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Virtual Economics

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Unit 3: Lesson 16 - Making Choices About Saving and Investing
Capstone: Exemplary Lessons for High School Economics - Teacher's Guide
This lesson introduces the distinction between savings and the investment. It demonstrates how the price of money --the interest rate--is critical to making the right savings and investment choices. It explains when, under various conditions, it is or is not in people's best interest to save.
Grade(s): 9-12
Concepts: Choice, Inflation, Interest, Investment, Loanable funds market, Purchasing power, Real interest, Savings

Lesson 14: Borrowing decisions and expected returns
Master Curriculum Guide: Economics and Entrepreneurship
Entrepreneurs must possess or have access to funds to start their businesses. They may use their own funds; get others to give them funds for a share of the business and claims on future profits (equity financing); or they may borrow money from others (debt financing) with the contractual obligation to pay back the amount of money borrowed plus additional dollars called interest payments.
Grade(s): 9-12
Concepts: Interest, Interest Rates, Investment, Expected Returns,

Lesson 12 - Building Wealth over the Long Term
Learning, Earning and Investing: High School
The students are introduced to the case of Charlayne, a woman who becomes, accidentally, a millionaire. Charlayne's success, the students learn, was unexpected, but not a miracle. It can be explained by three widely understood rules for building wealth over the long term: saving early, buying and holding, and diversifying. The lesson uses Charlayne's decisions to illustrate each of these rules. It...
Grade(s): 6-8, 9-12
Concepts: Compound interest, Diversification, Forms of saving and investing, Reward, Risk

Theme 4: Lesson 11 - What Is Credit?
Financial Fitness for Life: Bringing Home the Gold - Grades 9-12 - Teacher Guide
Credit decisions are among the most important choices that young people will make. This lesson provides an overview of what credit is and some of the advantages and disadvantages of using credit. Students examine various types of loans including home mortgages, car loans, college loans, personal loans, and credit card loans.
Grade(s): 9-12
Concepts: Credit, Risk, Interest

Lesson 2: Savings Accounts and U.S. Savings Bonds
Learning, Earning and Investing: Grades 4-5 Lessons
People who want to save money can do so in various ways. One method is to use a savings account; another is to buy U. S. Savings Bonds. In this lesson, the students learn about these two methods of saving.
Grade(s): 3-5
Concepts: Decimal, Face value, Interest, Interest rate, Percent, Savings account, U.S. Savings Bond

Unit 6: Lesson 15 - Halloween Treats and Nonrenewable Resources
Economics and the Environment
Students are introduced to the "when" question with a Halloween variation of the "cake-eating" problem. The snacks described in the problem are then used to demonstrate how a market for a nonrenewable resource works.
Grade(s): 9-12
Concepts: Nonrenewable Resources, Assets, Interest Rate, Price, Rate-of-return, Capital Gain,

Theme 3: Lesson 13 - Buddy, Can You Spare a Dime?
Financial Fitness for Life: Steps to Financial Fitness - Grades 3-5 - Teacher Guide
In this lesson, students role-play how they would respond to various lending situations and analyze how to make better decisions about lending. By assuming the role of lender, students will analyze the qualities necessary to receive a loan. They will recognize that these are qualities they may wish to develop to improve their opportunities to borrow in the future.
Grade(s): 3-5
Concepts: Credit, Debt, Lending, Borrowing, Costs, Benefits, Interest,

Lesson 3: What Happens When a Bank Makes a Loan?
Learning, Earning and Investing: Grades 4-5 Lessons
The students play roles in a simulation activity designed to show how bank loans made to individuals can have an impact on others in the community. Then, working in small groups, the students analyze other hypothetical loans, using flow charts or other diagrams to describe the probable impact of each.
Grade(s): 3-5
Concepts: Bank, Income, Interest, Loan, Profit

Lesson 6 - What Is a Bond?
Learning, Earning and Investing: High School
In this lesson the students learn what bonds are and how bonds work. They learn the basic terminology related to bonds and participate in a simulation activity aimed at showing that bonds are certificates of indebtedness, similar to an IOU note. Finally, the students explore credit ratings and calculate average coupon rates for various bond ratings in order to determine the relationship between ra...
Grade(s): 6-8, 9-12
Concepts: Bond, Bond rating, Coupon, Coupon bond, Coupon rate, Default, Face value, Maturity date, Par value, Risk, Zero-coupon bond

Lesson 8: Central Banking With or Without Central Planning
Focus: Economic Systems
Students participate in an auction to see how large increases in the money supply can cause inflation. Then they examine data on the relationship between inflation and growth rates in the money supply in different countries. That leads to a discussion of central banks and monetary policy. Finally, students plot a scatter diagram to investigate the relationship between the political independence...
Grade(s): 9-12
Concepts: Inflation, Monetary Policy, Central Bank

Theme 2: Lesson 4 - The Grasshopper and the Ant
Financial Fitness for Life: Steps to Financial Fitness - Grades 3-5 - Teacher Guide
In this lesson, children use an adaptation of Aesop's fable, "The Grasshopper and the Ant," to learn about the trade-off between satisfying wants today and planning for the future. Children use the fable to examine their own behaviors and decisions about saving. They learn how interest provides an incentive to save. Writing their own fable provides the children with a creative way to express th...
Grade(s): 3-5
Concepts: Opportunity cost, Trade-offs, Saving, Interest,

Lesson 7: Why Middlemen Matter: The Role of Financial Institutions in a Market Economy
From Plan to Market: Teaching Ideas for Social Studies, Economics, and Business Classes
Students participate in a simulation and analyze two case studies emphasizing the importance of the development of financial institutions in the transition economies.
Grade(s): 9-12
Concepts: Banks, Financial Institutions, Interest Rates, Investment, Search Costs, Middlemen

Lesson 11: Cash or Annuity?
Mathematics & Economics: Connections for Life - 9-12
Jackpot winners of state lotteries may have the choice of receiving their winnings in the form of cash or an annuity. An annuity is a financial instrument that provides income at regular intervals over a specified time period. For example, New York's Lotto and California's SuperLotto offer an annuity with an annual payment for 26 years, and the multi-state Powerball lottery has a 25-year annuity o...
Grade(s): 9-12
Concepts: Compound interest,

Theme 4: Lesson 14 - All About Interest
Financial Fitness for Life: Bringing Home the Gold - Grades 9-12 - Teacher Guide
In order to compare the cost of different loans, students must understand finance charges and interest rates. In this lesson, the students learn how to compute finance charges, how to differentiate between add-on and annual percentage rate and loan repayment period affect the cost of a loan.
Grade(s): 9-12
Concepts: Interest

Lesson 14: The Mathematics of Savings
Mathematics & Economics: Connections for Life - 9-12
Because of interest compounding, establishing a commitment to personal savings early in one's professional career can yield large long-run benefits. This lesson looks at the mathematics that underlie the computations of the future value of savings. These computations are now commonly found at many on-line financial calculators. Students will see that relatively modest savings, when compounded over...
Grade(s): 9-12
Concepts: Compound interest,

Lesson 15: The Mathematics of Credit Card Interest and Fixed Payments
Mathematics & Economics: Connections for Life - 9-12
It is common for a high school student to receive multiple invitations to enroll for a credit card. In fact, an increasing number of high school students even carry credit cards. One goal of this lesson is to try to uncover some of the mathematics that underlies the calculation of numbers that are found on a monthly credit card statement. While these calculations are done using technology, it will...
Grade(s): 9-12
Concepts: Interest,

Unit 6: Lesson 3 - The Federal Reserve System is Established
United States History: Eyes on the Economy - Through the 20th Century
The teacher shows a visual that demonstrates how reserves of small, medium size and large U.S. banks were interrelated in the 19th century. The teacher distributes a handout that demonstrates how many panics spread throughout the U.S. banking system. Students use two handouts that explain how the establishment of the Federal Reserve System reduced the problems of bank failure and the money panic...
Grade(s): 9-12
Concepts: Money, Fractional reserve banking, Bank reserves,

Unit 7: Lesson 1 - Whatdunit? The Great Depression Mystery
United States History: Eyes on the Economy - Through the 20th Century
Students read a brief passage posing the basic question about the Great Depression: How did it happen? A brief simulation activity shows how unemployment in one part of the economy can lead to unemployment in other parts of the economy. With the aid of two visuals, the teacher discusses the reduction in the stock of money caused by bank failures from 1930 to 1933.
Grade(s): 9-12
Concepts: Recession, Depression, Demand, Income, Multiplier, Money, Fractional reserve banking, Federal reserve system,

Lesson 21 - Lessons from History: Stock Market Crashes
Learning, Earning and Investing: High School
The students analyze information about the stock market crash of 1929 and the stock market crash of 1987. They use the information to make posters about the crashes, highlighting what happened during and after the crashes, causes of the crashes and the role of the Federal Reserve in each crash. After presenting their posters to the class, the students discuss similarities and differences between t...
Grade(s): 6-8, 9-12
Concepts: Causes and effects of the stock market crash of 1929, Causes and effects of the stock market crash of 1987, Federal Reserve, Monetary policy, Supply and demand

Theme 4: Lesson 12 - Cash or Credit?
Financial Fitness for Life: Shaping Up Your Financial Future - Grades 6-8 - Teacher Guide
Most students are aware of the variety of spending options available to consumers. Cash, checks, debit cards, and credit cards are often used by their parents; however, the students probably do not understand the implications of each. This lesson examines the advantages and disadvantages of various payment methods and focuses especially on credit usage. The students are challenged to calculate ...
Grade(s): 6-8
Concepts: Interest, Interest rate, Credit, Opportunity cost, Inflation

ONLINE LESSONS:

online The Early 1980s: A Tough Time For Home Builders and Mortgage Bankers
Have you ever thought of how much it might cost you to finance the purchase of a home? The home's purchase price is likely to be many times the yearly income of the typical household. If families waited until they had accumulated enough savings to use cash to pay for a home, they would be denied the benefits of homeownership for many years. Instead, most families go to a mortgage banker o...
Grade(s): 9-12
Concepts: Banking,Credit,Federal Reserve Structure,Housing,Inflation,Interest Rate,Mortgage,Deflation,Federal Reserve

online Climbing the Savings Mountain
Students discover how saving money can be compared to a mountain climb. The climb can be fast or slow, safe or hazardous, scenic or thrilling. You will find out that there is more than one way to get to the top!
Grade(s): 6-8
Concepts: Banking,Inflation,Interest Rate,Borrower,Deflation,Interest,Savings,Savers

online Earning Credit
Students participate in a series of activities that provide them with a simulated credit score and an auto loan interest rate based on their credit score. Then they learn to use compound interest and amortization schedules to calculate the real cost of buying a car, and they compare the total cost of buying a car for individuals with high and low credit scores. At the conclusion, students have a s...
Grade(s): 9-12
Concepts: Credit,Interest Rate,Risk,Compound Interest,Credit Report,Principal,Simple Interest

online Calculating Simple Interest
How do banks calculate the amount of interest paid on a loan? In this lesson, students will view a Livescribe Pencast to learn how to find the dollar amount in interest that is due at maturity. This lesson uses different time periods such as days, months, and years in the calculation as well as varying interest rates.
Grade(s): 6-8, 9-12
Concepts: Interest Rate,Interest,Principal,Simple Interest

online A Penny Saved
Students will read the comic book, "A Penny Saved" published by the New York Federal Reserve Bank. Students will make the information relevant through projects, graphic organizers, teacher instruction, and problems.
Grade(s): 9-12
Concepts: Interest Rate,Saving,Compound Interest,Savings,Savings Account,Rule of 72,Required Reserves

online The Credit Card Mystery
Credit Cards are a risky business these days, especially for students and those holding multiple cards. Interest rates on credit card balances have always been high relative to other rates, for several reasons. Despite this, there is still a demand for the "plastic money" that many people see as convenient and ideal with the increasingly technological world economy. This lesson explores ...
Grade(s): 9-12
Concepts: Choice,Consumers,Credit,Interest Rate,Benefit,Costs,Interest

online The Costs of Credit
"Will that be cash, check, debit, or credit?" This lesson plan explores the difference between these. What is the difference? Is using credit the same as paying with cash? Or by check? Or by debit card? Some young people believe that using credit is the same as paying with cash. In fact, some young people believe that all you need to make purchases is a credit card. It seems as if a cred...
Grade(s): 9-12
Concepts: Credit,Decision Making,Interest Rate,Characteristics of Money

online How Expensive are Payday Loans?
Students will learn how a payday loan works by watching a video. They will learn that payday loans are an expensive form of borrowing and then calculate the total cost of a payday loan using several methods (table, graph, and formula). Students will learn what makes payday loans an expensive form of quick cash and how to evaluate offers. They will learn the effect rolling over a payday loan can ha...
Grade(s): 9-12
Concepts: Interest,Annual Percentage Rate (APR),Finance Charge

online Loan Amortization - Mortgage
How to amortize a loan using an Excel spreadsheet.
Grade(s): 9-12
Concepts: Interest Rate,Mortgage,Interest,Compound Interest,Debt,Financial Planning,Annual Percentage Rate (APR),Principal

online Getting and Using a Credit Card
Students will read the "Credit Counselor" guide to learn about the costs and benefits of credit cards; the C's of credit; credit history; credit application evaluation; and become familiar with some useful formulas. They will need to complete the reading in order to make the best choice from a series of credit profiles and to answer a series of questions during the simulation.
Grade(s): 6-8, 9-12
Concepts: Credit, Interest rate

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