The Role of Money

Curriculum Area and Level

CIE IGCSE Economics: Unit 3.1 Money and Banking

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Lesson Objective

By the end of the lesson, Year 10 students will be able to:

• Understand the concept and functions of money.
• Identify the role of banks in facilitating economic activity.
• Explain how interest rates can impact savings and borrowing.

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Materials Needed

• Whiteboard and markers
• PowerPoint presentation
• Handout on the functions of money
• Case study material about a fictional bank
• Tokens or monopoly money for a class activity

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Lesson Overview (40 mins)

1. Introduction (5 mins)

• Begin with a brief discussion asking students: "What is money?" and "How do we use it in everyday life?".
• Prompt them to think beyond cash, touching on digital payments briefly.

2. Key Concepts Presentation (10 mins)

• Present a brief PowerPoint covering:
  • Functions of Money: Medium of exchange, measure of value, store of value, standard of deferred payment.
  • Role of Banks: Explain banks' purposes, such as storing money, providing loans, and how they facilitate saving and borrowing.
  • Interest Rates: Introduce how interest rates are a tool for influencing economic activity. Explain the basics of how they affect spending and saving.

3. Interactive Activity: Bank Simulation (15 mins)

• Setup: Divide students into small groups. Provide each group with tokens representing money.
• Activity Steps:
  • Each group acts as a bank and must decide how much money to lend and how much to hold in reserves.
  • Introduce a central event narrative, such as an economic boom or recession, influencing decisions on interest rates.
  • Allow groups to adjust their interest rates based on the scenario.
  • Discuss the outcomes as a class, focusing on how the decisions impacted their 'bank' and economy simulation.

4. Reflection and Recap (5 mins)

• Have each group present a brief overview of their strategy and decisions in the simulation.
• Discuss any real-life parallels and how banks in the UK operate similarly.
• Recap the functions of money and the role banks play in economic stability.

5. Closing and Q&A (5 mins)

• Open the floor for any questions or clarifications.
• Distribute the handout summarising key concepts.
• Set a short homework task to research a recent news article related to changes in interest rates and how these changes impact people’s decisions on saving or borrowing.

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Assessment

• Observation during the simulation activity for understanding and participation.
• Collect reflections on the economic implications of their bank decisions in the simulation.

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Differentiation

• Ensure materials are accessible to all learners, including visual aids and summaries of key points.
• Provide additional support to students who may find economic terminology challenging, ensure concepts are explained in simple language.

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Use this lesson plan to engage students with real-world applications of economic principles, stimulating interest and deeper understanding of Money and Banking as outlined in the CIE IGCSE Economics curriculum.