What Is Money? Why Does It Have Value?
Students will be able to:
- Understand what money is and its main characteristics.
In this economics lesson, students will learn about the history of money and its 5 characteristics.
Write the following two questions on the board:
Answer the following questions in a complete sentence.
- Why do you think we have money?
- What do you think we would do if we didn’t have money?
Ask students to think about their answers to these questions and have several students share their answers aloud with the class. If the concept of “bartering” for goods and/or services does not come up organically, then introduce this concept students during question number 2.
Ask each student to take out a sheet of paper and pencil. Tell students that they will watch a YouTube Video: Econ Vids for Kids: What is Money? to learn more about the history of money and its key characteristics. Tell students that the video will identify five characteristics of money. Display video to the whole class. As students watch the video, instruct them to write these characteristics on sheet of paper or in their notebooks.It is recommended that teachers show the video to students twice. Students will just watch and listen the first time; they will take notes during the second viewing. After watching the video and taking notes, ask students which of the five main characteristics they think is most important in terms of what gives money value. Differentiation: If students have access to dry erase markers and whiteboards (or student desks), have them write the five characteristics on their whiteboards/desks rather than on paper.
After watching and taking notes, have students volunteer to share the five main characteristics, which are divisible, portable, durable, recognizable and scarce. Explain what each means. Students should identify scarcity – a limited quantity increases value – and recognizability – all people recognize money as a medium for exchange as being key to giving money its value. Remind the students that money is used for the purpose of exchange, and is worth something only because everyone agrees that it can be accepted as payment.
Divide students into teams to play the Quizlet Live Game. In order to play a game of Quizlet Live in your class, you’ll need:
- A Quizlet account
- CEE Quizlet Game
- Four or more students with a computer, tablet or smartphone for each student
- A teacher-controlled device to project the directions and leaderboard 10 to 20 minutes of class time
To play, you will do the following:
- Sign into your Quizlet account at the website: https://quizlet.com
- Open CEE Quizlet Game
- Select the Live button
- Select Create game
- Project your screen
- Have your students go to https://quizlet.live and enter the join code displayed on your screen and their name. To remove a student from the game, click on their name.
- Wait for all your students to join, then select Create game.
- Quizlet will assign all students to a team.
- If possible, have your students move to sit with their teammates.
- Select Start game.
From here, each team member will be prompted with the same definition from the study set. Within each team, every student will have different possible answers. The students on each team need to work together to figure out who on their team has the correct answer on their device.
Give students 10 minutes to complete What’s It Worth. Give students 5 minutes to share their answers with one or two partners. Then, reconvene as a class and spend 5-10 minutes debriefing the activity. Ask the students to explain why they were willing to accept some items in an exchange, but not other items. Also, ask them if they discarded some possibilities, and why. The students should be able to explain that the amount of money they wrote down and the items they listed have approximately the same value to them as their favorite possession. Remind them that people trade because they believe that they will be made better off by the trade. If not, they would not make the trade. This concept is known as ‘Voluntary Trade’.
At the end of class, give an Exit Ticket to each student. Students should answer the questions and submit their Exit Ticket before leaving class.
Divide students into groups of 4-5 and have them write and perform a short (1-3 minutes) skit on one of the five main characteristics of money. The purpose of the skit is to illustrate the importance of the characteristic and the problem(s) that would occur without it. For example, a characteristic of money is portability. A cow or a car would not work as a form of money because they are not portable; they are too large and heavy. Students should NOT name their characteristic in their skit; instead, their classmates should guess what it is after watching the skit performance. The five main characteristics of money are: divisibility, portability, durability, recognizability, and scarcity.
Students will each write an original short story, which can be realistic or not, incorporating economic vocabulary from the lesson. Stories should be at least one page long and must include a minimum of five vocabulary words. Each vocabulary term must be underlined. Vocabulary options are: barter, surplus, commodity, double coincidence of wants, divisibility, portability, durability, recognizability, and scarcity. These terms must be used in the context of the main characteristics of money.
Ask the students to imagine that the Treasury Department of the United States decided to hold a contest to see who could design a currency that best fit the characteristics of money. Ask the students to either develop a list of characteristics of the currency that they would develop, or to draw a picture of their idealized currency.