Economics-in-Marketing CTE Lesson Plan

Transcription

1 Economics-in-Marketing CTE Lesson Plan Dollars for Trade Lesson Title Lesson Objective At the completion of this lesson, students will be able to describe and explain how interest rates affect the value of a dollar and how exchange rates affect purchasing value in the global market. Concepts CTE Concept(s) Global trade s impact on business decision-making Economic Concept(s) Currency rates on the global market Standards/Benchmarks Michigan Career and Technical Education Segment 12 I.D.7 Determine global trade s impact on business decision making. Michigan Department of Education High School Content Expectations Social Studies: Economics Exchange Rates and the World Trade. Describe how interest rates in the United States impact the value of the dollar against other currencies (such as the Euro), and explain how exchange rates affect the value of goods and services of the United States in other markets. (National Geography Standard 11, p. 206) Lesson Supplies Student Handout 1 Student Handout Answer Key 1 Student Handout 2 Student Handout 3 Student Handout 4 Student Handout Answer Key 4 Teacher Resource 1 Video 1 Supplies Needed Two different color sheets of paper cut in strips to represent currency, bag of candy Exchange Rates and Currencies Exchange Rates and Currencies Key Timbuktu Bidding Game - Tally Table The Timbuktu Bidding Game Worksheet Quiz Quiz Key Big Mac Index Poster Big Mac Index 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.] Discussion #1: Why is the value of a dollar a different value than other countries currencies? Possible Answers: interest rates, inflation, how much money is in circulation, demand for your countries goods and services and government debt. A. Watch Video 1: Big Mac Index. B. Distribute Student Handout 1: Exchange Rates and Currencies. Have students define the three vocabulary terms in their own words. C. After the students have written their own definitions, write the actual definitions of the following terms on the whiteboard. Have the students copy them into their notes on Student Handout 1: Exchange Rates and Currencies. 1. Currency The money in circulation in any country. 2. Interest rate The price paid for using someone else's money, expressed as a percentage of the amount borrowed. 3. Exchange rate The price of one nation's currency in terms of another nation's currency. 2. Assess students economic awareness as it relates to the CTE lesson. A. Using a projector, go online to Students will continue to use Student Handout 1: Exchange Rates and Currencies, filling in the currency chart, using the US Dollar, Euro, and Chinese Yuan. 1. Use Student Handout Answer Key 1: Exchange Rates and Currencies Key as a guide through the currency chart activity. 2. Using the online currency chart, the instructor will introduce foreign exchange rates vs. US dollar and US exchange rate vs. foreign currency. 3. The primary function of currency is to buy goods and services. 4. Importers need to obtain the exporting country s currency in order to purchase goods. 5. Many factors can influence the supply or the demand for a given currency (war, economic factors, etc.) Berrien RESA 2 Economics in Marketing Education

3 3. Work through the economic lesson as it is embedded in the CTE lesson. A. Discuss the global marketplace and the fact that even small businesses purchase items that are not produced in the United States. 1. Write the following on a white board for all students to see: Which of the following correctly identifies the best reason why a person would exchange currency? 1) To enhance a coin collection, 2) to purchase goods and services when visiting another country, 3) to help improve the economy, or 4) to be sure they have currency for all the neighboring countries on hand for emergencies. Discussion #2: Ask students to volunteer an answer to the question posed on the board. Why does the student feel that the answer is the best choice? Invite students to challenge the proposed answers. Discussion #3: What types of decisions do businesses have to make, regarding currency, when importing or exporting? Possible Answers: lower exchange rates will encourage businesses to engage in foreign trade, whereas higher exchange rates will discourage trade. 4. Work through related, contextual economic-in-cte examples. A. Display Teacher Resource 1: Big Mac Index Poster. Discussion #4: Why are Big Macs used as a measure of comparison? Possible Answers: It is an informal way to measure the purchasing power parody between two currencies. Discussion #5: How is the Big Mac Index calculated? Possible Answers: Use the example in Teacher Resource 1: Big Mac Index to demonstrate the mathematical steps of the Big Mac Index. In Brazil, a Big Mac costs $9.50 and in the U.S. this same burger is $4.05. The calculation shows that Brazil s currency is undervalue (less purchasing power) 1. Have the students pay attention to the time value of money shown in Teacher Resource 1: Big Mac Index Poster. Note how long workers need to work to earn a Big Mac in their country. Discussion #6: What does the time value of money say about labor costs in the countries noted in the info-graphic? Possible Answers: Labor is less expensive in some cities (i.e., Mexico City), while it is more expensive in cities like Los Angeles, U.S. and Tokyo, Japan. Berrien RESA 3 Economics in Marketing Education

4 5. Work through traditional economic examples. A. Have students participate in a simulated foreign exchange market. This exercise provides an opportunity to explain how flexible exchange rates to purchase products on the global market are affected by interest rates. 1. Distribute Student Handout 2: Timbuktu Bidding Game - Tally Table 2. Bidding Game Procedure a. Prepare for this lesson by taking two different colors of paper and cutting it into strips. Each student will get 8 to 15 strips of one color, representing the Euro. The second color will represent U.S. dollars and will be kept by the teacher. b. Announce that today the class will look at currency and the process of which it is exchanged and valued by people of two or more countries. c. The class is now a foreign currency market where you will play the Foreign Currency and Exchange Game. Students will be able to purchase a candy for one U.S. dollar. d. Inform the students they will act as citizens of Timbuktu. Distribute various strips of one colored paper to each student. Give them various amounts of paper. e. Announce the only way they can buy U.S. candy is with one of the U.S. Dollars that are held in the bank. Also announce that you can only sell five pieces of candy during each session of the currency market. Students will therefore be required to trade their Timbuktu bucks for your U.S. dollars before they can buy any of the candy. f. Appoint a student to serve as the banker. Pay the banker one piece of candy for the work done during each round. Give the banker the remaining Timbuktu Bucks and five strips of the other color of paper representing one dollar each. Set up a bank in the front of the room. g. Appoint another student as tally keeper. You will also pay this student one piece of candy per round. Use Student Handout 2: Timbuktu Bidding Game - Tally Table to record the number of transactions on the overhead. Do not add the columns for rounds 2 and 3 to the tally table until you are ready to begin those rounds. This procedure prevents those students from anticipating how many rounds there will be in the activity. The tally keeper will make a mark in the appropriate space for each price at which you sell an American Dollar in each round. h. Round 1- Announce that the bidding for U.S. dollars will begin. The only acceptable payment is with Timbuktu bucks. To simplify the chart, the minimum price will be three Timbuktu bucks. Let students bid. Decide at what price you Berrien RESA 4 Economics in Marketing Education

5 will sell U.S. dollars. At first, you will get low bids. Accept a few. Then the bids should start to increase. As each bid is accepted, the bidder should go to the bank and exchange the Timbuktu bucks. The tally keeper should make a mark on the chart at the appropriate price, for Timbuktu bucks, as each bid is accepted. Continue until the banker announces that you have sold the five U.S. dollars available for this round. Stop the bidding. Allow the owners of US dollars to get their candy. i. Round 2- Increase the interest rate in the U.S. which increases the interest in purchasing U.S. dollars, which will change the opening market price for U.S. dollars from three Timbuktu bucks to five Timbuktu bucks. Announce the beginning of round 2. Have available five U.S. dollars and five pieces of candy for this round. The banker and tally keeper will perform the same jobs as in the previous round. Repeat the bidding process. When the five U.S. dollars are sold, stop the bidding and allow the owners to get their candy. j. Round 3- Announce the decrease in interest rates in the U.S. Foreign buyers are now less interested in purchasing U.S. dollars so the opening market price for U.S. dollars is now two Timbuktu bucks. Have available another set of five U.S. dollars and five pieces of candy. The banker and tally keeper will perform the same job as in the previous round. Repeat the bidding process. When the five American dollars are sold, stop the bidding and allow the owners of the dollars to get their candy. 6. Students demonstrate their understanding. A. Distribute Student Handout 3: The Timbuktu Bidding game Worksheet. 1. In mixed ability groups of 3-5, complete Student Handout 3: The Timbuktu Bidding game Worksheet. 2. Share responses with the class. 7. Formal assessment. A. Students will complete Student Handout 4: Quiz. Berrien RESA 5 Economics in Marketing Education

6 Standards Dollars for Trade Lesson Title Lesson Objective At the completion of this lesson, students will be able to describe and explain how interest rates affect the value of a dollar and how exchange rates affect purchasing value in the global market. Standards/Benchmarks Michigan Career and Technical Education Segment 12 I.D.7 Determine global trade s impact on business decision making. Michigan Department of Education High School Content Expectations Social Studies: Economics Exchange Rates and the World Trade. Describe how interest rates in the United States impact the value of the dollar against other currencies (such as the Euro), and explain how exchange rates affect the value of goods and services of the United States in other markets. (National Geography Standard 11, p. 206) MBA Research Performance Indicator Describe the determinants of exchange rates and their effects on the domestic economy (EC:100) (SP) Berrien RESA 6 Economics in Marketing Education

7 References Econedlink: Council for Economic Education. (n.d.). Economic Glossary. IMF Center: A public center for economics education. (n.d.). Lessons #1 and 2 focus on the IMF and its role in the global economy. Retrieved from Rinsema, Kate. Alltop: Holy kaw! (n.d.). The big mac index [infographic]. Retrieved from Travelex: Worldwide money. (n.d.). The economist: Big mac index. Retrieved from X-Rates. (n.d.). Rates Table. Retrieved from Copywrite Permission Copy write permission has been given for the educational use of the web-based and printed Big Mac Index Chart, contained within this lesson. Berrien RESA 7 Economics in Marketing Education