Module 1 of 4

Understanding Money

1.1Why Do We Need Money?

Activity TypeGameDiscussion

Duration15–20 min

Description

This foundational activity is especially well suited to younger audiences. Participants first try a short barter exchange, then receive Monopoly money as payment for a small classroom task and use it to exchange for goods or services. They compare the two rounds before answering open questions about money, including its purpose, value, and control. The class identifies common questions and returns to them at the end of the Bitcoin Diploma to reflect on how their understanding has changed.

Objectives

Participants explain how money facilitates exchange across time and distance compared with direct barter, then reflect on questions for further learning.

Materials

Monopoly money
Simple “have” and “want” cards or classroom tokens representing goods and services
A small task card for each student
A board or paper to record results

Preparation Notes

Prepare a “have” and “want” card for each student. Make some wants deliberately difficult to match. Choose a quick, equal classroom task, such as sorting materials, solving a short puzzle, or tidying a shared area. Decide on a simple price for each good or service in the money round.

Setup

Explain that the class will try two ways of exchanging value. Remind participants that the cards and Monopoly money are classroom tools, not real money or a recommendation to use any particular currency.

Procedure

Step 1

Give each student a “have” card and a different “want” card. Allow a short barter round in which they can trade only when both people want what the other person has. Record how many participants obtain what they want and how long it takes.

Step 2

Give every student the same small classroom task. When it is completed, pay each student an equal amount of Monopoly money. Participants can now use the money to buy a good or service represented by a card, whether or not the person offering it wants what they have.

Step 3

Compare the rounds. Ask how money acted as an intermediary between people who did not have matching wants. Ask how a student could save the payment from today's task to use later, and how a shared money could help people exchange value with someone far away rather than only with nearby trading partners.

Step 4

Participants answer: Why do we need money? What is money? Who controls money? What gives money value? What question do you have about money?

Step 5

In groups, participants share answers, vote on five favorite answers, and share five favorite questions.

Step 6

Revisit the answers and questions at the end of the Bitcoin Diploma.

Key Points

Money can act as an intermediary, so people do not need an exact match of wants to exchange value.
A person can receive money for work now and choose goods or services later.
Shared money can support exchange across time and distance; direct barter is often limited to people who can find one another and have matching wants.

Discussion Questions

What made barter difficult? How did payment change the exchange? What could you do with payment that you could not do with a single good? How might exchange change if the person offering the good lived far away?

Notes

This is an intentionally basic introduction, most useful with younger audiences or participants new to the topic. Expand the exchange round with more goods, roles, time periods, or distant “markets,” or combine it with a barter activity or another activity on the functions of money when the group is ready for deeper exploration.

Bitcoin Diploma assessment link: May provide the individual-response context for T1 / C1. Use the approved protocol and record an individual explanation and comparison; otherwise, this activity is formative.

1.2What Is Money?

Activity TypeDiscussion

Description

Participants decide whether to trade a piece of candy for a US$1 bill or a $1 Monopoly bill, then explain the difference in their choices. The discussion examines what gives money value, how money is issued, who controls the supply, and why people may value one form of money more than another.

Objectives

Participants compare why people value different forms of money and consider what gives money value.

Materials

Monopoly bills or counterfeit bills of the country’s currency
One piece of candy per student

Preparation Notes

Place a piece of candy on each student’s desk.

Setup

Ask participants not to eat the candy yet.

Procedure

Step 1

Ask who would trade their candy for a US$1 bill, then who would trade it for a $1 Monopoly bill.

Step 2

Ask why or why not.

Step 3

Discuss what makes one bill desirable and another worthless, what gives money value, where money comes from, who decides how much to print, and why more money is not printed and distributed equally.

Discussion Questions

What gives money its value?

1.3Barter Game

Activity TypeGame

Description

Participants trade paper cards showing goods they have and goods they want, attempting to find matching exchange partners before time expires. They repeat the activity with macaroni as a common medium of exchange, then compare the ease of trade and the limitations of using a commodity as money.

Objectives

Participants experience and compare direct barter with exchange using a commodity as money.

Materials

Paper sheets cut into rectangles
Macaroni or a similar item

Preparation Notes

Prepare cards showing each student’s “have” and “want.”

Setup

Participants keep their original “want” and trade their “have” until the two match.

Procedure

Step 1

Allow five minutes for trading. Participants return to their seats when their new “have” matches their original “want,” or when time expires.

Step 2

Ask how many participants achieved their goal after one, two, or three trades. Discuss the benefits and drawbacks of barter.

Step 3

Give each student one piece of macaroni and assume every good costs one piece of macaroni. Repeat the goal and discuss commodity money.

Discussion Questions

Why could some participants trade and others not? Was the macaroni round easier? What are the drawbacks of macaroni as money?

Notes

1.4Iterative Barter Game

Activity TypeGame

Duration60 min

ParticipationSmall groupsIndividual

Description

Participants trade playing cards across three rounds that progressively change what each group wants. They experience direct exchange, the difficulty of matching wants, and the emergence of a widely accepted good, then compare the role of the most saleable good with the historical role of money.

Objectives

Participants experience the trade friction created by mismatched wants and recognize why a widely accepted good can emerge as money.

Materials

Standard playing cards
Recommendation = 1 deck for every 5 participants
Board or screen to display instructions
Paper, Excel, or another method to track results
Name cards to label team tables, e.g., “ACES” (optional)

Setup

The goal is to have cards separated by suit before you begin the exercise. You have the choice of opening the decks and separating cards by suit yourself, or enrolling participants in this step.

When you introduce this activity to the class, you will ask participants to separate into four groups. For setup, this means you should plan where you want each of the four groups to go. For example, you may rearrange desks before class starts. It is helpful but not required to label team areas with a sign such as “TEAM ACES,” etc.

If you have never given this class before, plan for an hour+ to familiarize yourself with the activity and the key concepts.

After you have delivered the activity the first time, future preparation is minimal.

Explain to the participants that this is a bartering game. If there are 10 or fewer participants in the class, they will play as individuals. For larger classes, divide the participants into four teams.

This activity has three rounds. To begin, assign participants to one of four “markets”: CLUB-MAKERS, SPADE-MAKERS, HEART-MAKERS, DIAMOND-MAKERS.

Give each group a set of cards matching its suit, or distribute the cards evenly if participants are playing individually. For example, participants in the spade-makers group should start with spades.

Procedure

Step 1: Coincidence-of-Wants

Give participants their assignments (table below). Their goal is to get their “wants.”

Then give them 5 minutes to walk around and negotiate trades with other groups.

Note that in round 1, there are matches between the groups.

Market	Wants
CLUB-MAKERS	spades
SPADE-MAKERS	clubs
HEART-MAKERS	diamonds
DIAMOND-MAKERS	hearts

Step 2: The Lack of Coincidence-of-Wants

Give participants their new assignments (table below). Their goal is to get their “wants.”

Then give them time to walk around and negotiate trades with other groups.

Take a few minutes to allow participants time to share what was different between the first and second rounds.

Note that in round 2, there are no direct matches between groups. To get what they want, participants must conduct multiple trades.

Market	Wants
CLUB-MAKERS	spades
SPADE-MAKERS	hearts
HEART-MAKERS	diamonds
DIAMOND-MAKERS	clubs

Step 3: Most Saleable Goods

Give participants their new assignments (table below). Their goal is to get their “wants.”

Then give participants time to walk around and negotiate trades with other groups.

As before, after trading is done, allow the participants to share what was different between all three rounds.

Note that in round 3, diamonds became the most saleable good. Ask participants how gold has fulfilled this role historically.

Market	Wants
CLUB-MAKERS	spades or diamonds
SPADE-MAKERS	hearts or diamonds
HEART-MAKERS	clubs or diamonds
DIAMOND-MAKERS	clubs or hearts or spades

Key Points

Direct bartering is possible with exact matches in wants.
Indirect bartering helps but increases the complexity of trades.
Discovering the most tradable good (i.e., most saleable) is a natural process and leads to money.

Discussion Questions

What were the most frustrating things that you experienced or observed during the three rounds of trading?
How does gold work as a tradable good?
Can anything be a tradable good? Cigarettes in a prison?
Trading cards in a lunchroom? Candy at school?

Notes

The minimum play time for this is 10 minutes per step or 3 * 10 = 30 minutes.

Plan on a full hour including setup, explanation, play, discussion, and cleanup.

This activity is a participatory game. The more you invest in terms of effort and creativity, the more fun it will be … and the more effective.

1.5Auction

Activity TypeAuction

Duration30 min

ParticipationWhole classSmall groupsIndividual

Description

Learners take part in a three-round auction using play money, rewards, and a shared tracking table. Between rounds, the educator changes the number of tokens in the classroom model. Learners record the total tokens and winning bid, then consider what their result does and does not show.

Objectives

Learners use a classroom model to distinguish a change in its play-money supply from a change in one auction's winning bid.
Learners identify assumptions and limits before applying the model to a real economy.

Materials

One set of play money
Three or more small rewards, or three pictures of rewards if no prizes are available
Whiteboard, paper chart, or projected spreadsheet
Calculators, if useful

Setup

Draw or project this table before the activity:

Round	Total play money in the model	Winning bid	What may have affected this bid?
1
2
3

Sort the play money into three piles. Use the first pile in Round 1, add the second pile after Round 1, and add the third pile after Round 2. Keep the reward as similar as practical across rounds. Explain that the tokens represent only the money variable chosen for this model; they are not a complete measure of a real economy's money supply.

Explain an auction: people make bids and the highest valid bid receives the item. Before beginning, ask learners to predict what could affect a bid besides the number of tokens available.

Procedure

Step 1: First round

Distribute the first pile of play money. Amounts may be equal or unequal, but record the choice because distribution can affect the result.

Show the first reward and run an auction. Learners may bid individually; permit pooling only if you will permit it in every round. Once bidding stops, exchange the winning bid for the reward.

Count and record the total play money in the model, the winning bid, and observations that may have affected the bid. Do not treat a particular bid as the expected or correct result.

Step 2: Change one condition

Distribute the second pile using a method you state in advance. Keep other conditions as similar as practical, then repeat the auction and update the table.

Optional distribution variation: give the additional tokens to one group first. Present this as a deliberately chosen scenario, not as a description of every real monetary system. Ask learners how the order and distribution of tokens could affect the result, and what real-world evidence would be needed before making a broader claim.

Step 3: Repeat and compare

Distribute the final pile, repeat the auction, and complete the table. If the bid rises, falls, or stays similar, ask learners to explain more than one possible reason. For example, learners may have changed strategy, valued the reward differently, pooled tokens, or learned from earlier rounds.

Key Points

The total number of tokens in this model and a winning bid for one reward are different measures.
A change in one item's price is not, by itself, evidence of a change in the general price level.
An official consumer price index is a documented estimate based on a defined basket and method. It is not the same as every household's experience. Learners should inspect the published method before alleging error or manipulation.
The classroom result is evidence about this activity under its stated rules. Applying it to a real economy requires further evidence and attention to other explanations.

Discussion Questions

What changed between rounds, and what did not?
How did the total play money and winning bid change? What other factors may explain the result?
What evidence would be needed to assess whether a general price level changed outside this classroom?
Why might an official price index and one household's experience differ?
If tokens reached different groups in a different order, what outcomes could change? Which parts are observations from this model, and which would be claims about a real economy?

Notes

This is a simplified classroom model

The activity can illustrate one possible relationship between the number of tokens, bidding conditions, and a winning bid for one item. It cannot establish a general cause of price changes in a real economy. Real prices can also change with supply, demand, quality, costs, taxes, transport, wages, regulation, expectations, and local conditions.

Allow time between rounds for counting and discussion. The value of the activity is the comparison of evidence, assumptions, and limits, not producing a predetermined pattern of bids.

Compact adaptation for mature or time-constrained groups

Run two rounds with the same reward. State the distribution rule, record the result, then add tokens and repeat. Use the same review questions. This version takes about 10 minutes and should still include the model-limits discussion.

Educator background and source notes

International Monetary Fund, Consumer Price Index Manual: Concepts and Methods explains how a consumer price index is defined and compiled.
International Monetary Fund, “What Is Inflation?” gives examples of supply, demand, and policy conditions that can affect general price levels.
Use the current official statistical agency publication for the location where the activity is taught. Check and date its basket and methodology before discussing local data.

These sources support the factual background on price indices. They do not establish a universal causal claim about play-money supply, money supply, or prices.

Video

Use it as a perspective for discussion, not as the activity's evidence. Ask learners to identify its claims, evidence, assumptions, and possible counterarguments.

Book

Use it as a viewpoint rather than a neutral account. Learners should compare its arguments with reliable sources and other explanations.

Additional Resources

“What’s the Problem?” is a video produced by Joe Bryan. It covers more than fractional reserve banking, which is one of several mechanisms through which money and credit can be created in modern monetary systems.“What Has Government Done to Our Money?” by Murray Rothbard presents an accessible Austrian-school perspective on money and government monetary policy.

1.6Time Preference

Activity TypeDiscussion

ParticipationWhole classIndividual

Description

Participants choose between a smaller reward immediately and a larger reward later in the class, then receive the reward at the time they selected. They reflect on the reasons for their choice and discuss how time preference influences consumption, saving, and the consequences of present-focused or future-focused decisions.

Objectives

Participants reflect on how time preference influences a choice between consuming now and saving for later.

Materials

Small candies or chocolate
Larger or more desirable candy

Setup

Explain the candy choice.

Procedure

Step 1

Participants choose a small candy or chocolate now, or two candies or a larger reward at the end of class.

Step 2

Participants commit to their choice and receive the reward at the selected time.

Step 3

Discuss the decision-making process and time preference.

Discussion Questions

What influenced your decision? How do you feel about it now? Where can high time preference be harmful or low time preference beneficial? What are the consequences of choosing high time preference?

1.7Alternative Time Preference Questions for Discussion

Activity TypeDiscussion

Description

Participants use guided questions to connect time preference with money, entrepreneurship, consumption, saving, and interest rates. The discussion treats money as a way people communicate value in a free market and considers how understanding present and future preferences can inform personal decisions.

Objectives

Participants connect time preference with saving, consumption, and interest rates through discussion.

Procedure

Step 1

Ask why time preference is included in a chapter about money.

Step 2

Ask how time preference helps entrepreneurs decide whether to save or spend, and how understanding it can help people live better lives.

Step 3

Discuss money as a communicator of value, the choice between immediate consumption and future savings, and how time preference appears through interest rates.

Key Points

Money communicates value in a free market. Time preference influences consumption and savings decisions.

Discussion Questions

How can learning about time preference help you make better money decisions?

1.8Bank balance sheets and lending

Activity TypeRole-playSimulation

Duration35 min

ParticipationWhole classSmall groups

Description

Participants build a simple bank balance sheet with cards or a shared table. They compare a customer deposit, a bank loan that creates a deposit balance, and a reserve balance. The model is intentionally limited. It does not describe every banking system, establish a current reserve rule, measure a national money supply, or predict bank failure.

Objectives

Participants distinguish deposits, loans, and reserves in a simplified bank balance sheet and identify questions that require local, current evidence.

Materials

A whiteboard, paper chart, or projected table.
Three sets of cards labelled “deposit,” “loan,” “reserve,” and “cash withdrawal request,” or equivalent paper labels.
Calculators, if useful.

Setup

Draw this table before class:

Event	Bank asset	Bank liability	Customer balance	Question to discuss
Customer deposit	Cash or reserve balance increases	Deposit liability increases	Customer A has a deposit	What does the bank owe the customer?
Bank makes a loan	Loan asset increases	Deposit liability increases	Customer B has a deposit	What conditions affect a bank's ability to lend?
Payment or withdrawal	Asset and deposit balances may change	Deposit liability may change	Depends on the payment route	What liquidity or settlement questions arise?

Explain that “asset” and “liability” describe the bank's balance sheet. A deposit is generally a liability of the bank because the bank owes the depositor. A loan is generally an asset of the bank because the borrower owes the bank.

Procedure

Step 1: Record a customer deposit

Place the deposit card in the first row. Ask participants to identify what the customer has and what the bank owes. Record the corresponding asset and liability entries without calling the result a measure of the whole money supply.

Step 2: Record a bank loan

Present a fictional approved loan. Add a loan asset and a deposit liability to the table. Explain that commercial-bank lending can create a deposit balance, but lending decisions also depend on borrowers, bank capital, liquidity, funding, risk, profitability, regulation, and local conditions.

Step 3: Compare payment and settlement routes

Use a fictional payment from Customer B to Customer C at another bank. Ask what balances may need to change and why banks need liquidity to settle payments. Do not ask learners to calculate a multiplier.

Step 4: Test a withdrawal scenario

Give the class a card stating that several customers want cash or transfers at the same time. Ask what information would be needed before judging the bank's liquidity or solvency. Distinguish a question about ready cash and settlement from a question about whether assets exceed liabilities.

Step 5: Compare the model with local evidence

Ask participants to list facts that cannot be inferred from this activity, such as local reserve rules, deposit insurance, capital requirements, supervision, or recent bank conditions. Explain that an educator must use current local authoritative sources before discussing those facts. The Fractional Reserve Explorer shows a country's banking capital and reserve rules and can start the comparison; confirm the current figures with the central bank or banking regulator before presenting them.

Key Points

A bank deposit is a liability of the bank, while a loan is generally an asset of the bank.
Lending, deposits, reserves, liquidity, capital, and money measures are related but different concepts.
A classroom balance sheet is not a complete model of a banking system or a prediction of bank failure.
Claims about local reserve rules, deposit insurance, bailouts, bank runs, and incentives need current, local evidence.

Discussion Questions

Why does the bank record a customer deposit as a liability?
What changes when a bank makes a loan and credits a customer's deposit balance?
What information would you need before deciding whether a bank has a liquidity or solvency problem?
Which claims about banking must be checked for the local jurisdiction and date?

Notes

Banks operate under different laws, regulations, funding arrangements, capital requirements, liquidity needs, and payment systems. This activity introduces terms and relationships. It does not show that a fixed reserve ratio determines lending or that one cause explains a bank run, default, bailout, or moral hazard.

This activity is formative. It may prepare learners for a money-and-banking discussion, but it is not evidence of a financial, legal, accounting, or investment competency.

Additional Resources

1.9Consequences of the Fiat System

Activity TypeDiscussion

Description

Participants take part in a Socratic discussion about possible consequences of the fiat system for individuals, society, and their country. They connect broad ideas to local history and personal examples, listening to differing perspectives and considering how monetary systems shape everyday life.

Objectives

Participants consider possible consequences of the fiat system through local, historical, or personal examples.

Procedure

Step 1

Ask participants to identify consequences individuals and society experience because of the fiat system.

Step 2

Ask about consequences in their country, its history, and how people were affected.

Step 3

Invite personal examples in an interactive session.

Discussion Questions

What consequences has the fiat system had in your country?

1.10Watch: How Money & Banking Work

Activity TypeDiscussion

Description

Participants watch “How Money & Banking Work” by Lyn Alden to reinforce the course discussion of money, banking, and the money supply. The activity gives participants a shared reference for identifying how the video explains banking processes and for comparing those explanations with concepts explored in class.

Objectives

Participants identify and discuss an explanation from the video about how money or banking works.

Materials

Internet access and video playback.

Procedure

Step 1

Open the video.

Step 2

Watch the video.

Step 3

Additional Resources

“How Money & Banking Work” by Lyn Alden explains money creation and banking processes, providing the video used to connect the class discussion to the money supply.

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