Magazine article Teaching Business & Economics

Setting Interest Rates

Magazine article Teaching Business & Economics

Setting Interest Rates

Article excerpt

Every year, the Bank of England runs its Target 2.5' competition. This involves one team per competing school. Each team starts out in regional heats and, if successful, moves on to area finals. The six area winners go to the national final.

At each level, teams of four students assume the role of the Monetary Policy Committee, and must decide on a particular rate of interest and justify it in relation to the 2.5% inflation target. Each team has to argue its case in a 15-minute presentation to a panel of judges (Bank of England staff and MPC members). They then answer questions put by the panel, who will have been briefed about how to speak to students in an encouraging way.

The activity below uses the Target 2.5' competition as its framework. You don't have to enter the competition, however, in order to use this activity. Although the competition and this activity are aimed primarily at A level students, a nearby comprehensive school took along a group of Year 11 GCSE students to compete.

They were unfazed.

This activity

* ties in closely with work on the trade cycle, an appropriate topic at the start of A2. You may wish students to prepare their presentation material as a summer holiday task.

* prepares each student to make an independent presentation, a central part of the Bank of England Target 2.5' competition.

* hits synoptic requirements particularly well. The AQA specification says 'The emphasis in the synoptic assessment will be on the candidates' ability to think as economists and to use effectively the economist's 'tool kit' of concepts, theories and techniques'.

The activity works well at the time at which the Bank of England competition occurs (September to December) but could be used at any time which suits your scheme of work. You can try out Part 1 of the activity at the end of the summer term, with each student taking a country to study over the summer holidays.

For this activity, Internet access is more or less essential. The Bank of England materials which accompany the competition are very valuable (if somewhat overwhelming in quantity).

A problem with the timing of the Bank of England Target 2.5' competition is that you have to submit the names of your team of four in early September, so you can't use the activity as a way of deciding team selection. Perhaps the organisers might consider changing their entry procedure.

Whether or not you go for the competition, this activity has two key benefits

* It encourages synoptic thought (AQA again: 'This module [6]...will require candidates to...develop further their critical approach to economic models and methods of enquiry. …

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