Federal Reserve and Banking System for Macroeconomics, American History and Personal Finance
Students will take a surprise trip around the world. As they travel, they will use clues to discover where they are going. They will then figure out how much money they have spent in U.S. dollars, using exchange rates.
Tell your students that a family meeting is scheduled at 7:00 P.M. tonight. At the meeting, their parents have told them they are going on a surprise family vacation. Before they leave, however, they will be given clues about where they are going to visit. They will have to identify the countries they will visit, identify the capital of each country, and determine how much money in U.S. dollars they will spend in each country. They will need to use exchange rates to figure out their actual cost for each place they visit. Finally, they will add up the total cost of the trip.
You will need the following materials:
Before beginning the lesson, ask the students the following questions:
Then introduce the concept of exchange rates. Have the students visit How Stuff Works to read an article on 'How Exchange Rates Work.' Ask the students for a definition of exchange rates. If they can't provide a definition, have them look up the meaning. An acceptable definition for exchange rate is: the method used to calculate the value of one currency compared to another currency.
At this point you will need to decide if you want the students to use the exchange rate sheet which is in Appendix C or use the website, which automatically converts currency at today's rates. If you use the website to convert currency, the answer key should be used only to identify the country, its capital, and its currency. The amount spent in U.S. dollars will not be accurate since that amount will change based on the given exchange rate for the day the lesson is done in class.
Now you are ready to begin the activity.
1. Place the students in groups of three or four.
2. Hand out the materials to the groups.
3. Give each group the sheets with the clues for identifying the places the family is going to visit. (See Appendix A for the clues and Appendix B for the family vacation log. If you are using the exchange rate sheet, use Appendix C to get the exchange rates.)
4. Explain how to calculate exchange rates. The formula is:
6. Let the students work through the clues and complete the Vacation Log worksheet. Groups should work independently.
7. Monitor the progress of the groups and provide assistance as needed.
8. Have the groups share results for each clue, one at a time. You will provide the correct answers with the class for each clue, one at a time.
Tell the students that they have now completed their worldwide family vacation. They have used exchange rates to determine how many U.S. dollars they spent on this trip. The trip cost a lot of money, but the memories will last a lifetime.
Ask the students to explain how different exchange rates affect the purchasing power of a person traveling abroad. (Favorable exchange rates increase our purchasing power).
Have the students practice converting U.S. dollars into the currency of at least five different countries, using the currency converter website.
Ask the students why exchange rates vary between countries. [It is based on the supply of and demand for a country's currency.]
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