Global Economy At Crossroads

Beginning on Thursday, April 2, 2009, the international community's Group of Twenty (G-20) financial leaders will convene during the London Summit. With the world experiencing its worst economic crisis in 60 years, the group's unified efforts will be critical to getting the global economy back on track and growing again.

When the U.S. economy faltered, the crisis rippled throughout the world, showing how tightly linked trade, jobs, and banking have become between nations. In fact, one agency in particular, the International Monetary Fund (IMF), keeps a careful watch on such matters. Founded just after World War II, the IMF promotes global economic growth and stability. Specifically, it serves its 185-member nations by promoting financial cooperation, ensuring balanced trade growth, and lending to needy nations with strict conditions tied to economic reform. On March 24, 2009, the IMF announced it overhauled its lending practices, providing a more flexible credit line and other updated features, which they hope will help lead the way out of the current crisis.

In this exploration, you will invest your time discovering the importance of global cooperation in achieving financial stability. Along the way you will learn the important role of the International Monetary Fund (IMF) in helping keep the global economy fair and balanced.

The Quest for Economic Stability

To begin, visit the International Monetary Fund's Students section to learn about Money Matters: The Importance of Global Cooperation. As you browse through this exhibit, create a timeline, summarizing key periods in a sentence or two. Click on any of underlined term for its definition.

Read the introduction, and then start with the era of Conflict and Cooperation (1871-1944). Read about The Golden Era, and continue through the Meltdown, The Cost of the World War, Global Depression, and The End of War is in Sight. How Could Leaders Ensure a Future of Global Prosperity?

This was followed by Destruction and Reconstruction (1944-1958). After thoroughly reviewing that era, find out why it was a System in Crisis during 1959-1971. As you will discover, this led to Reinventing the System (1972-1981), Debt & Transition (1982-1989), and finally, Globalization and Integration (1989-1999). Reflect on your timeline and what you have learned at this exhibit, and then write an essay about what struck you as an especially interesting aspect of our global economic history.

To get an idea of what IMF is doing today, watch the 5-minute video, On Many Fronts: IMF Helping to Combat Global Economic Crisis. This video provides a summary of the crisis and cites a few examples of how the IMF is working to help.

Now, check out The IMF in Action by exploring the answer to the question, Why do we need the IMF? As a wireless phone dealer in Yak, what steps were necessary to reach your economic goals? What were some constraints you faced when making decisions?

What does IMF do to actually make positive changes happen? Try serving as an IMF economist for a little first-hand experience. What factors seemed to influence the nation's economy the most? In what ways did your team's research and analysis support IMF's recommendations? How did the country use those recommendations to improve the economy?

That nation was not too bad off, but what about countries who are already in dire straits? How can the IMF help in crisis? What exactly is a "trade deficit"? What steps did you take to make your nation's exports more profitable? How did different groups of citizens react to suggested changes?

In what ways did the IMF help your country recover from the crisis? How exactly did the recommendations affect the nation's economy, both in the short-term and long-term?

Finally, on the IMF in Action page, find out, Who is the IMF? How would the different backgrounds, specialty areas, and perspectives of these staff members help the IMF perform its particular roles in the global economy? In what ways does each person work with member countries? Why are different nations sometimes on different levels of economic development, and how might these factors influence how each country can grow and stabilize?

To test your new economic knowledge, get on the Monetary Mania! quiz show. Pick an avatar, and then go head-to-head with the other two challengers as you answer questions about money, monetary policy, and the IMF, winning points for correct answers along the way. How well did you score?

If you have time, you may also wish to check out the collection of IMF Videos. Use the IMF Data Mapper to compare and contrast the economic health and history of two or more nations.

Newspaper Activities

Follow the G-20, IMF, and other economic news in The Sacramento Bee . Using what you have learned about global economics and financial interactions between nations during this lesson, analyze two or more articles related to the London Summit or other key news event. Write an analysis or opinion as a weblog post or more formal essay. In your essay, cite one or more related historical events noted in your timeline. Also, use at least one key term included in the Money Matters Exhibit Glossary and consider including information from the IMF Data Mapper. If possible, share your blog post or essay with classmates, allowing them to add their responses or other comments.