This lesson covers the concept of currency, including its role in an economy as a medium of exchange and store of value, and different types of currency such as traditional currencies and digital currencies like Bitcoin. It also covers the foreign exchange market and how it determines the exchange rate between different currencies, as well as the factors that can affect the exchange rate, such as economic conditions, interest rates, and political events.

CONCEPTS

Use this video lesson on the topic of currency, including its role in an economy, different types of currency, and the factors that can affect the exchange rate of a currency and other basic economic and related concepts of

• Currency
• Money
• Exchange Rates
• Interest Rates

PROCEDURE

Warm-Up: Have students brainstorm a list of different types of money they are familiar with (e.g. cash, credit cards, checks). Ask students to share their list with the class and discuss the purpose of each type of money.

Hand out the worksheet below (see the GET LESSON button near the bottom of the page).

Show students the video and have and have them complete the worksheet.  Review the questions on the worksheet.

What is Currency?

After watching the video, ask students to summarize the main points made in the video.

Lead a discussion on the role of currency in an economy and how it serves as a medium of exchange and store of value. Discuss the different types of currency mentioned in the video, including traditional currencies and digital currencies such as Bitcoin. Ask students to share any additional questions or points they have about currency.

Conclusion:

Review the main points covered in the lesson, including the role of currency in an economy and the different types of currency. Encourage students to continue learning about currency and its importance in the global economy.

GRADE LEVEL

6-12th grades. Adult Education.

TIME REQUIRED

45 minutes

 

What is Currency?

The official money of a country is called currency. It is made up of coins and paper money. A currency is any money that is generally accepted, such as coins or paper notes. It is issued by a government, and circulated within an economic system.  Each country has its currency and it is usually managed by the country’s central bank.

Sometimes, currencies are named the same as those of other countries and more than one country may use the same currency. The Euro, for example, is the official currency in many of the EU member countries. This facilitates trade and transactions among countries that use the Euro.

Other times, the currency name for one country is different from another. Examples of different currencies include the US dollar, Euro, and Japanese Yen.

The US dollar is the most widely used currency in international transactions. Because the US dollar is widely recognized and traded on the international market, this is why it is so popular. It is also considered a stable and reliable currency.

So what is an Exchange Rate?

An exchange rate refers to the rate at which one currency is exchangeable for another. For example, the exchange rate between the US Dollar and Euro can be expressed in the following way: “1 USD = 1.05 EUR” This means that you can get 1.05 euros for every $1 US Dollar.

The forex or foreign exchange market determines the exchange rate between currencies. The value of a currency will rise relative to other currencies if it is in high demand. Conversely, if a currency is in low demand, its value will drop relative to other currencies.

Many factors can affect the foreign exchange rate. These include economic conditions, interest rates and political events. A strong economy can increase demand for its currency, which could cause it to appreciate relative to other currencies.

The exchange rate is subject to change often, sometimes multiple times per day. The market’s underlying factors and currencies can have an impact on how the rate of change changes. In general, currencies that are more volatile, such as those from developing countries, experience greater frequency and more significant changes in   exchange rates.

What is Digital Currency?

Bitcoin is one example of a digital cryptocurrency. It is a digital currency decentralized on blockchain technology. Bitcoin, unlike traditional currencies that are issued by governments is created and managed electronically by a network of computers.  These computers use complex algorithms to verify transactions to maintain the integrity of its system.

Bitcoin’s value is determined only by market demand. It is not supported by any tangible assets or government. It is therefore a high-risk investment that can see its value fluctuate widely.

Currency plays an important role in the economy as it serves as both a medium for exchange and a store value.