Activity Two

This activity is to accompany Unit Two of the Curriculum Guide.

Incorporating the C.E.L.s:

• Independent Learning
• Critical & Creative Thinking
• Personal & Social Values & Skills
• Numeracy

Concept Application Lesson for:

• Economic Cycles
• Market Economies
• Social Costs
• Spending Priorities
• Interest Groups

The concept application lesson will increase students' understanding of the operations of a market economy through the technique of roleplaying. Students will investigate the challenges facing governments during the Great Depression of the 1930s.

Knowledge Objectives

The student will:

• know that governments, like other organizations, attempt to meet the needs of society and this often requires a financial expenditure;
• know that groups within a society will attempt to influence the decision making involved in determining national spending patterns and priorities;
• know that a reduction in income will necessitate a reorganization of spending patterns and priorities; and,
• know that economic and financial crises can/will result in social disharmony within society.

Skills Development

The student will:

• practise using the following analytical skills:
  • defining the main parts,
  • defining cause and effect relationships, and,
  • defining how the parts of the whole are related to each other;
• learn to define and apply criteria as a basis for decision making;
• practise using the critical attributes of concepts and values as criteria to make decisions; and,
• learn to determine priorities.

Values Issues

The student will:

• discuss how individuals, groups, and governments determine how to priorize their expenditures;
• discuss how criteria should be established to determine priorities in expenditures;
• discuss whether moral issues should be involved in the economic and financial decision-making processes of governments; and,
• discuss whether the Depression of the has influenced the way today's individuals and governments respond to economic and financial crises.

Outline of the Activity

Step One

Discuss with the students the economic situation facing most of the nations, particularly the European nations, following World War I.

• Note that European nations borrowed heavily from the United States to finance the rebuilding of their devastated economies.

Have the students construct a budget for a contemporary "typical family" with an income of X amount of money.

• Have students "brainstorm" to identify the monthly expenditures of a typical family.

Have the students compare their budgets and discuss the difficulties in balancing income and expenditures.

Step Two

Note that nations, like individuals and families, have to attempt to create and live within budgets.

Have the students list the expenditures that governments and the forms of income received by governments.

Have students, working in groups, identify and list the various functions which national governments perform that involve considerable expenditures. These might include:

• education;
• public health;
• law enforcement;
• the armed forces;
• roads and transportation systems; and,
• national debt.

Step Three

Discuss the financial problems associated with the Depression, noting decreased world trade, increased unemployment, and loss of income for governments.

• Discuss how the "typical family" would have to adjust to a drastic loss of income. What would be implications for the family's spending priorities?
• Note that governments also have to change their spending patterns and priorities when their incomes decline.

List a number of individuals and groups within society which would have been impacted by the Depression of the 1930s:

• international bankers;
• the prime minister of a nation heavily in foreign debt;
• a senior citizen of the indebted nation;
• a businessperson whose business depends on foreign trade;
• educators; and,
• the military and arms-producing establishment.

Each group is to represent one of the individuals or groups and prepare recommendations from the point of view of the individual or group they represent for their government to follow in preparing the nation's budget.

Indicate that the nation has X amount of money to spend in the given year. Ask the students to do the following tasks:

• establish criteria that the government should follow in determining expenditure increases and decrease;
• suggest areas where the government should reduce expenditures and areas where it should increase expenditures; and,
• prepare a balanced budget for the nation.

Evaluation instrument:

Have the student groups attempt to "balance" the government's budget in contemporary circumstances.

The groups can jointly attempt to come to agreement as to how to `balance' the governments budget by determining spending priorities and spending reductions.