International Trade and Money: A Simple Classroom Demonstration

Robert G. Houston Jr. and Gail M. Hoyt

International Economics
Macroeconomics and Monetary Economics

Non-computerized experiment

The activity presented in this paper is designed to demonstrate both gains from trade and the importance of fiat money as a medium of exchange. While this is certainly not the first activity to demonstrate either concept, it does offer the instructor the opportunity to prepare one demonstration for the presentation of multiple topics. This demonstration can be used in both a principles of macroeconomics or microeconomics classroom. It also can be tailored in several ways to reduce the amount of time required or to emphasize a particular topic. Student learning is enhanced as students typically find this activity humorous, adding to their excitement and interest in the topic.