Chapter 6, page 92
Problem 6.3: Understanding Students’ Thinking:
The banking system
Read the following transcripts and determine what Erin’s conception of the banking system is. Erin (E) is
16 years old and is being interviewed by her teacher (T).
T What can you do at a bank?
E Borrow money and save money.
T Is there anything else you can do?
E No, not really.
T How would things be different if there weren’t any banks?
E You wouldn’t be able to get interest on your money, and you wouldn’t be able borrow money like to
buy a house.
T Suppose that you put $100 in the bank. After one year, you withdraw it. How much money will you
receive?
E About $110.
T Where does the bank get the money to pay you?
E It gets it back from the government.
T Where does the bank get the extra $10 to pay you?
E From the government.
T What does a bank do with the $100 you put in the bank?
E It uses it to make roads and build hospitals and stuff.
T What happens when you write a check?
E The bank gives you some of your money back.
T Suppose you borrow $100 from a bank. After one year, when you return the money, how much will
you give back?
E $100.
T Why is that?
E It would be stealing to make me give back more than that.
T Where does the bank get the money to loan you $100.
E It comes from taxes.
T What do you mean by “It comes from taxes”?
E That’s one of the things the government does.
T Where did the bank get all its money.
E Same thing—from taxes.
T Does the bank pay its employees?
E Yeah.
T Where does the bank get the money to pay its employees?
E They’re like teachers. They get paid by the government.
Response: Here are some key components of Erin’s conception: Banks are part of the government. When
you put money in the bank, banks take the money and use it (as a branch of the government) to build
things like roads and hospitals. Interest, loans, and bank employees’ salaries are paid by the government
using taxes. This suggests that the student thinks that the government has two sources of money: bank
deposits and taxes. Both are used to build roads, etc. Interest on deposits is paid strictly using taxes.
Each individual has a checking account in which they keep money, and they cannot take out more
than they put in. However, you can take extra money out by taking a loan. There is no interest on loans
because this would be unfair. We can represent many key components of Erin’s conceptions in the