With the uncertain global economy NewsHour Economics correspondent Paul Solman reports on unemployment in the town of Elkhart, Indiana offering an opportunity to look at the real world effects of recession and changes to the American manufacturing landscape.

Activity A: Assessing Unemployment
Ask students to list luxury goods from their own lives and communities gathering a list of "prior knowledge" items on the board. Distribute Student Handout A and allow students time to fill out the luxury goods section. Lead students in a discussion about the relationship between unemployment and luxury goods. Do luxury good sales slump with unemployment? Why?

Watch Paul Solman's Making Sen$e video on the town of Elkhart, Indiana.

After watching the video ask students to add to the list on the board of luxury goods. As a class draft a definition of a luxury goods and explain why an RV is considered a luxury good

Ask students to define infrastructure and list some examples on the board. Split the students up into partners or small groups and have them write an answer to why a community would invest in its infrastructure

In the small groups go to Bureau of Labor and find the unemployment rate for the local community, for the entire country and fill it out on Handout A.

Staying in the small groups direct students to theBeautiful Bulgaria project and New York's effortto boost economy through infrastructure. Allow at least 15 minutes for students to read and investigate what they do not understand within the projects. Ask them to make changes to their answer for why a community would invest in its infrastructure.

Activity B: Reversing Unemployment
Divide the class into small groups of 3 students and distribute a copy of Student Handout B to each group.

Ask each group to a pick one luxury item from the list the class made earlier to be produced in their town.

Assign each group member one of the following roles: Mayor, CEO, laid-off worker and as a class discuss the top priority of each role. For the mayor, this would be reversing unemployment in town. For the CEO, this would be saving or rerouting the company he/she directs. For the worker, this would be finding a job and being able to provide for his/her family.

In their groups ask students to act their role and advocate for their group while filling out the Student Handout B

Students will conclude the class period in "town meetings," discussing the next step their town needs to take to reverse unemployment in town.

In the final class period, students will vote on the next step they will take as a town. Then each "town" will present the information on their handouts and the next step they voted to take to boost their economy.

Extension Activities
To extend the lesson, lead a vote among CEOs only, mayors only, and workers only to compare the different ways townspeople might vote based on personal interests.


Council For Economic Education Standards

Standard 2 : Marginal Cost/Benefit
Effective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are "all or nothing" decisions.
Related concepts: Decision Making, Profit Motive, Benefit, Costs, Marginal Analysis, Profit, Profit Maximization, Cost/Benefit Analysis

Standard 6 : Specialization and Trade
When individuals, regions, and nations specialize in what they can produce at the lowest cost and then trade with others, both production and consumption increase.
Related concepts: Division of Labor, Production, Productive Resources, Specialization, Factor Endowments, Gains from Trade, Relative Price, Transaction Costs, Factors of Production, Full Employment

Standard 7 : Markets - Price and Quantity Determination
Markets exist when buyers and sellers interact. This interaction determines market prices and thereby allocates scarce goods and services.
Related concepts: Market Structure, Markets, Price Floor, Price Stability, Quantity Demanded, Quantity Supplied, Relative Price, Exchange Rate

Standard 14 : Profit and the Entrepreneur
Entrepreneurs are people who take the risks of organizing productive resources to make goods and services. Profit is an important incentive that leads entrepreneurs to accept the risks of business failure.
Related concepts: Taxation, Costs, Costs of Production, Entrepreneur, Risk, Taxes, Cost/Benefit Analysis, Innovation, Entrepreneurship, Inventors

Standard 15 : Growth
Investment in factories, machinery, new technology, and in the health, education, and training of people can raise future standards of living.
Related concepts: Incentive, Interest Rate, Opportunity Cost, Production, Technological Changes, Trade-off, Trade-offs among goals, Human Capital, Intensive Growth, Investment, Physical Capital, Productivity, Risk, Standard of Living, Economic Efficiency, Economic Equity, Economic Freedom, Economic Growth, Economic Security, Investing, Business, Businesses and Households, Factors of Production, Health and Nutrition, Savers, Savings, Stock Market

Standard 16 : Role of Government
There is an economic role for government in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also redistribute income.
Related concepts: Externalities, Income, Natural Monopoly, Redistribution of Income, Role of Government, Taxation, Transfer Payments, Bonds, Distribution of Income, Income Tax, Maintaining Competition, Monopolies, Negative Externality, Non-clearing Markets, Positive Externality, Property Rights, Public Goods, Maintaining Regulation, Taxes, Regulation, Government Expenditures, Government Revenues

Standard 19 : Unemployment and Inflation
Unemployment imposes costs on individuals and nations. Unexpected inflation imposes costs on many people and benefits some others because it arbitrarily redistributes purchasing power. Inflation can reduce the rate of growth of national living standards because individuals and organizations use resources to protect themselves against the uncertainty of future prices.
Related concepts: Types of Unemployment, Causes of inflation, Consumer Price Index (CPI), Deflation, Labor Force, Unemployment, Unemployment Rate, Inflation

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