Economics-in-Marketing CTE Lesson Plan

Transcription

1 Economics-in-Marketing CTE Lesson Plan Money Supply and the Federal Reserve Lesson Title Lesson Objective At the completion of this lesson, students will be able to describe the various methods the Federal Reserve uses to control the money supply. Concepts CTE Concept(s) Economics Economic Concept(s) Money Supply, Monetary Policy, Reserve Requirements, and Multiplier Effect Standards/Benchmarks Michigan Career and Technical Education Segment 12 I.D.4 Acquire knowledge of the impact of government on business activities to make informed economic decisions. Michigan Department of Education High School Content Expectations Social Studies: Economics Financial Institutions and Money Supply. Analyze how decisions by the Federal Reserve and actions by financial institutions (e.g., commercial banks, credit unions) regarding deposits and loans, impact the expansion and contraction of the money supply. Student Handout 1 Student Handout Answer Key 1 Student Handout 2 Student Handout Answer Key 2 Student Handout 3 Student Handout 4 Student Handout Answer Key 4 Student Handout 5 Student Handout Answer Key 5 Teacher Resource 1 Video 1 Supplies Needed Money Supply: Where Does Our Money Come From? Money Supply: Where Does Our Money Come From? Key Reserve Requirements Reserve Requirements Key How to Create Money Money Multiplier Scenario Money Multiplier Scenario Key Short Answer Assessment Short Answer Assessment Key Fake Currency The Federal Reserve and You: Monetary Policy Berrien RESA 1 Economics in Marketing Education

2 1. Introduce the CTE lesson. Economics-in-Marketing CTE Lesson Plan [Grading is left to the discretion of the teacher.] A. Introduction Activity: Where does our money come from? 1. Distribute Student Handout 1: Money Supply: Where Does Our Money Come From? Ask the students to define the terms deposit and loan. Ask the students to wait to answer the four questions that follow. 2. Deposit Money put into a financial account. Also, to place money in a financial account. 3. Loan The act of giving money, property or other material goods to another party in exchange for future repayment of the principal amount along with interest or other finance charges. A loan may be for a specific, one-time amount or can be available as open-ended credit up to a specified ceiling amount. Discussion #1: Where do we make most of our significant financial transactions? Possible Answers: Banks or credit unions 2. Assess students economic awareness as it relates to the CTE lesson. A. Ask the students to answer the four questions that follow the definitions in Student Handout 1: Money Supply: Where Does Our Money Come From? Use Student Handout Answer Key 1: Money Supply: Where Does Our Money Come? Key for guidance through the discussion that follows. Discussion #2: Show the students any form of currency (coins and/or notes). Ask the students where the dollar came from. Possible Answers: a purse or wallet, a friend, a spouse, an automatic teller machine (ATM), a bank, a credit union, or the Federal Reserve Show the students a credit or debit card. Ask the students where the card came from. Possible Answers: a purse or wallet, a friend, a spouse, a retailer, a bank, or a credit union Where does the money for a student loan come from? Possible Answers: parents, the government, a bank, a credit union, or Sallie Mae When you borrow to buy a car or a house, where does that money come from? Possible Answers: friends, parents, a mortgage company, a bank, or a credit union Berrien RESA 2 Economics in Marketing Education

3 Discussion #3: Looking at the big picture who controls the money supply? Possible Answers: The Federal Reserve. Have the students write in their notes. It is important that all of the students understand that the Federal Reserve controls the money supply in the United States. The Federal Reserve is the focus of this lesson. B. Define Monetary Policy - changes in the supply of money and the availability of credit initiated by a nation's central bank to promote price stability, full employment and reasonable rates of economic growth. 1. Have the students write this in their notes as well. Monetary policy set by the Federal Reserve Bank determines the money supply in the United States. 3. Work through the economic lesson as it is embedded in the CTE lesson. A. Show Video 1: The Federal Reserve and You: Monetary Policy. B. Discuss Video 1: The Federal Reserve and You: Monetary Policy. 4. Work through related, contextual economic-in-cte examples. A. Display Student Handout 2: Reserve Requirements through a projection unit or document camera. Use Teacher Resource 1: Fake Currency and cut out the currency. Use Student Handout Answer Key 2: Reserve Requirements Key as a guide for this activity. 1. Ask four students to volunteer for this activity. a. One student will be the banker the banker will record all of the transactions for the class to see using a document camera. b. Give the second student Depositor 1 $200 in fake currency to deposit in a checking account. The banker will take the currency and record the deposit dollars column for Depositor 1. Ask students what the banker should record for the reserve requirement of ten percent of this deposit. Answer: $20 (banker must record this in the appropriate column on Student Handout 2: Reserve Requirement). The loan dollar amount must now be $180; $200 deposit less the $20 reserve requirement (ask the banker to record this amount in the appropriate column). c. Ask the third student Borrower 1 to borrow $180 from the bank. The banker will give the currency to the borrower and record the borrowed amount in the appropriate column. d. Give the fourth student Depositor 2 $180 in fake currency to deposit in a checking account. The banker will take the currency and record the deposit dollars column for Depositor 2. Ask students what the banker should record for the reserve requirement of ten percent of this deposit. Answer: $18 (banker must Berrien RESA 3 Economics in Marketing Education

4 record this in the appropriate column on Student Handout 2: Reserve Requirement). The loan dollar amount must now be $162; $180 deposit less the $18 reserve requirement (ask the banker to record this amount in the appropriate column). e. Follow the directions at the bottom of Student Handout Answer Key 2: Reserve Requirements Answer Key to complete the activity. 5. Work through traditional economic examples. A. The Federal Reserve Bank demands that banks hold onto a certain amount of deposits to hold as reserves. Explain the idea of the money multiplier effect. 1. Multiplier Effect The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. In other words, it is money used to create more money and is calculated by dividing total bank deposits by the reserve requirement. (Investopedia) a. Ask the students to record the definition in their notes. B. Distribute Student Handout 3: How to Create Money. 1. Review Student Handout 3: How to Create Money. 2. Emphasize the point that the Federal Reserve uses this multiplier effect to tighten or loosen the money supply. The higher the reserve limit, the tighter the money supply lending is restricted. When the reserve limit is lower, there is more money supply as banks have more to lend. 6. Students demonstrate their understanding. A. Distribute Student Handout 4: Money Multiplier Scenario. 1. Read through Student Handout 4: Money Multiplier Scenario with students. 2. Ask the students to fill in the blank spaces in the money multiplier scenario using Student Handout 3: How to Create Money as a guide. 3. Use Student Handout 4: Money Multiplier Scenario Key to evaluate student work. 7. Formal assessment. A. Distribute Student Handout 5: Short Answer Assessment to the students. 1. Ask the students to answer the questions in complete sentences. Berrien RESA 4 Economics in Marketing Education

5 2. Use Student Handout Answer Key 5: Short Answer Assessment Key to evaluate student work. Berrien RESA 5 Economics in Marketing Education

6 Standards Money Supply and the Federal Reserve Lesson Title Lesson Objective At the completion of this lesson, students will be able to describe the various methods the Federal Reserve uses to control the money supply. Standards/Benchmarks Michigan Career and Technical Education Segment 12 I.D.4 Acquire knowledge of the impact of government on business activities to make informed economic decisions. Michigan Department of Education High School Content Expectations Social Studies: Economics Financial Institutions and Money Supply. Analyze how decisions by the Federal Reserve and actions by financial institutions (e.g., commercial banks, credit unions) regarding deposits and loans, impact the expansion and contraction of the money supply. MBA Research Performance Indicators Explain the role of the Federal Reserve System (EC:097) (MN) Berrien RESA 6 Economics in Marketing Education

7 References Econedlink: Council for Economic Education. (n.d.). Economic Glossary. Retrieved from Berrien RESA 7 Economics in Marketing Education