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Currency Value Game

The page is authored by Bill Bettencourt, Edmonds Community College (Lynnwood, WA).
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This material is replicated on a number of sites as part of the SERC Pedagogic Service Project

Summary

This activity (designed to be deliverable within a 50-minute class period) sensitizes students to the concept that wealth is ultimately measured by access to goods and services rather than the availability of money. It creates two economies within the classroom each with its own currency and its own supply of goods; peanuts vs. chocolates. Over six rounds of play, currency is distributed and goods are made available challenging students to maximize their wealth through the acquisition of goods.
Upon discovering that one economy is less productive and inflationary while the other is productive and monetarily stable, students must adjust their currency management and wealth-seeking strategies accordingly.

Learning Goals

Students should be able to describe and evaluate:
a. the concept of wealth in non-monetary terms,
b. how monetary decisions affect a currency's purchasing power and a nation's economy in general, and
c. how personal economic decision-making is affected by broad economic circumstances.

Context for Use

This exercise is developed for students (group size: 14 to perhaps 34 max) with limited prior exposure to economic theory or principles, perhaps those typically enrolled in an "Intro to Business" course at a high school or community college. Discussion prior to the activity should acquaint students with these concepts:
– Wealth: a quality of life determined by the availability of goods and services.
– Currency: pieces of paper exchangeable for goods and services. (It should be noted that currency that is not exchangeable for goods and services cannot deliver quality of life.)
– Purchasing power: the fluctuating exchange value of currency determined by the balance between the availability of currency (money supply) and availability of goods and services (the productivity of the issuing economy).

Description and Teaching Materials

Set-up Prior to Starting Classroom Activity:

Student Group Size Notes – The minimum group recommended for this activity is 14 divided into 6 teams of paired students; 3 teams in the white (peanut) economy and 3 teams in the color (chocolate) economy. Another pair of students need to be appointed "shopkeepers" who will open the packets and distribute the currencies in equal portion to their teams. — For larger groups, perhaps up to 34 students in total, 8 teams made up of 4 students each can be established. As above, these teams are evenly divided between the two economies, and two students are appointed shopkeepers.

Game Play Instruction Sheet – See example in attachment.

This should be duplicated so that each of the 6 or 8 teams can have its own copy at the start of game. Note that the bottom of the page should be folded up to meet the dotted line and then stapled in 2 or 3 places so that the "Special Rules" are not available to any teams until the instructor indicates otherwise.

Goods/Currency Packet Assembly – See "Packet Contents" attachment. A small paper packet containing currency andgoods in the proportions described in the attachment charts for 6 or 8 teams must be prepackaged and ready to distribute.

The currency component is squares of scrap paper (rescued from recycle bin?) in two distinctive colors; white and whatever else comes to hand.

The goods consist of in-shell peanuts and small chocolates (something like Hershey's mixed variety minibars; Plain, Mr. Goodbar, Krispies and Special Dark.)

Whiteboard Tables #1 and #2 – See examples in attachment.

Table #1 Note: As the Goods/Currency packets are opened during the game, the contents should be recorded by the shopkeepers into this table. As the game progresses, these figures make it clear that the chocolate economy is productive and its money supply is held in check. In contrast, the peanut economy is far less productive while the availability of their currency expands dramatically.

Table #2 Note: The "Open Market" table records exchanges that happen on on the game floor where peanuts can be purchased with color currency and chocolates for white currency at prices negotiated on the spot between the teams.
Game play instruction sheet (Microsoft Word 24kB Oct10 13)
Whiteboard Tables #1 and #2 (Microsoft Word 2007 (.docx) 15kB Oct10 13)
Packet Contents (Microsoft Word 2007 (.docx) 15kB Oct10 13)

Teaching Notes and Tips

General Instructions/Suggestions to Instructor Overseeing this Activity:

Although the student handout sheet that you prepare for this activity generally explains how it proceeds, there are a few behind-the-scene factors that the instructional overseer should know.

1. Be sure that the contents of the currency/goods packets remain secret until they are opened in the classroom because, by looking at the currency/goods content of the packets, it is evident that the "peanut" economy is both unproductive and wildly inflationary. (You can enhance this even further by selecting triplet peanuts for the early rounds, and then gradually change to inferior nuts as the game proceeds.) In contrast, the productive "chocolate" economy has a restricted money supply and the goods actually improve a bit (from plain to variety) as the game proceeds.

As the game proceeds and the low productivity of the white currency economy becomes evident in the chronic shortage of peanuts available there, the statistics in the "Open Market" table will show that chocolate holders start to demand ever increasing amounts of white currency in payment for their goods. This is evidence of the white currency's decreasing buying power.

In contrast, the steady supply of goods and restricted availability of colored currency keep prices in check. And because there is increasingly more variety available in the chocolate economy, it makes sense for the teams to save some currency for the following round in case more attractive products come onto the market through the chocolate vending shop.

2. It may be useful to handpick your COLOR currency (chocolate) "shopkeeper" because, from Round #3, he or she will be actively setting the prices that apply to shop purchases. It enhances the game if this student can comfortably play a haggler's role to maximize their cash intake as they engage their market. But, in a private moment at the outset of the game, specifically instruct this chocolate vendor that you want him or her to carry over only small portion of their inventory from one trading round to the next. (In contrast, the peanut vendor will simply oversee a complete sellout each round.)

3. Note that it is necessary for Round #6 to be a disappointment. If everyone knows that the game is in fact over with Round #5, everybody would be motivated to dump all of their soon-to-be-worthless currencies for any goods left anywhere.

4. To fit this activity into a 50-minute class period, you will have to get the game moving quickly and keep it in motion by putting time limits on each trading round. You will want to reserve the last 10 minutes or so to analyze the "Open Market" Exchange Record to be sure that the students appreciate that the purchasing power of the white currency fell drastically by evidenced by how many white currency units it took to access chocolates. The ultimate point to be made is that although white currency holders were increasingly "flush with cash", their actually access to wealth (goods) was restricted by their currency's falling purchasing power.

5. Also at the conclusion of the game, it might be useful to observe that the peanut economy resembled that of the late Soviet Union; low productivity as evidenced by empty consumer market shelves looked at by frustrated people with rubles in their pockets. In contrast, the chocolate economy resembled Japan during its post WWII economic recovery; rapidly increasing productivity enjoyed by a society that both earned and spent their incomes judiciously.


Assessment

The follow-up/deliverable portion of this activity might be a short writing assignment set up as follows:
Q#1: Which economy (Peanuts or Chocolate) were you in? ________________
Q#2: What was your team's "Quality of Life Score" at the end of the game?
Positive Points (Goods):
Peanuts _________ Chocolates _________
Negative Points (Useless Currency):
Color _________ White _________
Q#3: Which economy had the easier time to achieve a higher Quality of Life Score, and why do you feel this way?

References and Resources