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Have you ever heard of the Gold Standard for currency? In 1930, 1 ounce of gold was worth $35 U.S. Dollars. This meant gold backed up the value of money. This is known as the “Gold Standard.” In 1971, the U. S. stopped using the “Gold Standard” and our currency is no longer associated with gold. Talk with your table partner and create a list of factors that contribute to determining the current value of the U.S. Dollar since it is no longer backed by gold. Now, form a group of four with another set of table partners. Compare your list and determine three factors you feel contribute to determining the Current value of the U. S. Dollar. Pick someone in your group to share out. Copyright © Texas Education Agency, All rights reserved. 3

 A measure of the total flow of money coming into a country minus the total flow going out  What causes money to come in and out of a country? Imports- Money is flowing out Exports- Money is flowing in Relationship: Favorable BOP= Increased demand for nation’s products and currency (More product they buy from your country/More they need to exchange for your currency) Favorable BOP=Increase in value of currency Unfavorable BOP= Decline in demand for nation’s products and currency Unfavorable BOP= Decrease in value of currency Discovery: Research the Internet and identify the current balance of payments for the United States. Copyright © Texas Education Agency, All rights reserved. 4

Inflation As prices rise, the buying power of money declines. Discovery: Research the Internet for an inflation calculator. Plug in different amounts and years and notice the rate of inflation through the years. Interest Rates When the buying power of money declines, lenders charge a higher interest rate on loans to cover the lost buying power of currency. Discovery: Go to a bank website and look up current interest rates for used car loans. Discuss how lower interest rates promote borrowing money. Copyright © Texas Education Agency, All rights reserved. 5

Unexpected change in government; new trading laws and regulations; and military and economic warfare in a country can reduce the confidence business people have in its currency. Businesses will be less likely to conduct business in a country that is not politically stable; therefore, demand for the currency goes down and this causes the value to go down. Discovery: Research the current value of the Russian ruble. Determine if the value of the currency is going up or declining. Explain the political factors that could be impacting the value of the ruble. Copyright © Texas Education Agency, All rights reserved. 6

 Select a specific country and research information about the country’s currency and the economic factors contributing to its current value.  Create a poster to serve as visual aid for you when presenting this information to the class.  Your poster should include a visual (table, graph, chart, etc.) depicting the country’s current: -Currency and Exchange Rate -Balance of payments -Economic Conditions -Political Stability  Be prepared to explain the country’s current value of currency and current economic conditions related to the value; you will use your poster as a visual aid during the presentation. Copyright © Texas Education Agency, All rights reserved. 7