Determine the impact of conflict on the U.S. economy

 

Overview: As the New York Stock Exchange opens, both New York Mayor Giuliani and President George W. Bush urge people to return to "normal activity." Why do you think it is important for people to return to work? Use this article and activity to have students determine the impact of conflict on the U.S. economy.

Curriculum Connections: Economics, U.S. History, International Relations

After students read the CNNfyi.com story,"Stocks tumble in orderly sell-off,"ask the following questions:

1. How did the financial markets fare yesterday? What was significant about the Dow Jones' point loss? Why do you think the market reacted so negatively to the tragedy and its aftermath? What is the Federal Reserve? What action did "The Fed" take yesterday to try to bolster the floundering U.S. economy? By how much did The Fed cut interest rates? Do you think this rate cut will promote consumer spending in the short-term? Why or why not?

2. Which stocks lost value yesterday? Which stocks closed higher? Divide the class into small groups. Direct each group to consult the Internet or yesterday's newspaper to find the names of six stocks that gained and six that lost market value yesterday. Next, have groups identify the kind of business represented by each of the stocks they found. Have each group share its findings and explain why some businesses, like airlines and insurance companies, saw their stocks decline, while others, like defense industries, saw their stock prices increase.

3. What forces propel the stock market? How does history provide us with some clues as to how the market reacts to extreme circumstances? Have students work in groups to research each of the following historical periods and their short-term impact on the stock market:

The Oklahoma City bombing (April 19-20, 1995). Have groups share their findings and discuss the market's response in each case. Why do political events, as well as economic ones, have an effect on stock prices? Discuss.

4. As a class, have students examine how people's emotions impact the stock market. Refer students to CNNfn.com, and other multimedia resources, to monitor the movement of the U.S. stock market throughout the day. Have students create a chart that depicts their finding. Have students note where the market stands at the close of the trading day. Then, have each student write an analysis of the emotions that he/she believes influenced the status of the market at its close. Ask students to consider what factors and events contributed to these emotions. Have students share their papers with the class and discuss.

5. Challenge students to consider the ripple effects of the halt in commercial air traffic last week(You can direct them to the story, "Ailing airlines look for financial aid"). Have each student conduct research to determine the short and long-term impact of the tragedy on the airline industry, the travel industry, mail-order industries, and airports, among other businesses. Direct each student to use what he/she has learned to create a concept map or other visual organizer that illustrates the "domino effect" the extended grounding of flights could have on the U.S. economy.

RELATED SITES: • US Economy: Business Cycle Indicators • A Glossary of Political Economy Terms • Chart of the Day Note: Pages will open in a new browser window External sites are not endorsed by CNN Interactive.