Inflation - Lesson Demonstration (Transcript)

Michael Melvin
12th Grade Economics Teacher
Starr's Mill High School
Fayette County, Georgia

Michael: I think it's important to get kids actively engaged in their learning. In economics specifically, I think in order to get certain concepts of the economy across, I think you need that competition, and I think a competition can really bring to light some of those kids that have a competitive streak, but they're not necessarily all that comfortable in a different type of classroom setting.

Michael: So it's worth five points. You can use it on any test, whatever, okay. Do I have an opening bid?

Student: A dollar.

Michael: One dollar?

Student: Yes.

Michael: Okay.

Student: Two dollars.

Michael: Oh, I heard two right here.

Student: Three.

Michael: I heard three.

Student: Five.

Michael: Five.

Student: Six

Michael: Six? Five points extra credit.

Students: Eight dollars.

Student: Eight. I got eight dollars.

Michael: I heard eight right here.

Student: Nine

Student: No.

Michael: Nine.

Student: No.

Student: Nine.

Michael: Nine dollars.

Students: That's too much.

Michael: The kids come into the class, come into Econ not knowing exactly what economics is, but not expecting a great deal. So my philosophy has always been, first of all you've got to make the class enjoyable to come to, so the simulations and things like that, it generates an enthusiasm for just, class, okay. And then that gives me a chance to teach them econ, it gives me a chance. I'm certainly biased, but you know, I think econ is one of the most important things that they're going to need to take with them in order to understand what's going to happen to them in the future and understand the world they live in. I think kids do perform better, they remember complex concepts more if they're role playing or doing something like that. I do think it sticks with them.

Michael: I've given you a bit of money. You can use your money however you choose. We have a crazy straw.

Student: Oh.

Michael: Five points extra credit. A number 2 pencil.

Student: Wow.

Michael: Stretch Ninja.

Student: Laughter.

Michael: Pet frog. Magic dough.

Student: Wow.

Student: I like that.

Michael: Everlasting Gobstoppers

Student: Forever?

Michael: They will last forever.

Student: Great.

Michael: The final is an animal of some kind. You place this in water and it grows to full size.

Student: I love those things.

Michael: Just so that everyone knows how an auction works. I have an item and someone will make an opening bid. You then have to Dorsey, do what? If someone else bids first and you want that thing?

Student: Bid higher.

Michael: You have to bid higher. That always seems to be a problem with kids. I'll pay you two dollars as well. Well, that doesn't work. So the first item we'll start with, the magic dough. Please do not eat the magic dough.

Student: Ugh.

Student: It's really salty. I used to eat it when I was little.

Student: Ugh.

Student: Thanks a lot.

Student: Oh.

Michael: Amber says it's very salty, but says it's non-toxic. So can I have an opening bid?

Student: a dollar.

Michael: One dollar.

Student: Two dollars.

Michael: Two dollars.

Student: Ooh.

Student: Five.

Michael: Five dollars.

Student: Six.

Michael: Six Dollars. Six dollars going once.

Student: Eight dollars.

Michael: Eight dollars. Going once, going twice. Dorsey?

Student: I only have seven dollars left. You only gave me seven.

Student: Fool.

Student: It's your fault.

Michael: Eight dollars going once. Going twice. Sold.

Michael: The auction is about inflation, which can be a difficult subject matter for the kids to grasp because they haven't been through the experience of really seeing inflation work on them.
The U.S. does a very good job of controlling inflation most of the time, so they don't really see it day to day. And so the auction activity gets them involved, it engages them, but it also teaches them to recognize when prices are going up. Some people are hurt, some people are helped. Then we can practice with finding the inflation rate, those kinds of things. So I think it gives the kids sort of a hands-on real life experience of a problem that goes on in the world.

Michael: Ten dollars in the back.

Student: What? You gave me seven.

Michael: Dorsey, unfortunately some people have more money than you do in real life as well.

Students: Laughter.

Student: Get used to it.

Michael: The first realization they have is that they all don't have the same amount of money, and that gets them a little irritated when they find out that maybe they don't have quite as much money as anyone else. But that's intentional, to build that in and to get them to realize well, you know we don't all have the same amount of money and you just have to deal with it. But eventually at some point they'll start to pool their money so that they can get what they want if it's something that they can share or whatever. So they pool their money. Sometimes that happens early in the activity, sometimes it occurs a little bit later. Sometimes it can get heated when they start pooling their money. They start bidding against each other, and it's interesting. It's low key once they leave the room, it's not a big deal. But you do find, occasionally, they'll mention it a couple of days, a couple of weeks down the road they'll bring up something: “Well, you're the one who got the frog,” or the crazy straw, or whatever item I happen to be using at that time. So it is something that they remember and hopefully they remember the activity. You know they can tie it to the content I'm trying to teach them.

Michael: I have another class, ESOL kids, the English as a Second Language, those students. And I find that these kinds of activities are even better for those kids, the kids you know that may have difficulties in learning, have language issues, things like that. So reading activities are a particular challenge to them, so you have to have things… experiential type activities for them.

Michael: Will you add up the dollar total from round one and tell me what that number is?

Student: Eighty-three.

Michael: Eighty-three. So in round one, you all paid a total of eighty-three dollars, okay. What about round two?

Student: Two hundred sixty-seven.

Michael: Two hundred and sixty-seven.

Student: Yeah, that's it.

Michael: That's a huge, huge difference. Let's say we want to find out the inflation rate for this time period, okay. We talked about this last week. We have to look at the change in the price over the beginning price level. So we get two point two, two times a hundred. What kind of percentage rate, what kind of inflation rate do we have?

Student: I'll have to figure that.

Michael: Pretty high is the correct for the time period - two hundred and twenty-two percent inflation. When we talk about our government debt you know, why don't we just print off money and not tell anybody? Well, we didn't tell you how much money we were giving out. That was just sort of a random thing, but the money still shows up in the price levels. Even if we didn't tell anybody that we're printing off money, and paying off money that we're printing off, it's still going to show up. So it's still going to show up, we're still going to feel the effects of it. So on Thursday we played monetary policy game and we talked about how the Fed's job, you know they have this dual mandate of trying to get economic growth without inflation. This is why their job is so important is because, remember when inflation happens, prices rise, but it doesn't create any more goods and services. Okay?

Michael: You can go back to a concept that you talked about, you know, a week ago, two weeks ago, things like that. You can use it to project forward. This works as sort of a teaser, if you will: This is something we're going to be talking about in the next couple of days; let's link it back to that activity that we did. You know, last week we talked about the Fed and monetary policy and the importance of controlling inflation.

Michael: To review the steps of the classroom auction, distribute the money supply to the class, introduce the market basket of goods. The next step is to conduct the auction and record the prices. You would then increase the money supply to the class and you conduct the second round of the auction, which is followed by your class discussion and debrief.

Michael: I definitely think this could be beneficial to a teacher regardless of your level, regardless of your experience, regardless of your comfort level.