Lesson 2: What Makes Good Money?
Students will be able to define “good money,” identify its five characteristics, and understand what it is and isn’t.
Standard: The Jump$tart standards do not address the characteristics that make good money.
SEL Competency: Social awareness
- Get familiar with the following terms (definitions included on the worksheet below along with the answer sheet at the end of this document): fungible, scarce, divisible, recognizable, portable
- Print out the worksheet or make it available digitally for individual or group work (answer key here and at the end of this document)
- Pull up the slide show
- Prepare to show students this video: The History of Paper Money (also embedded in slide show)
Hook: Video (10 min)
Slide: Recap of the History of Paper Money
(~8 minute video)
Say: This video goes into some details we didn’t cover in the previous lesson. But more or less, this is a recap of the evolution of paper money. Let’s do a quick recap of additional events that occurred around the history of money over time.
Video Discussion (10 min)
Ask: How did money evolve from coins to pieces of paper in China?
A: The government issued paper denoting the amount of coins it was holding for someone. Eventually, instead of redeeming the paper for coins, people would just trade the paper.
Ask: How did goldsmiths become bankers in England? How did their banks turn banknotes into money?
A: Goldsmiths had large vaults, and they started renting out space in the vaults to allow merchants to store their money. At first the goldsmiths charged for this service, but eventually they paid the merchants a small amount of interest, because the goldsmiths could use the merchants’ stored money to provide (and profit from) loans. When merchants dropped off their money to store it at the vault, goldsmiths provided the merchants with receipts, called banknotes. Eventually, anyone holding these banknotes could redeem them for the stored money, which meant the banknotes themselves began to be used as money and traded in the market.
Say: This is why money is also called banknotes.
Take out a bill and give it to a student.
Ask: Do you see the word note?
Say: In the video, GayKhatu of Iran tried to create paper money after spending all of the royal money. The video says that Gaykhatu can’t print money as a way to print money. What does this mean?
A: The video doesn’t get into this, but most likely, inflation was created—so saying Gaykhatu can’t print money as a way to print money basically means it’s not that simple, and just printing money without regard for context or consequences can cause problems.
Ask: Who knows what inflation is?
A: The word inflation has come to mean different things.
1) The rising price of goods in an economy
2) The printing of paper money (in other words, paper or coin money, or fiat) by a government—this tends to cause the first kind of inflation
Say: Have you heard older people in your life complain about how the prices of things having gone up? Usually they’re talking about inflation, or basically saying that the same amount of money, over time, can no longer buy the same amount of goods or services. So today, a dollar may not buy you what it bought you 5 or 10 years ago.
Activity (20 min)
Slide: Comic below
Slide: What makes good money
Ask: We are going to look at what makes money good. Turn and talk with a partner about why a pineapple is not a good form of money or why we don’t use it as the global reserve currency.
Have students turn and talk, then share out.
Slide: Fuel the pineapple on pizza debate
Say: One person said, “it would fuel the pineapple on pizza debate! Haha.”
And other things to think about—it’s hard to cut up, perishable, only grows in certain places, not easy to carry, etc.
Slide: The 5 Characteristics of Good Money
Say: There are five characteristics that make “good” money: it has to be recognizable, fungible, divisible, portable, and scarce.
- Fungible—The $1 coin or dollar in my pocket is worth the same amount as the $1 coin or dollar in your pocket.
- Divisible—You can easily divide it up into intentionally smaller pieces. For example, 1 dollar can be divided into 4 quarters or 100 pennies.
- Portable—You can easily transport the item without a lot of effort—it’s moveable and durable in the long-term. So a cow would be a non-example, because they are heavy and really slow.
- Recognizable—People know what it is around the world and can easily identify it as money.
- Scarce—There is only a limited supply in the world, so it would be hard to replicate or produce more of it. An example would be gold, because there is a limited supply of it in the world.
Distribute printed or digital version of worksheet and group students by 2-4 so they can discuss each box.
Slide: What makes good money
Say: We are going to explore five different items and go through to see if they fit the five characteristics of good money. We’ll explore a pineapple, seashell, the U.S. fiat dollar, a brick of gold, and bitcoin. If you are not familiar with bitcoin or crypto, don’t worry about doing the last column. We will discuss that in a later lesson.
Share “What Makes Good Money?” worksheet.
Give 15 minutes to complete the activity.
Say: Any good conversations you want to share about this activity—or areas you got stuck or want to talk through as a whole group?
Have students share out.
Go through the answers as a whole group.
Debrief/Exit Ticket (5 min)
In the form of an exit ticket, Flipgrid, or “parking lot answer,” have students respond to the following question:
Ask: Given our conversations around each item, which of the items (pineapple, seashell, U.S. dollar, gold, or bitcoin) have the best potential to be considered “good” money based on what we know right now?
Important: Collect the graphic organizers (“What Makes Good Money?”) and save them for lesson 6.