Lesson video

Hello, I'm Mrs. Haynes.

Welcome to key stage four, citizenship.

Right, let's get started.

Okay, so on your screen now you can see that our first topic that I am going to be looking at with you is called, Understanding the economy.

Now this is going to be four lessons in total, and today's lesson is going to try and answer the question, is government action led by the UK economy? Just going to ask you to pause that for a second if you want to write those two down.

Okay, let's get started.

Right, so on the screen now you can see several images.

When I teach this in my class I say to my students, what kind of words do you think of if someone says to you, what is the economy? And I'd like you to be thinking of the same thing.

Try and think of at least three words that you would reply to that question.

If you're not sure use the images that you can see there to give you a bit of a clue.

Okay, so normally my students will say things like, it's to do with money, or savings, a bank, taxes sometimes, business.

So if you said any of those kinds of things, then well done you.

Now this is an official definition, okay? More official now.

This one says, the economy; all business activity and wealth creation that takes place in a country.

Now I think it would be a good idea if you just pause for a moment and wrote that definition down.

Okay.

Right, let's move on.

So what I would like you to do now is answer these three questions.

So the three questions are, state what the economy is a collection of and give an example? Define what credit is? Explain why gaining a loan in order to buy something like a tractor would be a good choice, but buying a TV with a loan would not? Use the word productivity in your answer.

So those first two questions there, I'll anticipate probably two sentences as a response.

And our third question there probably would need four sentences to do the answer well, Now you're welcome now to pause the video, and then look at the first three pages, the first three slides of the worksheets.

However, if you would rather stay listening to me, I will now read out those first three pages of the worksheet.

And sometimes just hearing someone reading it out can help your understanding, can't it? Okay, so I'm going to move on, and read out the worksheet.

First page of the worksheet.

The economy is been made up of lots of simple transactions.

Something is bought from someone who sold it, that is a simple transaction.

Every penny I spend someone else earns, and every penny I earn someone else spends.

And you're got an image there, haven't you, with all the transaction, someone buying something with some money, that's an intimate transaction, but the concepts still applies.

So let's look at a different example.

A baker makes a loaf of bread and I buy it.

I have spent my money and the baker has earned it.

With the money he earned, he can buy some flour to make more bread, spending the money I gave him and enabling him to earn more.

Two transactions have happened there.

These transactions are all connected.

Okay.

In addition to paying with cash, we can use credit.

This is essentially like paying with the promise that you will pay them later.

Adults pay for things on a credit card, which means the credit company, often a bank, actually pays for all of the things a person buys each month.

The credit company is lending the person that money, they are gaining credit.

Then at the end of each month, the person is asked to pay the full amount back to the credit company.

If they can only pay back some of it, the person is charged interest on the amount they cannot pay back of the ongoing loan amount.

Let's just use an example here.

If you were a farm owner, you would need to buy a tractor, but you do not have the cash for it.

So you would ask a bank to lend you the money.

As they would not expect you to pay it all back at the end of the, in a months time, they would charge you a fee for continuing to borrow it.

This is called paying interest on your loan.

Sometimes things go wrong.

Our farm owner can harvest more corn with his new tractor, increasing his productivity and then sell it at market.

He can pay back his debt to the bank and undoing any interest that he has been charged.

And even buy himself a herd of cows who could then produce milk that he can then also sell.

But if the farm owner had taken a bank loan to buy a huge flat screen TV, and then had sat watching Netflix all day, rather than tending to his fields and directing his staff, he might lose his harvest, then be unable to pay his loan back.

He may well have to sell some of his land to pay back to the bank the money he owes.

That means he has less space to grow crops on next year and soon he's going to be in financial trouble.

He may have to sack his farm workers 'cause he can't afford them.

And then they won't be able to pay their rent and a downward economic cycle begins.

So those three pages should have helped you do the questions.

Pause now and go back to those questions.

Now going to go through some answers to those questions.

First one, state what the economy is a collection of and give an example.

The economy is a collection of, see how I've used the question there to start my answer? Is a collection of small, simple transactions.

An example would be someone selling bread and someone buying it, as simple as that.

Define what credit is.

Credit is when you buy something by promising to pay for it at a later date.

People borrowing money, which means they gain credit so that they can buy expensive things like tractors.

The money they have borrowed will have to be paid back and they may also be charged a fee for borrowing the money called interest.

Okay.

I think just the first two sentences there would still be absolutely fine as an answer, but that's a very full answer there that I've given.

Number three, explain why gaining a loan in order to buy something like a tractor would be a good choice, but buying a TV with a loan would not.

Use the word productivity.

Gaining a loan to buy something like a tractor is good because with that purchase, you can increase your productivity.

That means you can use the item to generate money to help pay back the loan and still have some money left over to spend on other things.

However, if you get a loan to buy an expensive TV, you would not see an increase in your productivity.

In fact, you may end up producing less as you are more inclined to sit watching TV rather than doing something else that will earn you money.

Okay, so I need to that answer was I kind of imagined, I probably needed about four sentences.

So I did two sentences on explaining why a tractor is good and then two sentences explaining why the TV loan wouldn't be good, okay.

Right so now let's think about how we could tell if an economy was growing and healthy.

What would that look like? In real terms, if we look at the effect of a growing economy on people in businesses, what would it actually look like? Okay, so I'd like you to consider for a moment what it would be like in a healthy growing economy when everything's great, what would that look like for people? Think about their jobs and loans, what kind of things they could buy? What would it look like for them? Can you think about the job market when things were all going well, what would that be like for people? That's on the left-hand side and then on the right hand side, I want you to think about businesses.

What would it be like for a business when things were all going really well? Think about their premises size, their staffing levels, the option to take out a loan or what else they might be buying.

So think about that for both sides.

And just pause for a moment and see if you can put anything against those bullet points for me, well done.

Okay.

We're going to look together at some answers now.

So this is what it might look like for people first, on the left-hand side.

So in the good times, there are lots of jobs available.

People have more cash in their pocket to spend, or they can easily go and get a loan because the bank's going to say, oh yes, that's fine.

You've got a job.

You're earning enough money to pay back that loan, that's fine.

They can just generally spend more.

And also perhaps they can buy a higher value goods like a new washing machine or a new hoover, car, house, those kinds of things.

Right, so for the businesses.

So they are selling more produce or whatever it is they do.

So they could perhaps buy more in, 'cause they're selling it faster than normal.

Perhaps they need a bigger place to be in, to store all their stock.

They may even need to go and get a few more different premises as well.

Therefore they're going to need some more staff and they might take out a loan to diversify.

Perhaps they're just selling washing machines, but because they're doing so well, they think they might go and get a loan and try buying in a whole load of kettles and toasters.

Okay? They can take that risk because they've got some money in the bank, okay.

But if the economy is not so healthy, that's what we call being in a recession, the opposite would be the case for each of those factors we have just described, okay? Now I'd like you to just make a note of that.

So the section in green, making sure you spelled the word recession correctly so that's when things are not doing as well, as the image there shows you.

It's going down.

So pause if you need to, if not, I'm going to carry on.

Okay, so I'm just going to go back to that slide beforehand now and just think about the opposites for each of those.

So let's just have a think.

What would the opposite be then in the recession for these elements? So in the good times, people all have jobs, the bad times perhaps, like those farm workers, perhaps they might lose their jobs.

So people will have less money.

They might not be able to get a loan 'cause the bank can see they might not be able to pay it back again.

Perhaps they can't spend as much and they may definitely not be deciding to go buy a new car at this stage.

And the businesses, selling less 'cause people have less money.

They therefore are reducing their stock 'cause they can't sell as much.

And they are maybe reducing the size of their premises, perhaps having to lay off some more staff, make some more staff redundant.

People are losing their jobs and perhaps they wouldn't be thinking, now is the time to diversify.

They're going to stick to what they know.

Okay.

So hopefully that makes sense.

It just shows you how the opposite occurs.

Okay.

So we've written that now.

So we're going to move on.

Next we're going to have a look at how a healthy or a recessive economy might affect the UK government.

So now on the screen in front of you, on the left-hand side, we've got what might be the case, the actions that the government could take if the economy was healthy.

So they could perhaps look at increasing some taxes somewhere maybe.

They could look at perhaps increasing the amount they pay out on state pensions.

They could invest in public services, such as building a new school or a hospital.

They could decide to give a pay rise to people who are public servants, such as teachers, council workers, nurses, and they could decide to pay off some of the national debt.

So our country has borrowed money from other countries and large global financial institutions in the past and we still need to pay off those debts back to those people, okay? Now what I'd like you to do is see if you can put in the opposites to those now then.

So if there was a recession, what might the government have to do? So I've done the first one there for you, it says lower taxes and I want you to try and think about the negative of each of my other bullet points and then you write them into that right-hand side.

Okay, like I did there.

It says increased taxes on the left and then I wrote on the right, lower taxes, okay? I'll ask you to pause while you do that for a moment.

Okay.

Now you're back with me.

We're going to have a look at the answers I have written in.

So yours might not quite say the same thing, but as long as you've got the idea, that's fine.

Any of these things that I've gone through when I've given the answers, if you want to pause and double check that your answers are in line with mine, that might be helpful.

Okay, so in a recession where the economy is not doing so well, the government might lower taxes, reduce the state pension payment, 'cause they can't afford to increase it.

Perhaps they might stop spending on public services, infrastructure projects, perhaps they're not going to build those new schools or hospitals after all.

They might not be able to give me pay increases to public servants and they might actually have to go and borrow some more money.

Okay.

Well done if you've got any of those.

Just pause the screen again if you just want to add any of those in.

I'm going to move on.

Okay, now this is our final question of our lesson today and it just brings together all of the different things that we've been looking at in our lesson, it says, using all the information from this lesson and the final side of the worksheet, which is one about the Bank of England, okay, and then there's a glossary as well on the worksheet.

So using all the information from this lesson and the final slide of the worksheet, agree or disagree with the following statements.

So you have a choice there.

And the statement is, all actions of the UK government are driven by the economy.

I'd like you to consider the following in your answer.

Think about the actions that the government takes with advice from the Bank of England, depending on the economic position of the country.

So does it change what it does depending on the economic situation of the country? Does it change its actions? And then the second thing I want you to consider is, the government actions that are not driven by the economy.

And I put a little hint here for you on that in brackets, hint, such as, maybe an imminent general election.

So perhaps government's actions are not driven here by the economy, but by the fact that they know in a year's time, they could be back up to be voted for, and that might affect their policy.

Perhaps the crime rate has increased or maybe there's a need for new law or a global pandemic, or even perhaps protecting the environment is a big issue at the time.

Therefore, perhaps those things might be driving government policy rather than the economy.

So those two bullet points should help you form your arguments.

So you can decide whether you're doing agree or disagree.

If you feel it would be helpful, then it would be very good practise to have it go at just trying both sides of that argument as well.

Okay.

Now I'm going to ask you to pause the video now, if you think you can do that now without any further assistance.

And at this point, going to perhaps lay out a little bit more detail about what you might want to write in your paragraphs, if you'd like a little bit more help and structure.

So pause if you feel confident to do that, stay with me if you want to hear a little bit more about what I might write in my paragraphs, if I was doing that question.

Okay, so if we were going to agree that all the actions the UK government take are driven by the economy, we need to demonstrate how it might change its policy, okay? So you can go back to that slide that looks at, and the bit in your book now where you've written down about the different actions the government might take, if it was a healthy or an unhealthy economy, a recessive economy.

And you can explain in the first paragraph, perhaps that you agree with the statement and then say all the things that the government could do, if the economy was healthy.

And then in your second paragraph, you could say all things that the government could or may have to do if the economy was not so healthy.

So then you've given two full paragraphs explaining that certainly government has to respond to economic policy.

Okay, if you're deciding to disagree and say that all actions are not really driven by the economy, then you're going to need to talk about the different things that effect government policy.

So my first paragraph here, I think, would be talking about the fact that you know in your whole course how political parties might want to position themselves prior to an election to make themself appear popular, to try and create policy that they know people will want to hear.

Maybe they need to look at, perhaps something like the re-offending rate, which we know is quite high.

Perhaps they want to respond to concern about prison overcrowding, those kinds of things that may not be directly economically based.

So I would think I would talk about those things in the first paragraph.

And then my second paragraph will be more about how they might actually have to react to things that they maybe didn't know were coming.

And how they've had, you could use your example, couldn't you, about Coronavirus and how the government has had to spend the 300 billion now on making sure that we have the hospitals and the staffing and the infrastructure ready here to deal with that.

And blow the economy almost, that just had to be done.

And then I think in that same paragraph, I'd also include that it has to respond to strong public opinion.

For instance, the extension rallies and the fact that people have been concerned about the environment and the support that Greta Thunberg has had, and I think you'd want to perhaps have that in your second paragraph as well, okay.

So I hope that's helped.

Either pause now and go write that, or at this point, I think I'll say that I hope you have enjoyed today's lesson and I'm sure whatever you've done has been really helpful.

Perhaps you might like to take it back to your teacher and show them when you attend school.

I'm sure that really appreciate it that.

I would, if my students had done this.

So I hope you enjoyed that, and my next lesson is going to be on taxation.

Bye for now.