By Liz Verley, Staff Writer
Question: If a bank currently has no excess reserves and has a reserve requirement of 10 percent, how much will excess reserves grow by if the FOMC buys a $10,000 bond from the bank and what is the potential growth in the money supply?
Answer: $10,000 and $100,000.
This is just one example of the questions that students participating in the National Economics Challenge face. For the second straight year, Little Falls Community High School students have brought home the championship title in the David Ricardo Division of the National Economic Challenge which is always held in New York. The competition was held May 19.
Coached by Tom Stockard, students participating included Aaron Nilsen, Brian McNamara, Travis Spillum and Eric Schmidt.
The Little Falls team represented Minnesota after winning first place in the state Economics Challenge competition in April. It advanced to the national finals as one of the four highest scoring teams at the national semifinals, outpacing more than 10,000 other students to win the all-expense paid trip to New York City (NYC).
Stockard said, “We started preparing for the competition in mid-February as two of the students were taking economics during the second semester and just started to receive economic instruction. The time dedicated for preparation usually takes place after school and during the weekend when time permits as the students are very active in other events such as the school play, track and personal work responsibilities.
“They are enrolled in the basic intro to economics, which is not affiliated with any college or advanced placement requirements and is only one semester long. They prepared by reviewing current events, text, completing practice questions and studying varying economic concepts,” said Stockard.
The students are all seniors taking their first economic course. Stockard has taught economics at the high school for 10 years and has been involved with coaching an economics team since 2005.
“My favorite part of the tournament is observing the student’s mastery of economic theory and concept in a short period of time,” he said. “Their success is a reflection of not only their personal dedication to excellence, but also the contribution from all of the teachers in District 482 who have nourished their skill set from early childhood.”
At the national finals, students completed rounds of testing, worked in teams during a critical thinking round to solve case problems and participated in a fast-paced oral quiz bowl in order to compete for the national championship title.
The team went into the competition feeling very confident of the ability to come out on top.
“Before the competition I felt we were prepared and very confident. I didn’t begin to feel nervous until the final buzzer round,” said McNamara. “Afterward I could hardly believe it was all over and that we had won. It took a while for the victory to sink in. It was kind of sad realizing that the competition we had prepared so hard for was over. It was a great experience and I was very glad to be a part of it.”
“We knew we studied everything we could in the months leading up to the competition, and we expected to come out on top. After the competition was completed, I felt very accomplished with our achievement and was proud of the team,” said Spillum. “The final round was very close, but we kept our composure and were able to finish the job. My favorite part of the competition was the final buzzer round. Going head-to-head on live television with another very good economics team, Carmel High School, was exhilarating, and I could not be happier with the final results.”
Little Falls defeated the Carmel High School Team from Carmel, Ind. in the final quiz bowl round.
“I was anxious but confident. I knew that with all of our hard work studying for the past couple of months we had a very good chance of winning,” Schmidt said. “After the competition I was relieved. The pressure and intensity of the competition was almost to much to handle, and after it was over it took a while for the fact that we had won to set in.”
“Walking around New York City with my teammates was by far my favorite part of the experience. After all of our time spent working together it was great to be able to relax and have fun in one of the most exciting places in the world,” said Schmidt.
Nilsen said going into the competition was a flurry of emotions. “We were all excited because we had already received a free trip to NYC and had a blast running around the city, but at the same time we were very nervous. The night before I remember us studying in the room for a few hours and, against Mr. Stockard’s wishes, we went for a walk about 1 or 2 a.m.. We were just so excited and anxious to compete,” he said.
“We felt very confident going in as we had scored a 435, 450 being perfect, in the first round of competition. We had only gotten one wrong. There were plenty of hard questions though. We were asked a lot of history in one round, a subject the is definitely our weak spot. We had to know when the last time the fed funds rate was raised, that caught us a little off guard,” said Nilsen. “Also we had to give a presentation on why our economy was growing slowly. We were prepared to give a presentation but just all the knowledge we had to pull out of thin air and all the time thinking out our answers made it some what challenging.”
Nilsen said, “The competition as a whole was just a blast but personally my favorite part was just being in NYC. Going from a town of 8,000 to one of 10 million is a huge culture shock, but it is an awesome experience that opened my eyes to the world a little.”
In addition to the first place title, the winning students receive $1,000 in cash prizes
“It is a great honor to be this team’s instructor and I feel blessed to have been a part of their success,” said Stockard.
One last question: If an effective price ceiling is put in place what illegal market forms?
Answer: A black market.