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Share the Wealth: Three teachers' strategies for presenting circular flow

photo of man and woman bankingDo your students want to own the latest technological gadget, trendy/hipster clothes, and, if they are driving, a set of wheels to liberate themselves? If they are like many teenagers, the answer is yes to all these. How many young consumers ponder the economic relationships that exist between businesses and households? How many understand that this interaction is essential for market economies to function? Do they think about the source of the income necessary to buy these coveted items, the incentives motivating businesses and households to interact, or the role that ownership of the factors of production plays in the flow of economic exchanges? Three Atlanta-area teachers share lessons and strategies for teaching the simple model of the circular flow of economic activity.

Dr. Elfi Funk, an AP macroeconomics teacher at Peachtree Ridge High School in Suwanee, Ga., has developed a lesson plan on the circular flow model that moves from concrete examples to abstract concepts. She puts her students in groups of four and assigns each group a short case scenario along with the basic layout of the circular flow model (factor and product market, and households and firms/businesses). Students read the case scenarios, and each group transfers the information onto the arrows of the model. When groups solve their first scenarios, they go on to pick a second one. Each scenario—four in all—adds new components to the puzzle. By the end of the exercise, students see the interdependence of all the players in a circular flow model. Dr. Funk uses a simple circular flow for this lesson, omitting the government in the model. She adds this component later, when she teaches about government revenue and spending. This process allows her to review the model throughout the course.

Like Dr. Funk, Gary Petmecky, an AP economics teacher at Parkview High School in Lilburn, Ga., uses laminated pieces of the circular flow model glued to magnets to allow students to actively engage with the model as a puzzle. Mr. Petmecky describes the model, then places one of the pieces on the whiteboard. (The magnets allow placement on the whiteboard.) He asks a few students to come to the whiteboard to put the remaining pieces in the correct order. The exercise gives students practice at making the model. Students can also correct their peers if they make mistakes, which reinforces everyone's understanding. Teachers can switch the position of one of the magnets, then have the students rearrange the other pieces to accommodate this change. The kinesthetic nature of this activity reinforces learning.

Dr. Pamela Roach, an AP macroeconomics teacher at North Cobb High School in Kennesaw, Ga., presents the circular flow model at the end of her unit on economic fundamentals. She uses the lesson she developed as a springboard for the unit on microeconomics. Dr. Roach begins her lesson by having a conversation with the students about supply and demand, as well as how people earn money. She leads a simulation of a series of potential exchanges. Student volunteers play shoppers (consumers), a store manager (product market), a CEO (business/headquarters), and a factory manager (factor/resource market). After the simulation, students draw the circular flow model based on the simulation of the exchanges that took place. The students later draw the model using textbooks' terms such as households, businesses, factor market, and product market rather than the examples from their simulated exchanges. The students may draw another model using a product they choose. (This will be a homework assignment.) Teachers can use the rubric to assess the students' models. Finally, students fill in the blanks on the model with the product market and factor market reversed.

September 6, 2011