## Basic Economics

**Basic Economics and Finance Lessons**

Lessons and worksheets for teaching, learning, and understanding basic economics and finance concepts.

Basic finance and economics provide a foundation for understanding important money management principles.

Teach and learn what is economics, time value of money, compound interest, opportunity cost, supply and demand, inflation, and other basic economic principles. Material also may be used to improve real-world math skills.

Use the following lessons to help teach and learn important economic and financial concepts.

### Basic Economics Lessons

This material provides a foundation in basic economics and finance principles.

** WHAT IS ECONOMICS?**

**What is Economics? Lesson Plan**

An introduction to economics. Students learn the vocabulary of economics, what economics is, why we study it, and why it is important to our daily lives.

** TIME VALUE OF MONEY**

Time is Money! This lesson introduces students to a basic concept behind all types of investments, the Time Value of Money. Also introduces the concepts of Present Value and Future Value.

** MAIN FUNCTIONS OF MONEY VIDEO LESSON**

Learn what is money and what are its four main functions. Money serves all these functions: it is a medium for exchange, store of value, unit of account, and standard for deferred payments. Instructional video lesson and worksheet.

What is money? Economists differentiate among several different types. Learn about the four main types including commodity money, representative money, fiat money, and bank money. Also learn why intrinsic value is important for understanding the types of money. Instructional video lesson and worksheet.

** COMPOUND INTEREST**

A worksheet for a lesson in the concept of compound interest as it relates to the time value of money (TVM).

** OPPORTUNITY COST**

We make many decisions every day. Should we go to work? Should we go shopping? In economics this is called opportunity cost.

** SUPPLY AND DEMAND**

** Supply and Demand Introduction**

A worksheet that introduces the concept of supply and demand.

** LAW OF DEMAND**

Learn the law of demand, understand how it works, and create demand curves.

** INFLATION INTRODUCTION**

A worksheet that introduces the concept of inflation.

** WHAT IS CAUSING INFLATION?**

**What is causing Inflation? When will it end?**

Why are prices going up for food, gas, and housing? Why are prices rising and who is it hurting? Why is everything so expensive? Learn about what is causing inflation. Includes video lesson and worksheet.

** PRESENT VALUE**

Learn about the important financial concept of present value. Present value tells us how much the prospect of future income is worth in today’s dollars.

** SIMPLE INTEREST**

Understand what simple interest is, and how it is calculated.

** COMPOUND INTEREST**

Understand what compound interest is, how it is calculated, and appreciate the impact it makes on loans and investments.

** MORTGAGES AND INTEREST**

Understand the concepts of mortgages and compound interest.

** ANNUITIES AND PERPETUITIES**

Understand, define, and calculate annuities and perpetuities.

** NET PRESENT VALUE (NPV)**

Understand the concept of net present value (NPV) and how it is used to determine the value of future cash in today's dollars.

** NPV VERSUS OTHER INVESTMENT MODELS**

**NPV versus Other Investment Models**

Compare other investment models to NPV including payback period, discounted payback, average return of book value, Internal Rate of Return (IRR), discounted cash flow, profitability index, and benefit-cost ratio.

** MODERN PORTFOLIO THEORY**

Understand modern portfolio theory. Topics include Markowitz theory, efficient portfolio, CAPM, and the relationship between risk and reward.

** INTRO TO RISK, RETURN, AND OPPORTUNITY COST OF CAPITAL
**

**Intro to Risk, Return, and Opportunity Cost of Capital**

Understand risk, return, and opportunity cost of capital. Topics include investment portfolio, variance, standard deviation, and portfolio risk.

** USING NPV TO MAKE INVESTMENT DECISIONS**

**Using NPV to make Investment Decisions**

Understand how to decide which items to include in the cash flow analysis after tax corporate cash flow, and how to utilize limited capital.

** DEMAND AND MARGINAL UTILITY**

Understand the concept of demand, marginal utility, and diminishing marginal utility.

** GOODS AND SERVICES: KEY ECONOMIC QUESTIONS**

**Goods and Services: Key Economic Questions**

Understand the three economic questions that all societies must answer.

### Additional Lessons

**Introduction: Economic Reasoning**

Learn about macroeconomics, basic principles, and concepts.

### Informational Articles

**Macroeconomics: A General Overview**

Learn about macroeconomics, basic principles, and concepts.

**Microeconomics: A General Overview**

Learn about microeconomics, and basic micro concepts.

The two theories which explain what money is.

**Back to more Economics lesson plans, worksheets**