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LESSON: ROUND AND ROUND THE MONEY
GOES
Lesson Summary
The very
informative book gives a brief history of the development of money and
explains how it is used in our economy. Follow the movement of money
- in earning, saving, spending and giving - in a clear and simple way.
Terms such as interest, saving, and credit cards are explained. In
addition, learn how money - both paper and metal - is made. The
currencies of other countries are also identified.
Concept: Money
Definition: Money is anything widely
accepted as final payment for goods and services.
Comprehension Questions
What
are some goods that you often buy or would like to buy? Answers
will vary
How do
people typically pay for the goods they buy?
With money! This
is often in the form of cash, a check, or a debit card. (Credit cards
are not really money. Credit cards provide you with a loan, which you
must pay back with money.)
A long time ago there was no money.
How did the people pay for goods?
They bartered with each other,
trading potatoes for cloth, fish for meat, firewood for animal skins,
etc.
When people trade with each other,
who gains from the trade?
Both parties expect to gain from
voluntary trade. Voluntary trade is not a zero sum, "win-lose"
event.
Why is barter often
difficult?
You have to find someone who wants what you have and
vice versa. Also, it is sometimes difficult trading items of greatly
differing values - like the cow for a coat in the story.
What is money?
Money is
anything commonly traded for goods or services.
What were some of the earliest
forms of money?
Shells, beads (wampum belts), lumps of salt
(Africa); beans (Mexico), huge stone rings (Yap Islanders), red feathers
(Santa Cruz islands), metals such as gold, silver, copper, and
iron.
What is the primary function of
money?
It helps people to trade.
What are two other primary
functions of money?
Unit of account (helps people measure value of
products), store of value (helps people to save)
Why were gold and silver commonly
used as money?
These metals were relatively scarce/valuable, did
not wear out (durable), could be made into different sizes (divisible),
and were fairly easy to transport (portable).
Why did people often prefer to use
paper notes instead of gold and silver coins?
The metal coins were
big and heavy.
Name the currency used by five
different countries.
Answers will vary. The currencies could be the
pound from England, the franc from France, the lira from Italy, the peseta
from Spain, the yen from Japan, etc. See pages 18-19.
How are the dollar bills and the
coins produced?
The dollar bills are printed on special paper with
ink and secret chemicals, engraved with hundreds of thin lines, marked
with tiny red and blue threads in the paper, etc. Coins are cut from
strips of metal, then punched with a design.
What are different ways to receive
money?
Produce a good or service, work and earn wages, receive
money as gifts, get an allowance, etc.
What do people typically do with
their money?
Specific answers will vary. There are four basic
things that people do with their money: spend, save, or give it away
(friend, church, charity, etc.).
What is the major purpose of a
bank?
Banks help transfer money from savers to investors/borrowers.
Banks pay interest to savers, but charge a higher rate of interest to
borrowers.
Extra Credit
Question:
The basic United States M1 money
supply is made up primarily of what kind of money?
Checking
accounts! (also known as demand deposits)
Other Concepts: Trade and Money | 
