Economics Content Standards

Building on knowledge from previous years, students should be able to:

Topic 1. Scarcity and economic reasoning

Compelling Question: How do individuals and corporations make choices about saving or spending?

1. Define each of the productive resources (natural, human, capital) and explain why they are necessary for the production of goods and services. 

2. Explain how consumers and producers confront the condition of scarcity, by making choices that involve opportunity costs and tradeoffs.

3. Identify and explain the broad goals of economic policy such as freedom, efficiency, equity, security, growth, price stability, and full employment. 

4. Describe how people respond predictably to positive and negative incentives.

5. Predict how interest rates act as an incentive for savers and borrowers.

6. Recognize that voluntary exchange occurs when all participating parties expect to gain.

7. Compare and contrast how the various economic systems impact different social groups (traditional, market, command, mixed) try to answer the questions: What to produce? How to produce it? And for whom to produce it?

8. Describe how clearly defined and enforced property rights are essential to a market economy and yet create conditions for wealth stratification. 

9. Use a production possibilities curve to explain the concepts of choice, scarcity, opportunity cost, tradeoffs, unemployment, productivity, and growth. Explain how unemployment rates do not factor in those not looking for work (stay at home parents).

Topic 2. Supply and Demand

Compelling Question: What factors affect the prices of goods and services?

1. Define supply and demand.

2. Describe the role of buyers and sellers in determining the equilibrium price.

3. Describe how prices send signals to buyers and sellers.

4. Recognize that consumers ultimately determine what is produced in a market economy (consumer sovereignty).

5. Explain the function of profit in a market economy as an incentive for entrepreneurs to accept the risks of business failure.

6. Demonstrate how supply and demand determine equilibrium price and quantity in the product, resource, and financial markets.

7. Identify factors that cause changes in market supply and demand.

8. Demonstrate how changes in supply and demand influence equilibrium price and quantity in the product, resource, and financial markets.

9. Demonstrate how government wage and price controls, such as rent controls and minimum wage laws, create shortages and surpluses. 

10. Use concepts of price elasticity of demand and supply to explain and predict changes in quantity as price changes.

11. Explain how financial markets, such as the stock market, channel funds from savers to investors. 

Topic 3. Market structures

Compelling Question: What impact does competition have on businesses? 

1. Compare and contrast the following forms of business organization: sole proprietorship, partnership, and corporation.

2. Identify the three basic ways that firms finance operations (retained earnings, stock issues, and borrowing), and explain the advantages and disadvantages of each.

3. Recognize the role of economic institutions, such as labor unions and nonprofit organizations in market economies. 

4. Identify the basic characteristics of monopoly, oligopoly, and pure competition.

5. Explain how in most industries competition among many sellers lowers costs and prices and encourages producers to produce more.

6. Explain how firms with market power can determine price and output through marginal analysis.

7. Explain ways that firms engage in price and nonprice competition.

8. Illustrate how investment in research and development, equipment and technology, and training of workers increases productivity. 

9. Describe how the earnings of most workers are determined by the market value of the product produced and workers’ productivity, considering the ways that cultural biases can impact earnings. 

Topic 4. The role of government  

Compelling Question: What is the government's responsibility in providing for social needs? 

1. Explain how the government responds to perceived social needs by providing public goods and services (e.g. parks, social security, education). 

2. Describe major revenue and expenditure categories and their respective proportions of local, state, and federal budgets. 

3. Identify laws and regulations adopted in the United States to promote competition among firms, including the ways some equity-driven policies promote competition.

4. Describe the characteristics of natural monopolies and the purposes of government regulation of these monopolies, such as utilities. 

5. Define progressive, proportional, and regressive taxation. 

6. Describe how the costs of government policies may exceed their benefits because social or political goals other than economic efficiency are being pursued. 

7. Predict how changes in federal spending and taxation would affect budget deficits and surpluses and the national debt, while shifting spending to states or individuals.

8. Define and explain fiscal and monetary policy. 

9. Analyze how the government uses taxing and spending decisions (fiscal policy) to promote price stability, full employment, and economic growth. 

10. Analyze how the Federal Reserve uses monetary tools to promote price stability, full employment, and economic growth. 

Topic 5. National economic performance

Compelling Question: What factors affect patterns of income distribution in the United States?  

1. Define aggregate supply and demand, Gross Domestic Product (GDP), economic growth, unemployment, and inflation.

2. Explain how Gross Domestic Product (GDP), economic growth, unemployment, and inflation are calculated.

3. Analyze the impact of events in United States history, such as wars and technological developments, on business cycles. 

4. Identify the different causes of inflation, and explain who gains and loses because of inflation.

5. Recognize that a country’s overall level of income, employment, and prices are determined by the individual spending and production decisions of households, firms, and government.

6. Illustrate and explain how the relationship between aggregate supply and aggregate demand is an important determinant of the levels of unemployment and inflation in an economy.

Topic 6. Money and the role of financial institutions 

Compelling Question: Why are banks and stock markets regulated by the government?  

1. Explain the basic functions of money (e.g., medium of exchange, store of value, unit of account).

2. Identify the composition of the money supply of the United States.

3. Explain the role of banks and other financial institutions in the economy of the United States.

4. Describe the organization and functions of the Federal Reserve System.

5. Compare and contrast credit, savings, and investment services available to the consumer from financial institutions.

6. Research and monitor financial investments such as stocks, bonds, and mutual funds.

Topic 7. Trade 

Compelling Question: What are the costs and benefits of trade agreements among nations?  

1. Explain the benefits of trade among individuals, regions, and countries. 

2. Define and distinguish between absolute and comparative advantage and explain how most trade occurs because of a comparative advantage in the production of a particular good or service.

3. Define trade barriers, such as quotas and tariffs. 

4. Explain why countries sometimes erect barriers to trade. 

5. Explain the difference between balance of trade and balance of payments.

6. Compare and contrast labor productivity trends in the United States and other developed countries.

7. Explain how changes in exchange rates impact the purchasing power of people in the United States and other countries. 

8. Evaluate the arguments for and against free trade.