Download SS. 9.12.FL.5.8 Discuss ways that the prices of financial assets are

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project

Document related concepts

Economics of fascism wikipedia, lookup

Non-monetary economy wikipedia, lookup

Nouriel Roubini wikipedia, lookup

Abenomics wikipedia, lookup

Post–World War II economic expansion wikipedia, lookup

Great Recession in Europe wikipedia, lookup

Business cycle wikipedia, lookup

Recession wikipedia, lookup

Transcript
Grade: 11 Lesson #12
What is the best financial plan during a recession?
SS. 9.12.FL.5.8 Discuss ways that the prices of financial assets are also affected by
changes in domestic and international economic conditions, monetary policy, and fiscal
policy.
LAFS.1112.RL.1.1 Cite strong and thorough textual evidence to support analysis of
what the text says explicitly as well as inferences drawn from the text, including
determining where the text leaves matters uncertain.
1
SS.9.12.FL.5.8 Discuss ways that the prices of financial assets are also affected by changes in domestic
and international economic conditions, monetary policy, and fiscal policy.
What Happened? Understanding the Great Recession of 2008
Lesson Number 12:
Correlated Florida Standards (See Full Text on Cover page)
 LAFS.1112.RL.1.1
Essential Question
 How and why did the United States experience the worst economic downturn since the Great
Depression and what were the lessons learned for investors?
Learning Goals/Objectives
 Review the definition of a recession
 Define Gross Domestic Product and explain its significance as an economic indicator
 Analyze housing starts as a leading economic indicator
 Compare and contrast the Great Depression with the Great Recession
 Assess the value of economic forecasting in developing a personal financial plan
Overview
 This lesson, adapted from the Council for Economic Education’s EconEdLink, The Effects of the
Recession lesson plan, provides students with background knowledge of the Great Recession and
helps them to develop a financial strategy to protect themselves from the negative personal impact.
Materials
 Federal Reserve Bank of San Francisco’s Video, The Great Recession, Part 1,
http://www.frbsf.org/education/teacher-resources/economics-in-person/great-recession-part-one
 Frontline Video on the origins of the housing crisis
http://www.pbs.org/wgbh/pages/frontline/meltdown/interviews/bair.html
 Chart comparing the Great Depression and Great Recession,
http://money.cnn.com/news/storysupplement/economy/recession_depression/
 Lessons from the Recession, AARP Magazine, http://www.aarp.org/money/investing/info-082013/lessons-from-the-recession.html
 http://www.goodhousekeeping.com/life/money/advice/a12403/deal-with-recession/
 http://www.pewsocialtrends.org/2009/04/23/luxury-or-necessity-the-public-makes-a-u-turn/
 Internet Access
 Promethean or Smart Board
Time
 50 minutes
Activity Sequence
INTRODUCTION/HOOK
 Ask the students to explain what they think a recession is. After they share their thoughts, tell them
that a recession is a period of time when the economy slows down, people lose their jobs, and
consumers cut back on buying products. Remind them that they learned about the causes and
consequences of the Great Depression earlier in the year in United States History, and will now be
comparing the Great Depression with the Great Recession of 2008 – 2009. (2 minutes)
2
ACTIVITY
1. Explain to students that the United States experienced the most severe economic downturn since
the Great Depression in 2008-2009 and it had a major impact on many people in the United States
and the world. Tell students they will learn how a recession affects them and the people around
them and how the federal government responded to the crisis.
2. Show and discuss “The Great Recession, Part 1” from the Federal Reserve Bank of San
Francisco’s website, http://www.frbsf.org/education/teacher-resources/economics-inperson/great-recession-part-one (8minutes for steps 1 and 2)
3. Tell students that in hindsight, there were signs that the economy was in trouble. Show and
discuss the Frontline interview with Sheila Bair, the chairman of the Federal Deposit Insurance
Corporation, http://www.pbs.org/wgbh/pages/frontline/meltdown/interviews/bair.html.
4. Restate that the main reason the United States went into such a severe recession was that the
banks had loaned money through adjustable rate mortgages to too many people who really should
never have qualified and this led to the housing crisis where the foreclosure rate was a whopping
25% in some communities in the U.S. (3 minutes for steps 3 and 4)
5. Explain to students that the way we know if we are having economic problems is to look at what
are called economic indicators and that the most comprehensive of all the economic indicators is
Gross Domestic Product. Discuss what GDP means:
“GROSS DOMESTIC PRODUCT” is how much the economy produces in a given year. “Gross”
here means total. “Domestic” means everything produced inside the country, no matter by whom.
(So cars being made by a Japanese firm in Ohio count – minus the parts that were shipped from
Japan or elsewhere) “Product” means goods and services – everything that has a price and is
recorded as sold that year. The President’s salary is included. So is a prison guard’s. But a
parent’s hours caring for a baby – or doing the housework – is not, unless someone is paying for
it. Another way of putting it: GDP is the total legal sales of the economy in a 12-month period.”
http://www.pbs.org/newshour/extra/lessons_plans/the-housing-crisis-gdp-housing-bubblerecession/
6. Show the chart comparing the Great Depression and the Great Recession. Ask students to
compare the two time periods. Are there any similarities or differences?
http://money.cnn.com/news/storysupplement/economy/recession_depression/ (5 minutes for steps
5 and 6)
7. Have students use their tablets or computers to visit both the Bureau of Labor Statistics,
www.bls.gov and the Bureau of Economic Analysis, www.bea.gov to find the current GDP and
Unemployment Rate and compare and contrast them to the Great Depression and Great
Recession. Explain that policies were implemented by the Federal Government and Federal
Reserve Bank to help the economy recover, but it was a long recovery and came at a substantial
cost. (5 minutes)
8. Tell students they will now learn strategies that will help them if this ever happens again. Have
students use their tablets to review the following articles (10 minutes):
o Lessons from the Recession, AARP Magazine, http://www.aarp.org/money/investing/info-082013/lessons-from-the-recession.html
3
o http://www.goodhousekeeping.com/life/money/advice/a12403/deal-with-recession/
o http://www.pewsocialtrends.org/2009/04/23/luxury-or-necessity-the-public-makes-a-u-turn/
9. Have students work with a partner to create a list of personal financial strategies to handle a
severe recession.(12 minutes)
CLOSURE
 Ask students to share and discuss their strategies which should include ideas like never borrow more
money than you really need, save money in case of emergency (at least 6 months of living expenses),
diversify investments, get a good education and always remember that needs and wants are not the
same thing. (5 minutes).
OPTIONAL EXTENSION SUGGESTION/HOME LEARNING
 Each student will interview one adult who experienced the 2008 Recession. The student will ask ten
questions about the interviewee’s experience. Students will type a reflection of the interview and
present to a partner or the class the following week.
Sources/Bibliographic Information that contributed to this lesson:
“The Effects of the Recession” Lesson Plan, from the Council for Economic Education’s EconEdLink,
http://www.econedlink.org/lessons/index.php?lid=859&type=educator
http://www.aarp.org/money/investing/info-08-2013/lessons-from-the-recession.html
http://money.cnn.com/2009/03/25/news/economy/depression_comparisons/index.htm
http://sffed-education.org/econanswers/crisis.htm
http://www.frbsf.org/education/teacher-resources/economics-in-person/great-recession-part-one
http://learning.blogs.nytimes.com/2008/10/06/a-tale-of-two-economies/
http://www.pbs.org/newshour/extra/lessons_plans/the-housing-crisis-gdp-housing-bubble-recession/
4
Great Depression vs. 'Great Recession'
Comparisons between this economic recession and the Great Depression are common, but
the granddaddy of all downturns was far worse.
By David Goldman, CNNMoney.com staff writer
CONTENT
Great
Depression
Bank failures
Unemployment rate
9,096 – 50% of banks
(Jan. 1930 March 1933)
25%
Great
Recession
57 – 0.6% of banks
(Dec. 2007 May 2009)
8.5%
-3.3%
(Second quarter 2008 - first
quarter 2009)
Economic decline1
-26.5%
(1929 - 1933)
Biggest decline in
Dow Jones industrial
average
-89.2%
(Sept. 3, 1929 July 8, 1932)
-53.8%
(Oct. 9, 2007- March 9, 2009)
Change in prices
-25%
(1929 1933)
Emergency spending
programs
1.5% of GDP for 1 year
(Increase in 1934 budget deficit)
States response
Raise taxes, cut spending
+0.5%
(Dec. 2007-March 2009)
2.5% of GDP for 2 years2
(2009 American Reinvestment
and
Recovery Act)
Federal stimulus plan gives fiscal
relief to
states to lessen impact of tax
increases
Increase in money
supply by Federal
Reserve
17%
(1933)
125%
(September 2008 May 2009)
Source: FDIC, Federal Reserve; Commerce Department; Dow Jones; Christina Romer, Obama economic adviser,
Lessons from the Great Depression for Economic Recovery in 2009 (March 9) and JEC testimony
1
2
Inflation adjusted GDP, peak to trough
Romer estimate (April 30)
5