## Making Decisions

This lesson introduces students to points 3 and 4 of the economic way of thinking—that people must make choices, and every choice involves a cost. In activities related to these points, the students practice using the PACED decision-making process:

• State the Problem.
• List Alternatives.
• Identify Criteria.
• Evaluate alternatives based on criteria.
• Make a Decision.

By explicitly identifying the alternatives and criteria for particular decisions, the students will gain skill in making decisions thoughtfully.

This lesson is correlated with national standards for mathematics and economics, as well as national guidelines for personal financial management.

### Objectives

At the end of this lesson, the student will be able to:

• Explain the purpose of a decision-making strategy.
• Analyze a problem using the PACED decision-making process.
• Explain why some criteria are more important than others when using the decision-making process.
• Identify the opportunity cost of a decision.

### Economic and Personal Finance Concepts

• Alternatives
• Cost/benefit analysis
• Criteria
• Decision-making
• Opportunity cost
• Trade-offs

### Materials

• A transparency of Visual 1.4 (from Lesson 1)
• A transparency of Visuals 2.1 and 2.2
• A copy of the Introduction and Vocabulary sections from Lesson 2 of the Student Workbook for each student
• A copy of Exercises 2.1, 2.2, and 2.3 for each student from the Student Workbook
• PACED grid sheet (available in Visual 2.2 or in exercises from the Student Workbook)
• A copy of Lesson 2 Assessment from the Student Workbook for each student
• Product advertisements from newspapers or magazines
• 4" x 6" index cards (one per student)
• Construction paper and crayons or markers
• Three brands of graham crackers (or pretzels, soda crackers, etc.)
• Approximately 24 sandwich-sized plastic bags. (Mark the bags A, B, and C. Place 4–5 crackers of one brand in each bag. Be sure to note which brand is A, which is B, and which is C.)
• Paper cups (one per student) and water

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## The Economic Way of Thinking

The students are introduced to the final two principles of the economic way of thinking.

• People’s choices have consequences.
• People respond to incentives.

Students engage in activities that require an analysis of choices using the economic way of thinking.

This lesson is correlated with national standards for mathematics and economics and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Identify the costs and benefits of a choice.
• Identify and evaluate incentives.
• Analyze choices and predict consequences.

### Economic and Personal Finance Concepts

• Consequence
• Incentive
• Opportunity cost

### Materials

• A transparency of Visual 1.4 from Lesson 1
• A transparency of Visuals 3.1, 3.2, and 3.3
• A copy of the Introduction and Vocabulary sections from Lesson 3 of the Student Workbook for each student
• A copy for each student of Exercises 3.1, 3.2, and 3.3 from the Student Workbook
• A copy for each student of Lesson 3 Assessment from the Student Workbook
• Calculators

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Why Stay in School?

Against a background of information about the relationship between educational attainment, employment, and income levels, the students weigh decisions about education in light of costs and benefits.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Explain the benefits associated with levels of educational attainment.
• Explain the costs associated with levels of educational attainment.
• Define opportunity cost, and explain the opportunity cost of dropping out of school.

### Economic and Personal Finance Concepts

• Benefits
• Costs
• Income
• Marginal benefit
• Opportunity cost
• Wage

### Materials

• A transparency of Visuals 4.1, 4.2, and 4.3
• A copy for each student of the Introduction to Theme 2 and Introduction and Vocabulary sections of Lesson 4 from the Student Workbook
• A copy for each student of Exercises 4.1 and 4.2 from the Student Workbook
• Calculators (one per student)
• Rulers (one per student)
• Unlined paper (one sheet per student)

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Choosing a Career

This lesson focuses on a deliberate approach to making career choices. The students examine statistics projecting future demand for workers in various occupations. They complete a self-assessment to identify career pathways that match their interests and abilities. After examining a number of job descriptions, they compare each job’s requirements to the skills recommended by the Secretary’s Commission on Achieving Necessary Skills (SCANS). Finally, they consider entrepreneurship as a career option.

People sometimes find their way into particular careers by haphazard means, influenced by chance occurrence or unreliable information. To make more deliberate, well-informed choices, young people need to understand the job market, identify their own aptitudes, and grasp the relationship between marketable skills and workplace success.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Assess his or her career interests in light of projected demand for workers in various occupations.
• Explain the relationship of human capital to career choices and opportunities.
• Recognize the importance of investment in human capital.
• Explain the relationship of worker productivity to education and experience.
• Describe the characteristics of an entrepreneur.
• Explain how entrepreneurs benefit the economy.

### Economic and Personal Finance Concepts

• Entrepreneur
• Human capital
• Opportunity cost
• Productivity

### Materials

• A transparency of Visuals 5.1, 5.2, 5.3, 5.4, and 5.5
• A copy for each student of the Introduction and Vocabulary sections of Lesson 5 from the Student Workbook
• Copies of Activity 5.1A (enough for half of the class) and 5.1B (enough for half of the class)
• Optional: Copies of Activity 5.2A (enough for half of the class) and 5.2B (enough for half of the class)
• A copy for each student of Exercises 5.1, 5.2, 5.3, and 5.4 from the Student Workbook
• A copy for each student of Lesson 5 Assessment from the Student Workbook
• A stopwatch (or clock with a second hand)
• Poster board for each student

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Productivity

The students examine ways to develop their human capital. They discover that people make themselves more productive by developing their human capital and by using capital resources—the tools of their trade. As they become more productive, they become more valuable to employers. As they become more valuable to employers, they gain earning power, thus improving their standard of living.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Give examples of capital resources used in various careers.
• Explain ways in which productivity can be increased.
• Explain ways in which the use of capital resources increases productivity.
• Identify the human capital required for particular jobs.
• Explain how certain skills are acquired.

### Economic and Personal Finance Concepts

• Capital resources
• Human capital
• Productivity
• Wages

### Materials

• A transparency of Visuals 6.1, 6.2, and 6.3
• A copy for each student of the Introduction and Vocabulary sections for Lesson 6 from the Student Workbook
• A copy for each student of Exercise 6.1 from the Student Workbook
• A copy for each student of Lesson 6 Assessment from the Student Workbook
• Calculators
• A clock with a second hand for students to access

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Why Save?

The students learn about saving and investing, and they consider the importance of setting short-term, medium-term, and long-term savings goals. They use math skills to solve problems and they play a game designed to emphasize the importance of setting goals and working toward a goal. Finally, the students engage in a family activity that focuses on the opportunity cost of saving.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Recognize the importance of setting goals.
• Define short-term, medium-term, and long-term goals.
• Use math to project savings goals.
• Identify the opportunity cost of saving.

### Economic and Personal Finance Concepts

• Investing
• Long-term goals
• Medium-term goals
• Opportunity cost
• Saving
• Scarcity
• Short-term goals

### Materials

• A transparency of Visuals 10.1 and 10.2
• A copy of the Introduction to Theme 4 and Introduction and Vocabulary sections of Lesson 10 from the Student Workbook
• A copy of Activity 10.1 for each group of four students
• A copy for each student of Exercises 10.1 and 10.2 from the Student Workbook
• A copy for each student of Lesson 10 Assessment from the Student Workbook
• Scissors and a pair of dice for each group of four students
• Three 4" x 6" index cards for each student
• Sticky notes or index cards

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Let Lenders and Borrowers Be

The students learn how financial intermediaries foster exchanges between savers and borrowers. They learn how savers and borrowers benefit from these exchanges; they also learn about the opportunity costs of saving and borrowing.

Financial intermediaries perform an important function in our economy. In accepting deposits from savers and in lending money to borrowers, they support people in their efforts to reach their goals.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Define interest.
• Explain that interest rates are determined by supply and demand.
• Identify the opportunity cost incurred by savers and borrowers.

### Economic and Personal Finance Concepts

• Demand
• Financial intermediaries
• Interest
• Opportunity cost
• Profit
• Revenue
• Supply

### Materials

• A copy for each student of the Introduction and Vocabulary sections of Lesson 11 from the Student Workbook
• A transparency of Visual 11.1
• A copy for each student of Exercise 11.1 from the Student Workbook
• A copy for each student of Lesson 11 Assessment from the Student Workbook

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Who Pays and Who Receives?

The students discover that three factors affect how money grows in savings accounts: the amount deposited, the interest rate, and the length of time the money is held on deposit.

Students calculate interest and formulate a generalization about the difference between simple and compound interest.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Calculate simple and compound interest.
• Explain the opportunity cost of allowing interest to compound.
• Explain the opportunity cost of taking interest as it is earned.
• Analyze the difference between simple and compound interest.
• Explain the factors that affect how money grows.
• Apply the Rule of 72.

### Economic and Personal Finance Concepts

• Compounding
• Compound interest
• Interest
• Interest rate
• Opportunity cost
• Rule of 72
• Simple interest

### Materials

• A transparency of Visuals 13.1, 13.2A, 13.2B, 13.3A, 13.3B, 13.4, 13.5, and 13.6
• A copy for each student of the Introduction and Vocabulary sections of Lesson 13 from the Student Workbook
• Copies of Exercises 13.1A (enough for half the class) and 13.1B (enough for half the class)
• One copy for each student of Exercises 13.2, 13.3, and 13.4 from the Student Workbook
• One copy for each student of Lesson 13 Assessment from the Student Workbook
• A bag of large dried kidney beans (or other beans of fairly uniform size)
• Two tall, narrow clear glasses or jars (one labeled “Simple Interest,” the other labeled “Compound Interest”)
• One small, narrow clear glass or jar (labeled “Interest Paid Out to Depositor”)
• Two overhead projectors
• Calculators (one for each student)

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

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## Stocks and Mutual Funds

The students learn about stocks—how stocks are issued, different levels of risk, and differences in possible returns. In studying risk, the students also learn about mutual funds and diversification.

This lesson is correlated with national standards for mathematics and economics, and with personal finance guidelines.

### Objectives

At the end of this lesson, the student will be able to:

• Explain that stocks represent shares of ownership in a corporation.
• Explain the risk associated with stock ownership.
• Explain two ways in which stocks provide a return to owners: capital gains and dividends.
• Define mutual funds; identify different types of mutual funds.
• Define diversification.

### Economic and Personal Finance Concepts

• Capital gains
• Diversification
• Dividend
• Equity
• Mutual funds
• Risk
• Stocks

### Materials

• A transparency of Visuals 14.1 and 14.2
• A copy for each student of the Introduction and Vocabulary sections of Lesson 14 from the Student Workbook
• A copy for each student of Exercise 14.1 from the Student Workbook. Distribute copies to the five cast members a day ahead (see Procedure 2)
• A copy for each student of Exercises 14.2, 14.3, and 14.4 from the Student Workbook
• Two small boxes (see Procedure 20)
• The financial pages of a newspaper
• Six sheets of poster board
• Art supplies
• Magazines

To download visuals, correlations to state standards, interactives, and more, visit the Council for Economic Education site, opens in new window.

© Council for Economic Education

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