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In April 2002, Argentina's economic situation seemed to be getting worse and worse. Banks closed for nine days before reopening on April 29, 2002. How did Argentinians function during that time? Amy Radil of NPR reported on the flourishing barter economy that sprung up through necessity. Her report provides background information for the students in this lesson as they examine inflation, barter systems, and the use of currency.

KEY CONCEPTS

Barter, Currency, Gains from Trade, Inflation, Scarcity

STUDENTS WILL

  • Identify alternatives to exchanging goods and services for money.
  • Identify the choices people must make in an economy with no money or in an economy where money has lost its value.
  • Describe the consequences of bartering solely with goods and services.

INTRODUCTION

Explain that the students will explore what happens when a country's currency loses its value. In such a situation, how would citizens obtain the goods and services they desire? In exploring this question, the students will learn that the goods and services they obtain with money also have non-monetary value and can be obtained and traded through barter. They also will learn about the disadvantages of barter systems.

RESOURCES

[Note to teacher: The following link requires RealPlayer www.real.com/dmm/realplayer/search .]


Extension Activities

 

PROCESS

Activity 1
Have the students listen to the Marketplace audio file about the Argentina Barter Fair. As they listen they will complete an outline of important information contained in the story. Then they will use their outlines to answer both factual and evaluative questions about economic concepts addressed in the story.

[Note to teacher: In this audio, the speaker incorrectly identifies using creditos as barter. The lesson compounds the mistake by referring to creditos as "bartering currency." However, the term "bartering currency" this is an oxymoron. Once paper or other materials are used to identify the value of an item and buy it or sell it, that material is a currency and the activity is no longer barter. Despite this error, the audio can be used to provide background information for a discussion of what happens in a period of inflation. Use the discussion to emphasize that barter is an exchange of goods and services, that it is quite inconvenient, and that the inconvenience often prompts people to develop a currency, in this case called creditos.]

The Marketplace audio file about the Argentina Barter Fair can be found at marketplace.publicradio.org/shows/2002/04/rafiles/29_mpp.ram (starting timestamp 19:10, ending timestamp 23:43).

Explain to the students that they will use the note-taker while they listen to the audio file. On the note-taker they will record supporting details about three main ideas. Introduce these three main ideas as focal points for the lesson:

The three main ideas you will focus on today are:

  1. Goods Argentines Are Bartering
  2. Services Argentines Are Bartering
  3. Problems with creditos (creditos are paper currency used in Argentina)

Provide the following instructions:

As you listen to the segment, record any words that you don't know, especially words that may be important economic terms.

Then listen to the audio file again to gather supporting details and possible definitions of the vocabulary words, using context clues; record this information in your note-taker.

Finally, you will be asked a series of questions related to the story.

barterActivity 2
Have the students listen to the audio file again and consider the choices the Argentine people must make in order to benefit from the new barter economy. The students should consider the following questions as they listen.

  • Have you ever participated in a barter exchange with your friends?
  • Are there services you think you could provide in exchange for goods?
  • How much value do you place on the goods you own and on the services you can provide for others?

Lead a discussion based on the three questions above.

Have the students create a mock barter fair in the classroom. Explain that the classroom represents a country whose currency has depreciated in value. In the barter fair, the students will determine the value of goods and services and exchange them.

After the students have completed their simulated bartering, discuss the activity. Pose the following questions and have the students record their answers:

 

  1. What problems did you encounter during the barter fair? [Answers will vary.] 
     
  2. Was it hard to determine the value of goods and services? [Answers will vary.] 
     
  3. Were all the exchanges fair?[Answers will vary.] 
     
  4. What choices would you have to make in order to survive in a barter economy? [Answers will vary.] 
     
  5. Are there any benefits from a barter economy? [Bartering or direct exchange is the predecessor to a monetary or indirect exchange economy. The benefit of bartering is the direct negotiation between traders over the value of goods. This benefit quickly breaks down as transaction costs rise in association with the lack of a coincidence of wants. ]
     
  6. Why is the use of creditos not the same as bartering? [Once paper or other materials are used to identify the value of an item and buy it or sell it, that material is a currency and the activity is no longer barter.]
     
  7. How is the credito the same as currency? [Creditos allow for indirect exchange through the price system. The act as a unit of account, store of value and a medium of exchange.]
     
  8. How does inflation impact the creditos system? [Inflation decreases the value of the credito. If inflation rates rise substantially the transaction costs of exchanging goods and services will rise along with the prices of goods and services denominated in creditos. Ultimately if the value of the credito continues to deteriorate eventually monetary order will break down and individuals will look to other mediums of exchange (other currencies) or return to barter.]

CONCLUSION

By the conclusion of this lesson, students should be able to explain the reason for Argentina's barter economy, how a barter economy works, and the possible consequences of having a barter economy.

ASSESSMENT ACTIVITY

1. Have the students hand in their note-taker activities and discuss them with the class. Student answers and discussion comments should reflect an understanding of the way in which barter can replace the use of currency when necessary.

2. The students participated in a mock barter fair and they will hand in their reflections. During the fair, you should have circulated to listen for student comments and discussions regarding the use of barter for securing goods. Check student reflections to be sure they focused on the concepts of the lesson.

EXTENSION ACTIVITY

1. Have the students explore the topics of trade and inflation in 'A case study: United States International Trade in Goods and Services-December 23, 2003'

2. Have the students further explore the concept of money and its value in 'One is Silver and the Other is Gold'

EDUCATOR REVIEWS

  • “I love it! I've honestly been looking for something like this for years. Thank you, oh great curriculum writer!”

    Rob M., Athens, GA   POSTED ON January 13, 2009

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