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Virtual Economics

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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 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

Lesson 23 - Investing Involves Decision Making
Learning, Earning and Investing: High School
This lesson provides an overall review and an opportunity for students to apply many of the concepts stressed in earlier lessons. The students examine different sorts of risk that come with investments. They are introduced to a fivestep decision-making model. After practicing with it, they apply the model in a simulation activity in which they act as financial advisors, offering financial advice i...
Grade(s): 6-8, 9-12
Concepts: Bonds, Capital gain, Certificate of deposit, Dividend, Diversification, Liquidity, Money market account, Mutual funds, Principal, Rate of return, Risk, Savings account, Stocks

Lesson 2 - Investors and Investments
Learning, Earning and Investing: High School
In this lesson the students explore different types of investments, some of which are unconventional, in order to grasp the basic idea that investment involves trading off present benefits for future satisfaction. The students also apply the criteria of risk, return and liquidity to define more precisely the meaning of investing.
Grade(s): 6-8, 9-12
Concepts: Investing, Investment, Liquidity, Return, Risk

Lesson 7 - What Are Mutual Funds?
Learning, Earning and Investing: High School
The students form class investment clubs that work much in the way mutual funds do. They invest $3,000 (300 shares at $10 a share) in up to six stocks. One year later they revalue their shares and determine whether a share in their class investment clubs has increased or decreased in value. Finally, they read about mutual funds and learn that the concept behind mutual funds is similar to the conce...
Grade(s): 6-8, 9-12
Concepts: Diversification, Liquidity, Load, Mutual fund, Net asset value, Risk and reward

Theme 3: Lesson 9 - There Is No Free Lunch in Investing
Financial Fitness for Life: Bringing Home the Gold - Grades 9-12 - Teacher Guide
Risk is inherent in all investments. In investing, there are risks you cannot control. However, other risks can be controlled. The key is to develop a risk-reward ratio with which you are comfortable. The higher the risk, the greater the potential reward. This is why there is no free lunch in investing. In this lesson, students learn about five types of risk and then compare the risks and re...
Grade(s): 9-12
Concepts: Money management, Real vs. Nominal, Risk, Investing, Savers, Saving, Investment

Lesson 14 - Savings and Personal Investments: If You're So Smart, Why Aren't You Rich?
Personal Decision Making: Focus on Economics
Students view a transparency showing the difference between economics definitions and personal finance definitions of the terms capital and investment. They read and discuss a handout listing four basic rules for wise investment decisions.
Grade(s): 9-12
Concepts: Capital, Investment, Savings, Opportunity cost, Securities, Stocks, Bonds, Mutual funds, Savings accounts, Certificates of deposit, Risk versus return, Liquidity,

Lesson 16 - What We've Learned
Learning, Earning and Investing: High School
This lesson features a game in which the students review key vocabulary words and concepts presented in earlier lessons. The game is called Flyswatter Review. The teacher divides the class into two teams. Using transparencies, the teacher projects financial terms from the visuals onto a screen or wall. The teams compete to select the correct definition.
Grade(s): 6-8, 9-12
Concepts: Stock Market, Stock, Mutual Fund, Risk, Liquidity, Liquidity Risk

Lesson 7- The Great Tulip Boom
World History: Focus on Economics
The teacher displays a transparency comparing the prices of many goods in the 1600s in the Netherlands to prices paid for rare tulip bulbs during the Great Tulip Boom of the 1630s. Students perform a simulation of the boom and write a short essay expressing their personal feelings about the relationship between risk and rates of return.
Grade(s): 9-12
Concepts: Financial Investment, Rate of Return, Risk, Speculation

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

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,

Lesson 10: Why Are Some Nations Wealthy?
Focus: Economic Systems
Students work in pairs to examine data from several nations regarding size, natural resources, and population. Using these data they make predictions about which nations are likely to be below, at, or above the world average of per capita Gross Domsetic Product (GDP). GDP is the basic economic measure of national income, so per capita GDP is a key measure of a nation's per person income. Studen...
Grade(s): 9-12
Concepts: Economic Growth, Productivity, Property Rights, Saving and Investment, Physical Capital and Human Capital, Natural Resources, Trade

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,

Unit 7: Lesson 1 - Saving and Investing in Razorback
United States History: Eyes on the Economy - Through the Civil War
In this saving and investment simulation small groups of students decide how they would invest $3,000, given a list of 10 possibilities. They learn how much they earned on their investments, taking into account not only the rate of returns on the savings but also the financial consequences of investments that were not made.
Grade(s): 9-12
Concepts: Incentives, Profit, Savings, Investment,

Theme 1: Lesson 1 - How to Really Be a Millionaire
Financial Fitness for Life: Bringing Home the Gold - Grades 9-12 - Teacher Guide
This lesson is designed to get students interested in personal finance. Financial planning may seem dull and laborious, but finding out how to become a millionaire is an activity that tends to stir up considerable interest. This lesson shows the students that they are unlikely to achieve wealth without self-discipline. Achieving personal wealth involves planning and making sound choices, such a...
Grade(s): 9-12
Concepts: money management, saving, investing, compound interest

Unit 6: Lesson 6 - What is Investment?
United States History: Eyes on the Economy - Through the Civil War
Students read an activity about a fictitious farmer of the early 1800s who used earnings from his labor to buy a farm and then used income from the farm to increase his wealth in the future. Students then answer questions about the farmer's decision.
Grade(s): 9-12
Concepts: Productive resources, Investment,

Lesson 8: GDP and Life Expectancy
Geography: Focus on Economics
Students construct choropleth maps based on a number of economic and social variables, then analyze the relationships among the variables. They describe the characteristics of countries with high and low GDP per capita, identify regions of high and low GDP per capita, and generate hypotheses about possible consequences of efforts to improve the health of people in Africa.
Grade(s): 9-12
Concepts: Choropleth Maps, Gross Domestic Product Per Capita, Life Expectancy, Infant Mortality, Investment, Human Capital, Positive Relationship, Negative Relationship,

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 1 - Why Save?
Learning, Earning and Investing: High School
Following an introduction that defines saving, the students discuss the idea of "paying yourself first" and the reasons why people save. After reporting on their small-group discussions, the students simulate the accumulation of simple interest and compound interest. The lesson concludes with students calculating both simple interest and, using the Rule of 72, the amount of time it takes savings t...
Grade(s): 6-8, 9-12
Concepts: Compound interest, Consumption, Income, Rule of 72, Saving, Simple interest

ONLINE LESSONS:

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 Pop Goes the Housing Bubble
In this lesson, students will learn about a speculative bubble within the context of the U.S. real estate market.
Grade(s): 9-12
Concepts: Credit,Decision Making,Incentive,Investment,Risk,Debt,Borrow,Asset,Collateral,Lender,Real Estate

online What's the Cost of Spending and Saving?
This lesson examines the benefits and opportunity cost of spending and saving. The students learn how compound interest makes savings grow. Compounding provides an incentive to save and invest early. The benefits of saving and investing when you are young can increase substantially over time when funds are allowed to compound.
Grade(s): 9-12
Concepts: Interest Rate,Opportunity Cost,Saving,Investment,Compounding,Rate of Return,Rule of 72,Spend

online President Jackson and the Veto of the Second National Bank
ESSENTIAL DILEMMA Could the conflict over the Second National Bank have been resolved in a way that supported the values advocated by both President Jackson and Congress?
Grade(s): 9-12
Concepts: Money Supply,Definition of Money,Monetary Policy,Money,Risk,Government Failure,Market Failures,Bank,Fraud Risk,Paper Money,Characteristics of Money

online Collecting for Fun . . . and Profit?
Art, baseball cards, coins, comic books, dolls, jewelry and stamps are just a few examples of the many things people collect. While some people collect for fun — others hope to profit. In this lesson, students explore how supply and demand influence the price of collectibles. They also evaluate speculation in collectibles as an investment option. They learn that collectibles are one ...
Grade(s): 6-8, 9-12
Concepts: Demand,Investing,Price,Supply,Investment,Risk

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 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 Timing Is Everything
In the first part of the lesson students examine the incentives and opportunity costs of spending and saving in a teacher directed lesson. The remainder of the lesson is an interactive web site. Students work through problems that demonstrate the power of compound interest.
Grade(s): 9-12
Concepts: Incentive,Interest Rate,Opportunity Cost,Interest,Savings

online The Benefits of Investing Early
The students will see how compounding returns make investing at a young age pay off.
Grade(s): 9-12
Concepts: Investing,Interest,Savers

online It's a Not So Wonderful Life
In this lesson students learn about banks and banking. The study the fractional reserve system, and the role the Fed plays in the money creation process.
Grade(s): 9-12
Concepts: Banking,Central Banking System,Money Supply,Supply,Money,Savers

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