading experts.

      You need the free Flash Player to see this video.

  • Segments:

    • Ascent of Money 1

      The Importance of Money and Credit as a Measure of Trust --Explanation of how trust and confidence give money value.
      2:30 - 4:15

    • Ascent of Money 2

      The Importance of Money and Credit as a Measure of Trust --Explanation of the evolution of currency
      1:15 - 2:22

    • Ascent of Money 3

      The Importance of Money and Credit as a Measure of Trust --Explanation of the foreign exchange market
      4:15 - 5:15

  • Web site:


  • Materials:

    Teachers will need the following supplies:

    • Computer with connection to a screen or television on which to project the Web-based video clips, or computer stations where students can watch the clips
    • Board
    • Poster paper

    Students will need the following supplies:

    • Computers with Internet access (for individuals or groups)
    • Notebook or journal
    • Pens/pencils
    • Calculator
    • "Money Scenarios" Student Organizer
    • "Valuation" Student Organizer

  • PREP FOR TEACHERS:

    1. 1. Bookmark the Web sites used in the lesson on each computer in your classroom, or upload all links to an online bookmarking utility such as www.portaportal.com.

    2. Preview all of the video clips and Web sites used in the lesson to make certain that they are appropriate for your students, currently available, and accessible from your classroom.

    3. Download the video clips used in this lesson onto your hard drive, or prepare to stream the clips from your classroom.

    4. Print out the Student Organizer "Money Scenarios" and make enough copies so that each student has one copy of each organizer.

    5. Print out the Student Organizer "Valuations" and make enough copies so that each student has one copy of each organizer.

    6. When using media, provide students with a FOCUS FOR MEDIA INTERACTION, a specific task to complete and/or information to identify during or after viewing of video segments, Web sites, or other multimedia elements.

Steps

Day 1: Introduction of Lesson - Why Money Has Value (The Psychology of Money)

  1. Introduce the lesson by piqing the students interest by announcing loudly, "Who likes money?" asking students what they know about money. Specifically, ask the class why we have money, why money has value, how money evolved as a medium of exchange. Write the answers on the board.

  2. Provide students with a FOCUS FOR MEDIA INTERACTION, asking them to think about in particular the question of why money has value. Play the "Ascent of Money 1" segment for the class.

  3. When the segment is over, have a discussion with students about some of the ideas mentioned in the video. Specifically, what are some of the specific reasons listed that give money value? Be sure to discuss the concepts of confidence and trust. Explain to the class if they have not made this connection, that money has value because we believe it does. Specifically, because we have trust and confidence that the currency will have a certain value in our society.

  4. Next, discuss with students why it is a good idea to have a medium of exchange for goods. Hand out the "Money Scenarios" Student Organizer.

  5. Next, ask students to break up into five groups. The groups will look at five scenarios of different mediums of exchange. Explain to the class that each group should write on a poster sheet the positives and negatives of their group's specific medium of exchange.

  6. Then, ask the students to come back together as a class. Ask each group to appoint a spokesperson to report out to the class.

  7. Have a discussion of which type of currency proved to be the most useful, and why.

  8. Wrap up the class by explaining that the next two lessons will involve creating a system of markets and currency exchange.

Day 2: The History of Money

  1. Start the class with a review of the class discussion of the previous day, focusing on the concepts of the psychology of money, and why money has value.

  2. Next, explain to the class that today they will be focusing on the history and the evolution of money.

  3. Provide students with a FOCUS FOR MEDIA INTERACTION, asking them to pay careful attention to the different means of currency. Play the "Ascent of Money, 2" segment for the class.

  4. Ask the students to return to their five groups. Now, ask each group to come up with a different type of currency in bill and coin form. Ask each group to come up with five different denominations, akin to dollar denominations. They can make the money. Each group should also make a basic design of their currency on a piece of poster paper, along with the name of the currency.

  5. Next, give the students the Student Organizer "Valuation" list of items to price. Explain that they need to figure out how much of their currency is worth one dollar (it can be a factor or a multiple), and then compute how much in their currency each item is worth in their item group.

  6. Make a master grid on the board of how much each item would cost in the five currencies. Set up the grid like this:

    Items: Group 1
    Cost
    Group 2
    Cost
    Group 3
    Cost
    Group 4
    Cost
    Group 5
    Cost
    Value of $1          
    Group 1:          
    Item 1          
    Item 2          
    Item 3          
    Item 4          
    Group 2:          
    Item 1          
    Item 2          
    Item 3          
    Item 4          
    Group 3:          
    Item 1          
    Item 2          
    Item 3          
    Item 4          
    Group 4:          
    Item 1          
    Item 2          
    Item 3          
    Item 4          
    Group 5:          
    Item 1          
    Item 2          
    Item 3          
    Item 4          


  7. Next, explain to the students how the Student Organizer "Valuation" list of items to price also shows that each group controls a certain group of items. Ask the students what would be necessary if each group wanted to exchange currency with the other so that they could buy the other's goods. [The correct answer is that there need to be exchange rates determined for each group's currency.]

Day 3: Market Structures and Pricing

  1. Start class by reviewing the concepts of currency, and means of exchange. Discuss how it was possible to figure out an equation to determine how to exchange each currency for the other.
  2. Next, discuss the reality that is a market for money, known as the "Foreign Exchange" or "FX" market where different currencies are traded for each other. Also explain to the class that it is the biggest financial market in the world, and it is open 24 hours per day as it trades in every time zone.
  3. Provide students with a FOCUS FOR MEDIA INTERACTION, asking them to pay careful attention to the foreign exchange market. Play the "Ascent of Money, 3" segment for the class.
  4. Ask students to return to their groups from the previous day. Ask the students to figure out how to determine how much their currency is worth versus another group's currency. The students can determine this by figure by comparing the two currencies' equivalency to one dollar. For example, if Group A currency is 2 pieces to the dollar and Group B currency is 4 pieces to the dollar, then one pieces of Group B currency is worth one piece of Group A currency.
  5. Using calculators, ask students to fill in the currency values for their Group for each of the products listed in the grid.
  6. Next, discuss with the class why different currencies might be bought and sold. Explain that much like the grid on the board, different countries produce different products, so companies or individuals who want to purchase goods in other countries have to purchase the currency of that country first.
  7. Wrap up the class by reiterating how important money is as a medium of exchange in a global economy.

Extension Activities

  1. Students can research online different exchange rates for different countries compared to the United States using the Bloomberg.com website.

  2. Students can research which goods come from which countries. For example, which countries produce oil? Which countries produce coffee? Which countries produce semiconductors?


Overview | Procedures for Teachers | Organizers

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