Help broaden your students’ understanding of the underlying economic principals behind current events, as well as other more basic economic concepts.
FOR THE WEEK OF Apr. 4, 2010
Article Link: "Consumers fill their baskets with more nonessential stuff," Sunday, Apr. 3, 2010, The Denver Post, 5B
- Spending: the purchase of goods and services by consumers.
- Consumer: individuals and households purchasing goods and services.
- Wants vs. needs: a “want” is something that is desired. Economics teaches that people have unlimited wants, but limited ability to have (buy or consume) everything they want. A “need” is something that is believed to be essential to living: food, shelter, and clothing. Economists do not use these two words the same way that the average person does. They say that one person’s want may be another person’s need. Therefore there is no way to tell the difference between a want and a need.
- Gift-giving: the article mentions Easter and other holidays when people give gifts. Giving a gift is a social system where people do not expect immediate repayment. Gifts are usually not money.
Discussion: A research company reports that consumer spending for 2010 Easter will increase to $14 billion in the U.S. This means that the consumer is spending again for nonessentials. Spending for Easter fell in 2008 and 2009. Most Easter gifts are food (restaurants), candy and clothing. Consumers spend more on Christmas, Valentine’s Day and Mother’s Day.
Questions for discussion: What is the difference between a “want” and a “need”? Why are consumers still favoring needs over wants? (Ans.: the article says because the average consumer is feeling more confident.) Define the word: nonessential. Most people agree that food and shelter are needs. What about a car? A bicycle? Or a toy?
Article Link: "CU bumps tuition," Tuesday, Mar. 30, 2010, The Denver Post, 1B
- Financial planner: a professional who guides clients with various personal financial issues: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, and tax planning.
- Inflation (rate): a per cent change in general prices over a period of time—generally one year. As general price levels increase the purchasing power of the dollar declines.
- Tax support: state tax revenues are distributed for government services by the legislature. The Colorado Legislature has given less to higher education over the recent past.
- Stock market: a financial market where buyers and sellers of shares in companies can be exchanged. See the Stock Market Game: www.smgww.org for a student simulation of the stock market in the U.S. Many other countries have their own stock markets.
- College savings accounts: is an investment and savings account used by parents to save for their children's college or university education costs. See www.collegeinvest.org for details on how to save and invest for tuition expenses.
- Middle class: defined as a group of people who have roughly a third of their income left for discretionary spending after paying for basic food and shelter. This allows people to buy consumer goods, improve their health care, and provide for their children’s education.
- Financial aid: funds (loans or grants) intended to help students pay educational expenses including tuition and fees, room and board, books and supplies, etc. for education at a college or university.
- Risk: in investing terminology risk means the probability of loss. The greater the risk of an investment the greater the reward. Investors should understand their “risk tolerance” before making decisions about where to place their money. There are many types of risk—inflation, credit, currency, weather, etc.
- Financial literacy: the knowledge and skills to manage one’s financial affairs efficiently. Financial literacy is a new required subject that will be taught in all Colorado public schools beginning in 2011. People who lack financial literacy tend to make poor choices with their money. This results in loss of scarce financial resources and a reduced standard of living.
Discussion: The major universities in Colorado have increased their tuition for the next school year. This is a result of lack of funding from the Colorado Legislature. These increases are going up faster than the general inflation rate. In addition, families who are trying to save and invest for their children’s college education have experienced loss of value during the 2008 stock market crash. Parents are worried that the tuition increases will make it difficult to pay for college. Financial planners are suggesting that parents start saving for college as soon as a child is born. Parents are unsure whether to put their college investments into conservative or riskier funds. Students can reduce college costs by taking concurrent courses in high school and by attending a community college right out of high school. Students and parents can learn more at www.collegeincolorado.org.
Questions for discussion: How much should parents tell their children about financial literacy? Are parents or school mostly responsible for teaching financial literacy? Why? Why do you think Colorado colleges are raising tuition every year? What do you think makes a family middle class?
Handy Dandy Guide
6 core economic Principals
Colorado Model Content Standards for Economics
Economics is written by Dennis Grogran, Program
Director, Colorado Council for Economic Education. For information about
CCEE's other programs, call 303-752-2323 or e-mail firstname.lastname@example.org.