Rational Decision Making SSEPF1 The student will apply rational decision making to personal spending and saving choices. a. Explain that people respond to positive and negative incentives in predictable ways.

Essential Questions Do people respond to positive and negative incentives in predictable ways?

Activating Strategy What are some different types of incentives that your respond to?

Key Concepts Incentive Positive Incentive Negative Incentive

Rational Decision Making 1. Incentive: reward that a person is likely to receive if he or she behaves in a certain manner. A. Positive incentive: positive reward B. Negative incentive: negative reward

How Financial Institutions and Investments Work SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from savers to investors. a. Compare services offered by different financial institutions. b. Explain reasons for the spread between interest charged and interest earned. c. Give examples of the direct relationship between risk and return. d. Evaluate a variety of savings and investment options; include stocks, bonds, and mutual funds.

Essential Questions How can you save or invest to meet you future goals? What is the relationship between financial risk and return? How are banks and financial institutions important to the economy?

Activating Strategy How do banks make money? Explain in 5 or more sentences

Key Concepts Commercial Bank Credit Union Savings and Loans Risk, Return Stocks Mutual Funds Bonds Workers Earnings Potential Earnings

Banks, Credit Unions, and Savings and Loans 1. Commercial banks: financial institutions that receive deposits of money, extend credit, and provide loans. a. Interest charged: interest the bank charges them to borrow money. b. Interest earned: interest the bank pays them for the use of their money. 2. Credit unions: are cooperative associations that serve only their members. They offer checking and savings accounts, as well as grant loans. 3. Savings and loan associations: are saving institutions designed to aid home building.

Risk and Return 1. Return: refers to the eventual payoff of the investment. 2. Risk: refers to the chance that an investment might actually end up losing money rather than making money.

Risk vs. Return

Savings and Investment Options Stocks: are shares in a company that an individual/organization purchases giving that person/entity part ownership. Bonds: loans to either a company or the government. Mutual funds: pool money from a number of investors to buy a range of stocks.

Reasons People Save and Invest. 1. Retirement 2. Saving for future purchase 3. Saving when interest rates are high

Workers Earnings 1. Workers earnings: how much employers pay workers for their labor. 2. Potential earnings: how much money one is likely to make in the labor market due to their skills, training, and education.

Balanced Assessment Personal Strategic Plan Standard:SSEF6a&c, SSEPF1c Concepts: Productivity, Investment in Education, Higher Standard of Living, Savings or Financial Investment Plan Using the choices and opportunity costs from the future choices activity, students will create a vision of their future professional and personal self. This can take the form of a written description or a visual image. The teacher will then facilitate a strategic planning session. The session will focus on developing a personal mission statement, creating long-term & short-term goals in the area of education, career, personal finance, and family/personal relationships. Students will be able to use their plans to guide future choices about investment in human capital, financial assets, personal productivity, and resource allocation.

Summary Questions What is your incentive for attending high school? What is the difference between interest earned and charged? What is the difference between return and risk? What is a stock? What is a bond? What are the three reasons people save and invest?

b. Define progressive, regressive, and proportional taxes. SSEPF3 The student will explain how changes in monetary and fiscal policy can have an impact on an individual’s spending and saving choices. b. Define progressive, regressive, and proportional taxes. c. Explain how an increase in sales tax affects different income groups.

Essential Question Who benefits and hurts from progressive, regressive, and proportional taxes. How do changes in tax rates and interest rates respectively affect individual’s spending and saving behavior?

Activating Strategy Should the wealthy pay a higher percentage in taxes, or not? Why/why not?

Key Concepts Progressive Tax Regressive Tax Proportional Tax

3 Types of Taxes Progressive tax: a tax that imposes a higher percentage of taxation on persons with high incomes than on those with low incomes. (Federal Income Tax) Regressive tax: a tax that imposes a higher percentage rate of taxation on low incomes than on high incomes. (sales tax) Proportional tax: a tax that imposes the same percentage of taxation on everyone, regardless of income. (F.I.C.A. Social Security and Medicare)

Taxes Who are hurt from an increase in sales tax? Who are hurt from an increase in income tax?

Taxes Poor people are hurt by an increase in sales tax. (Regressive tax) Rich people are hurt by a decrease in income tax. (Progressive tax)

Balanced Assessment Taxes Standard: SSEF3b&c Concepts: Taxes (progressive, regressive, proportional ) Teacher can ask for a student’s pay stub or generate one of her own. With this, the teacher can demonstrate a progressive tax (Federal Income Tax) and a proportional tax (F.I.C.A. Social Security and Medicare). Additionally, to demonstrate a regressive tax the teacher could ask who has been retail shopping lately. Then, selecting an identical item that two people of different incomes purchased compare how they are affected by the sales tax on the item. http://www.mdc.edu/hr/Compensation/yourpaycheck_sample.asp And copy on next page

Summary Questions What is the difference between a progressive and a regressive tax? What is an example of a progressive tax? What is an example of a regressive tax? What is a proportional tax? Who is hurt by an increase in sales tax? Who is hurt by an increase in income tax?

Credit and interest SSEPF4 The student will evaluate the costs and benefits of using credit. a. List factors that affect credit worthiness. b. Compare interest rates on loans and credit cards from different institutions. c. Explain the difference between simple and compound interest rates.

Essential Question What is the difference between compound and simple interest? What factors affect credit worthiness? What is the difference between credit rates on loans and credit cards?

Activating Strategy What factors can affect your credit? Explain in 5 or more sentences

Key Concepts Credit Interest Credit Cards Debit Cards Simple Interest Principal Compound Interest Credit Worthiness Debt, Credit Score

Credit and Interest 1. Credit: is an agreement under which a buyer receives goods or services at the present time in exchange for a promise to pay for them at a future time. 2. Interest: is the amount of money that a lender charges a borrower in exchange for the use of their money.

Interest 1. Credit cards: when you use a credit card you are borrowing the credit card issuers money as a loan that you will pay back with interest. 2. Debit cards: when you use a debit card you are using your own money, so you pay no interest.

Simple and Compound Interest Simple interest: is a rate that is applied only to the value of the principal. (simple interest grows slowly) Principal: is the amount of money that has been borrowed. Compound interest: is interest applied to both the principal and the interest. (you pay interest on interest) (compound interest grows fast)

Simple Interest If they continued to receive 5% interest on the original $100 amount, over ten years the growth in their investment would look like this: Year 1:  5% of $100 = $5 + $100 = $105 Year 2:  5% of $100 = $5 + $105 = $110 Year 3:  5% of $100 = $5 + $110 = $115 Year 4:  5% of $100 = $5 + $115 = $120 Year 10:  5% of $100 = $5 + $145 = $150

Compound Interest Year 1:  5% of $100 = $5 + $100 = $105 Year 2:  5% of $105 = $5.25 + $105 = $110.25 Year 3:  5% of $110.25 = $5.52 + $110.25 = $115.76 Year 4:  5% of $115.76 = $5.79 + $115.76 = $121.54 . Year 10:  $162.89 Simple: $150 Compound: $162.89

Credit Worthiness 1. Debt: is the amount of money that you owe on money that you have borrowed. 2. Credit score: is a number base on your history as a borrower. Bad debt damages your credit score. 3. Credit worthiness: when a lender uses your credit score to determine what type of loan you will receive. a. If your credit score is high, lenders will loan you money at a lower interest rate. (600 to 800) b. If your credit score is low, lenders will loan you money at a higher interest rate. (599 to 499)

Balanced Assessment Credit and Interest Standard: SSEPF4a,b &c Concepts:

Summary Questions (Ticket out The Door) What is credit? What is interest? What is the difference between simple and compound interest? What is the principal? If your credit score is ______, lenders will loan you money at a lower interest rate. If your credit score is ______, lenders will loan you money at a higher interest rate.

Insurance SSEPF5 The student will describe how insurance and other risk-management strategies protect against financial loss. a. List various types of insurance such as automobile, health, life, disability, and property. b. Explain the costs and benefits associated with different types of insurance.

Essential Question List 4 types of insurance. What are the benefits of each type of insurance?

Activating Strategy Do you believe that is important or unimportant to have health insurance? Why or why not in 5 or more sentences

Key Concepts Insurance Health Insurance Disability Insurance Liability Insurance Homeowner Insurance Comprehensive Liability Deductibles Premiums Shared Liability

Insurance Insurance: money paid to an insurance company for assurance that, if what they value is lost or damaged, the insurance company will pay for their loss.

5 Types of Insurance 1. Health/medical insurance: is meant to cover health and medical expenses. 2. Disability insurance: provides a policy-holder with income in the event that they become disabled and unable to work. 3. Liability insurance: pays if your are held financially liable (responsible) for an accident.

5 Types of Insurance 4. Homeowner insurance: covers a policy-holders house in the event it is damaged or destroyed. 5. Comprehensive liability: covers a policy holder (usually businesses) for a wide range of disasters, such as: professional mistakes (medical malpractice), accident due to employee negligence, property damage cause by company worker.

Costs and Benefits of Different Types of Insurance Deductibles: exempts the insurer from paying initial specific amount in the event that the insured sustained a loss. Premiums: payment for insurance Shared liability: joint liability which entitles any one party who is sued to insist that others be sued jointly with him or her. Asset protection: auto, home, and renters insurance.

Balanced Assessment Insurance Standard: SSEPF5a & b Concepts:

Summary Questions (Ticket out the Door) What is insurance? What is the difference between health and disability insurance? What is liability insurance? What is a deductible What is a premium? What is shared liability?

b. Explain the role of money and how it facilitates exchange. SSEMI1 The student will describe how households, businesses, and governments are interdependent and interact through flows of goods, services, and money. b. Explain the role of money and how it facilitates exchange.

Essential Question What is the role of money and how it facilitates exchange?

Activating strategy Why is bartering a good or bad system of exchanging goods or services? Why or why not, in 5 or more sentences

Key Concepts Medium of Exchange Unit of Account Store of Value

Function of Money

Characteristics of Money or PSADD 1. Portability 2. Stability 3. Acceptability 4. Durability 5. Divisibility

Balanced Assessments Medium of Exchange Standard: SSEMI1b Concepts: Medium of Exchange Students will participate in a demonstration of how money is a medium of exchange. Teachers will provide desirable goods (bag of chips, soda pop, new shoes, etc.) to model a market place. Several students will be given the role of shop owners. As shop owners, they can decide how they want to sell their items (barter system, money system, etc.) The remaining students in the class participate in the market as buyers. Depending on the interaction of the buyer and seller the students will be demonstrating how buyers and sellers gaining from non-fraudulent exchange, monies as a medium of exchange. The teacher will need to discuss the stimulation focusing on how the household and businesses interact together.

Summary Questions(Ticket out the Door) How is money used as a medium of exchange? How is money used as a measure of value? How is money used as a store of value? What are the 5 characteristics of money?

Forms of Business SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy. a. Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation.

Essential Question Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation. What is the role of profit as an incentive for entrepreneurs?

Activating Strategy If you could invest in a business, would you invest in a mom and pop business or a corporation like McDonalds? Why in 5 or more sentences

Key Concepts Sole Proprietorship Unlimited Liability Limited Life, Partnership Corporation Limited Liability Double Taxation

3 Forms of Businesses 1. Sole proprietorship: a business owned and run by one person A. Advantages 1. Easy to start 2. All decision making power belongs to the owner 3. Profits are taxed once B. Disadvantages 1. Owner faces unlimited liability a. Unlimited liability: the owner is personally and fully responsible for all losses and debts of the business 2. Limited ability to raise funds for the business 3. Limited life: usually ends with death or retirement of owner

3 Forms of Businesses 2. Partnership: a business jointly owned by two or more persons A. Advantages 1. Benefit of specialization 2. Profit taxed only once B. Disadvantages 1. Partners face unlimited liability 2. Decision making can be complex (limited life) 3. Owners share profits and costs

3 Forms of Businesses 3. Corporation: a form of business recognized by law as a separate legal entity having all the rights of an individual. A. Advantages 1. Owner (stockholders) have limited liability a. Limited liability: Share holders are not personally responsible for all losses and debts of the business. 2. Business has a long life span 3. Usually able to raise large sums of money B. Disadvantages 1. Double Taxation: the profits that the company makes are taxed twice 2. Corporations are complicated to set up

Types of Businesses

Balanced Assessment Forms of Business Essay Standard: SSEMI4a Concepts: Forms of Business (Sole Proprietorship, Partnership, Corporation)

Summary Questions (Ticket out the Door) What are two advantages and disadvantages of a sole proprietorship? What are two advantages and disadvantages of a partnership? What are two advantages and disadvantages of a corporation? What is a franchise?