Introduction

We hear a lot today about the economy—whether domestic, national, international, and global. Economy is a system of interaction or exchange and money is essential to it. How much do you know about the concept of money and how money works? For example, can you define "money"? [List students’ definitions on the board.] The word money refers to two different concepts:

• First, money refers to a standard of value: it is that abstract unit of account that we use to compare the value of goods, services, and obligations. So, for example, a culture could use a cow or an ounce of gold as a standard of value. This object is worth three cows or two ounces of gold.
• Second, money refers to a medium of exchange: it refers to anything that is widely established as a means of payment, and is called .currency. For example, this object is worth three cows, and I’ll give you these hundred shells for it.

There are different ways to set the standard of value and the medium of exchange in a society. One very common way is by fiat. [Go to the article "Money" in Encarta Reference and read the caption describing the concept of fiat money, or, read the brief definition of fiat money in the Columbia Encyclopedia.]

Another way is to issue scrip or "temporary money." [Read the definition of "scrip" in the Columbia Encyclopedia. Ask for examples.]

All cultures value money in different ways. [Go to the article "Money" in Encarta Reference. Show the students the image of "Money from Around the World" or another image of different currencies.]

How many different kinds of money can you find in this picture? [List them on board or projector.]

Every culture has its own understanding of value and the medium of exchange, or the currency it uses for transactions between people. What do these different currencies in this picture tell us about the cultures that created them?

[Hold up a dollar bill.] How much is the paper on which this dollar is printed worth? Many countries today use paper money. Paper money has little inherent worth, so what gives paper money its value? Can the value of money change? In this activity we are going to try to answer these and other questions. You will research the concept and the history of money, examine currencies from several countries, and compare their current exchange rates.

Main activity

[Teachers: Please download the Student activity handout for details on the main activities for this lesson plan:

Conclusion

Assess the students on the thoroughness of their final reports.