Economics and You. By Author: Kristen Girard Golomb Editors: Mary Dieterich and Sarah M. Anderson Proofreader: Margaret Brown

Transcription

1 Economics and You By Author: Kristen Girard Golomb Editors: Mary Dieterich and Sarah M. Anderson Proofreader: Margaret Brown COPYRIGHT 2012 Mark Twain Media, Inc. ISBN Printing No EB Mark Twain Media, Inc., Publishers Distributed by Carson-Dellosa Publishing LLC The purchase of this book entitles the buyer to reproduce the student pages for classroom use only. Other permissions may be obtained by writing Mark Twain Media, Inc., Publishers. All rights reserved. Printed in the United States of America. Visit us at

2 Table of Contents Table of Contents Introduction...1 What is Economics?...2 Goods and Services...3 Supply and Demand Part The Chicken Farm...5 Supply and Demand Part The New and Improved Chicken Farm...7 Case Study: Auctions...8 Case Study: Write Your Own...9 More Economic Terms...10 Case Study: The Lemonade Stand...11 Money in the United States...13 Money Research Project...14 Banking and Interest...15 How to Calculate Interest...16 The Federal Reserve...17 The Federal Reserve Questions...18 Federal Reserve Banks...19 Flow Chart: The Federal Reserve...20 Inflation...21 Inflation Questions...22 Inflation Case Study: Real Estate...23 What Did Things Cost?...24 Case Study: Menus...25 Economic Crossword Puzzle...26 Matching Quiz...28 Consumer Simulation...29 Career Cards...30 Welcome to the Working World...32 Checks...33 Application for a Checking Account...34 Blank Checks...35 Deposit Slips...36 Checkbook Register...37 Money Cards...38 How to Balance Your Checkbook...40 Bank Statement...41 Credit Cards...43 Credit Card Application...44 Credit Card Statement...45 Buying a Car...46 Car Loan Application...48 Apartment Hunting...49 Apartment Application...50 Apartment Move-in Costs...52 What Do You Need?...53 Comparison Grocery Shopping...55 Taxes and W-2 Forms...56 Tax Form...57 Answer Keys...58 Bibliography...62 Photo Credits... C3 ii

3 Introduction Introduction Economics and You explores real-world applications of economics in a way that is relevant to students today. The book breaks down topics such as the Laws of Supply and Demand into easy-tounderstand examples that teachers, parents, and students can review together at home or school. The easy-to-follow format of Economics and You facilitates planning for the diverse learning styles and skill levels of middle-school students. This book is divided into two parts. The first is a step-by-step introduction to the basic principles of economics. The second is an in-depth, real-life simulation activity designed to reinforce the economic principles and basic mathematics concepts taught previously while introducing the students to the consumer world. The economic activities come in many formats. Vocabulary and basic economic laws are introduced in bold in every lesson. Case studies, articles, graphic organizers, questions, puzzles, lists, and other types of activities are used to spark student interest. Many of the materials are suitable for whole-class use on the overhead projector. An emphasis is placed on using math skills in real-life situations. In today s challenging economic times, ensuring that students understand the value of a dollar and what it can buy is vital to their long-term financial health. Economics and You helps to lay the groundwork for students to grow into financially responsible adults. 1

4 Supply and Demand Part 1 Supply and Demand Part 1 Supply is the degree of availability of an item, or, in simpler terms, the number of items ready for sale. For example, the supply of airplane tickets to Anchorage, Alaska, is the number of seats available on all of the planes that fly there each day. Two planes fly into Anchorage each day, and they can hold 56 passengers each. This means a total of 112 passengers can fly to Anchorage each day. Therefore, the supply is 112 seats. = 112 seats (supply) Demand is the usability of the item or how many people want to buy it. To continue the example, the demand is the number of people who want to fly to Anchorage each day. If 100 people want airplane tickets to Anchorage each day, then the demand is 100. x 100 = 100 passengers (demand) If supply is greater than demand (more seats available than people wanting to buy them), it is called a surplus. Surplus usually causes the price of the item to go down. When demand is greater than supply (more people want to go to Anchorage than there are seats available), then you have a scarcity. Scarcity usually causes the price of the item to go up. 4

5 Name: Date: The Chicken Farm The Chicken Farm There is one chicken farm in Cholesterolville. Farmer Yolkman owns 10 chickens. Each hen lays about five eggs per week. Farmer Yolkman sells eggs to 10 families. Each family needs one dozen eggs per week. Use the words high, low, surplus, and scarcity to fill in the blanks. The words may be used more than once. 1. Approximately how many dozen eggs will the chicken farm be able to supply each week? Demand will be for these eggs, so eggs will be in. This will cause the price of the eggs to be. Assume that Farmer Yolkman bought more chickens and expanded his chicken farm. He now has 30 laying hens. He still supplies eggs to 10 families who each demand one dozen eggs a week, and each chicken still lays five eggs a week. 2. Approximately how many dozen eggs will the chicken farm be able to supply per week now? Demand for these eggs will be, supply will be in, and cost will be. 5

6 Supply and Demand Part 2 Supply and Demand Part 2 Sounds pretty simple so far, right? Well, there are just a couple of small catches. Read on.... As the price of an item goes up, the supply of that item will also go up. This is called the Law of Supply. Think about this. When tickets to Anchorage are scarce, the price will rise. We learned that earlier. But as the price goes up, more airlines become interested in scheduling flights to Anchorage. They see how much other airlines are charging to get there and become interested in flying there themselves to make more money. Therefore, more companies will schedule flights to Anchorage. There will be more sellers of flights to Anchorage, which will lessen the demand. Price goes up and supply goes up. Similarly, let s look at the Law of Demand. This principle states that as the price goes down, the demand will go up. Back to Anchorage. The new companies flying into Anchorage over-satisfy the demand for tickets, causing a surplus. This surplus causes companies to lower ticket prices in an attempt to lure customers to buy tickets with their airlines. As the price of the tickets goes down, what would you expect to happen? Right! More people will want to buy tickets because it becomes a better value a deal. But as the demand rises, fewer companies can afford to fly at this price, and the supply goes back down. Price went down, demand went up, and supply went back down. Ugh! What a vicious circle! To review: Supply = The degree of availability of an item (what s for sale) Demand = The usefulness of that item (who wants to buy it) Law of Supply = As the price increases, the supply increases. This means more sellers, yet fewer buyers. Law of Demand = As the price decreases, the demand increases. This means more buyers, yet fewer sellers. PRICE PRICE SUPPLY DEMAND 6

7 Name: Date: The New and Improved Chicken Farm The New and Improved Chicken Farm With one chicken farm in Cholesterolville and 10 chickens, Farmer Yolkman can produce approximately four dozen eggs per week. (Each chicken lays five eggs per week.) He sells one dozen eggs each to 10 families. Demand for these eggs will be high, causing the cost of the eggs to be high as well. Eggs will be scarce. Answer the following questions in complete sentences. 1. Now that the cost has gone up, what will happen to the number of chicken farms in Cholesterolville? Why? 2. What will this do to the supply of eggs? 3. How will this affect the cost of and demand for eggs? 4. What will happen to the many chicken farms in Cholesterolville (the supply) as a result of the change in price? 5. Explain why this is a circular cycle. 7