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Teacher Guide to Student Interactive:

The IMF In Action: What Does the IMF Do?


The IMF In Action: What Does the IMF Do? icon Students are instructed to choose a team of four to accompany them to a Latin American country to assess its economy. Criteria they should consider as they make their choices are: areas of expertise, languages spoken and experience.


14-18 year olds (9-12 graders, US) studying Social Studies and Economics in school.

National Economics Content 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.

Standard 10 — Role of Economic Institutions
Institutions evolve in market economies to help individuals and groups accomplish their goals. Banks, labor unions, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and well-enforced property rights, is essential to a market economy.

Standard 20 — Monetary and Fiscal Policy
A government's budgetary policy and its monetary policy influence the overall levels of employment, output and prices.

Warm-up Activities
  • Write the following occupations on index cards: doctor's receptionist, school secretary, auto sales person, bus driver, carpenter, park ranger. Divide the class into six groups, and distribute a card to each group. Have students divide a sheet of paper info three columns, headed "physical skills," "intellectual skills," "emotional skills." Allow about five minutes for groups to brainstorm the skills needed for the occupation they received and to record their ideas in the three columns. Discuss their responses, emphasizing that every job requires particular capabilities.
  • Distribute classified advertising pages from a large Sunday newspaper listing "help wanted" ads. Have students look through the ads and circle those that require applicants to speak more than one language. Discuss the importance of knowing more than one language in today's global economy. Assign some students to research the population or percentage breakdown of the top 15 languages spoken in the world. Discuss how this information might influence which languages will be taught in U.S. schools in the future.
  • Ask students to brainstorm a list of occupations in which knowing languages is not only recommended but necessary.
  • Explain that the IMF helps developing nations improve their standards of living by examining their economic status and making recommendations for improvement. Ask, "What information would help an IMF examiner to assess a country's standard of living?" (Answers: per capita GDP, median household income, infant mortality, life expectancy, literacy rate) Have students download these data for some developing countries and for some industrial economies and compare. Discuss why a country might want to know about the economic well-being of another country before engaging in trade.

Lesson Applications

Remind students that in the late 1990s and early 2000s some major corporations were engaged in unethical accounting practices that made them appear to be more profitable than they actually were. Ask, "Why would a company want to improve its profit outlook?" (In order to be more attractive to stock buyers and to share holders). Ask, "How does incomplete or incorrect information affect investors?" (Without accurate data, investors cannot make good decisions.)

Explain that accurate information is also important among nations. Countries need to have access to the true monetary status of their trading partners in order to make good trading decisions.

Have students complete the online activity, "What Does the IMF Do?" Point out that they will be choosing assistants to examine the economic data of various Latin American countries. They must choose wisely, analyzing the characteristics of various workers, in order to select the best candidates.

Define inflation as a general increase in the price level. Ask why inflation is not a desirable economic condition. Discuss what is meant by an annual inflation rate of 15%. (A 15% inflation rate means that something costing $1.00 this year will cost $1.15 next year.) Explain that inflation decreases the value of a dollar, because each dollar buys fewer goods and services.

Additional Resources

Web Link
Cooking the Books: The Cost to the Economy. This link features an article about how big corporations such as Enron and World Com "cooked the books" and precipitated anxiety among investors. The article can be used to introduce the idea that accurate data are essential in a market economy so that investors can make educated decisions about buying or selling stock. In the same way, nations must provide accurate information so that their trading partners can make valid choices. The IMF oversees the accuracy of economic data in its role as an agency committed to stable economic systems. http://www.brookings.edu/comm/policybriefs/pb106.htm

Online Extension Activities: Choose 8 students who have finished their assigned work and have them, in pairs, evaluate the following lessons and present them to the class.

Economic Sectors and International Development. This lesson provides suggestions for comparing developing countries, especially in the area of agriculture. Students come to understand that countries most heavily dependent on farming are generally among the poorest. http://www.econedlink.org/lessons/index.cfm?lesson=EM288

What Does the IMF Do?

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