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 Mar. 28, 2010
Article Link: "Teach Your Children Well," Sunday, Mar. 28, 2010, The Denver Post, 6K
- Spending: the purchase of goods and services by consumers.
- Earn: payment for work. Also income (interest) from investments.
- Allowance: Parents often give their children an allowance for their miscellaneous personal spending, and also to teach them money management at an early age. Allowances can given for household chores, or other types of responsibilities. Allowances give children a better understanding of money management, teaches them the value of money, and gives them personal responsibility and encourages independence.
- Debit card: a plastic card that provides an alternative payment method to cash when making purchases. Debit card is tied to a checking account at a bank.
- Credit card: a card entitling its holder to buy goods and services based on the person's promise to pay for these goods and services. A credit card is a loan from a bank and must be repaid with interest.
- Investing: purchase of an asset (stocks, bonds, mutual funds, etc.) with the hope of a profit in the form of interest, dividends or increased value. Investing carries the risk of loss of the money invested. Normally investing is done in the stock market. See information about the Stock Market Game at http://www.smgww.org/.
- Saving: saving occurs when you reduce spending or increase income. The first lesson of personal financial literacy teaches that saving is the first task of a person who has income. This means “pay your self first.” Savings are deposited into bank savings accounts where they are protected and insured against loss. A deposit account is low risk as opposed to an investment account which carries a higher risk of loss.
- 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 bad choices with their money. This results in loss of scarce financial resources and a reduced standard of living.
Discussion: The article describes the 15 Rules that parents should follow in order to educate their children about financial management. Rule 4 suggests that good grades should be expected not rewarded with money. Rule 12 encourages children to give some of their savings or income to organizations that help the world—people or environment. Parents are encouraged to teach their children financial literacy through their own good examples.
Questions for discussion: Read the rules and pick out one rule that you like and one rule that you do not like. Discuss why you picked these rules. Do you think students should be given money for good grades or good tests? Why or why not? What is the dumbest financial mistake you can think of? What is the smartest think you can think of to improve your future finances?
Article Link: "Pay drops for Colo. workers," Friday, Mar. 26, 2010, The Denver Post, 8B
- Income: the sum of all the wages, salaries, profits, interest payments, government payments, rents and other forms of earnings received in a given period of time, usually one year.
- U.S. Bureau of Economic Analysis (BEA): is an agency in the U.S. Department of Commerce that provides important economic statistics including the gross domestic product (GDP) of the United States.
- Consumers: individuals and households engaging in purchases of goods and services.
- Economic activity: gross domestic product (GDP) is the measure of the U.S. economy. It includes consumer spending (C), government spending (G), business investment (I), and net exports (NX).
- Average hourly wage: wages for most workers are set by market forces (supply and demand), or by collective bargaining, where a labor union negotiates on the workers' behalf.
- Standard of living: measured by standards such as real (i.e. inflation adjusted) income per person and poverty rate. Other measures such as access and quality of health care, income inequality and educational standards are also used. Examples are access to certain goods (such as number of refrigerators per 1000 people), or measures of health such as life expectancy. It is the ability of people living in a time or place to satisfy their wants.
Discussion: This article describes the reduction in personal income by Colorado workers. The average Colorado worker in 2009 make 3.9% less than in 2008. Colorado per capita wages are now at $41,344 per year. The Bureau of Economic Analysis also reported that Colorado has fallen in a ranking of the states from 7th place in 2000 to 15th place in 2009. This fall in average income is assumed to reduce consumer spending which slows the economic recovery. The one bright spot is a report that shows the average hourly wage in Denver has increased to $24.40 per hour.
Questions for discussion: Why do you think Colorado citizens are making less per capita? What is the major component of household income? Describe some other sources of personal income. How do you think the Bureau of Economic Analysis calculates per person income? How is it possible that hourly wage rates increased in Denver?
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 email@example.com.