3.1 Recessions and Depressions

• Engels
• MBO
• Studiejaar 1

3.1 Recessions and Depressions

Lesson outcome:

Learners can use vocabulary related to finance an the economy.

Lead-in

Discussion questions:

1. How good are you at managing your money?

2. Which banks or financial institutions do you bank with?

3. Do you have any tips for saving money?

4. Have you ever invested in the stock market? What happened?

5. How is the economy doing in your country at the moment?

Think about the following questions and take notes. Be prepared to answer the questions in class.

Introduction to theme

The finance sector is a global trading industry which uses the stock market in a range of countries to buy and sell a variety of investments.

Most investments hold a risk factor and there can be a period of boom or bust.

Investor attitude can influence the finance sector creating either a bull or a bear market.

In a global economy, when one country faces financial crises it can have an impact on the economy of other nations (recession, depression).

Example 1920's United States of America

During the boiler room days, Belfort would promote penny stocks through intensive marketing which drove up the price of these stocks. Then, Belfort would instruct his team of investors to dump the stock making him millions of dollars over time.

More recent economic crises have been less destructive.

During 2007-2010 the financial crisis was closely linked to growing confidence in the housing market, which had been making considerable profits.

This overconfidence in the housing market led to a trend towards making it easier to borrow money by lowering lendings standards and also selling higher-risk mortgage products.

The person taking out the mortgage was not in the position to repay the loan, leaving a debt that was unlikely to be repaid.

The results of the crisis were far-reaching. Banks came close to a collapse and some needed to be bailed out by the government.

Class activity:

Exercise 2 listening exercise. Watch the video and put the following events in order of severity (1 = the wirst type of financial crisis).

crash - economic depression - recession

Exercise 3 watch the video again and answer the questions.

Exercise 4 Who do you think was responsible for the economic recession which began in 2008; governments, banks and financial institutions, business leaders, or people over-spending? 

Go to the following website, read the article and answer the question in exercise 4. https://www.forbes.com/advisor/investing/great-recession/

Individual work:

Exercise 5, 6, 7, 8, 9

Instruction exercise 9:

Research what happened to a bank or financial institution during a recent recession. 

Create a powerpoint and presents your findings to the class.