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WRITING COMMITTEEJohn Siegfried, Writing Committee Chair

Vanderbilt University

Alan Krueger, Writing Committee Co-Chair

Trough February 2009

Princeton University

Susan Collins

University of Michigan

Robert Frank

Cornell University

Richard MacDonald

St. Cloud State University

KimMarie McGoldrick

University of Richmond

John aylor

Stanford University

George Vredeveld

University of Cincinnati

ACKNOWLEDGMENTS

Many individuals reviewed the Voluntary National

Content Standards in Economics, 2nd Edition. Te

individuals listed below provided special assistancein helping develop the content of the standards.

Stephen Buckles


Bonnie Meszaros

University of Delaware

James ONeill

University of Delaware

Robert Strom

Ewing Marion Kauman Foundation

FUNDINGTe Council for Economic Education gratefully acknowledges the funding of this publication by the United States

Department of Education, Oce of Innovation and Improvement, Excellence in Economic Education: Advancing

K-12 Economic & Financial Education Nationwide grant award U215B050005-08. Any opinions, findings,conclusions, or recommendations expressed in the publication are those of the authors and do not necessarily

reect the view of the U.S. Department of Education.

Copyright 2010, Council for Economic Education, 122 East 42 Street, Suite 2600, New York, NY 10168. All rights

reserved. Te Content Standards and Benchmarks in this document may be reproduced for non-commercial educational

and research purposes. Notice of copyright must appear on all pages. Printed in the United States of America.

ISBN 978-1-56183-733-5 5, 4, 3, 2, 1


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Contents

PREFACE v

FOREWORD TO THE FIRST EDITION ix

ADDITIONAL RESOURCES ix

CONTENT STANDARDSSTANDARD 1: SCARCITY 2

Productive resources are limited. Terefore, people cannot have all the goods and services they want;

as a result, they must choose some things and give up others.

STANDARD 2: DECISION MAKING 5

Eective decision making requires comparing the additional costs of alternatives with the additional

benets. Many choices involve doing a little more or a little less of something: few choices are all or

nothing decisions.

STANDARD 3: ALLOCATION 8

Dierent methods can be used to allocate goods and services. People acting individually or collectively

must choose which methods to use to allocate dierent kinds of goods and services.

STANDARD 4: INCENTIVES 10

People usually respond predictably to positive and negative incentives.

STANDARD 5: TRADE 13

Voluntary exchange occurs only when all participating parties expect to gain. Tis is true for trade among

individuals or organizations within a nation, and among individuals or organizations in dierent nations.

STANDARD 6: SPECIALIZATION 15

When individuals, regions, and nations specialize in what they can produce at the lowest cost and then

trade with others, both production and consumption increase.

STANDARD 7: MARKETS AND PRICES 17

A market exists when buyers and sellers interact. Tis interaction determines market prices and thereby

allocates scarce goods and services.

STANDARD 8: ROLE OF PRICES 20

Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market

prices adjust, aecting incentives.

STANDARD 9: COMPETITION AND MARKET STRUCTURE 22Competition among sellers usually lowers costs and prices, and encourages producers to produce what

consumers are willing and able to buy. Competition among buyers increases prices and allocates goods

and services to those people who are willing and able to pay the most for them.

STANDARD 10: INSTITUTIONS 24

Institutions evolve and are created to help individuals and groups accomplish their goals. Banks, labor

unions, markets, corporations, legal systems, and not-for-prot organizations are examples of important

institutions. A dierent kind of institution, clearly dened and enforced property rights, is essential to a

market economy.


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iv Voluntary national Content StandardS in eConoMiCS

STANDARD 11: MONEY AND INFLATION 26

Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services.

Te amount of money in the economy aects the overall price level. Ination is an increase in the

overall price level that reduces the value of money.

STANDARD 12: INTEREST RATES 29

Interest rates, adjusted for ination, rise and fall to balance the amount saved with the amountborrowed, which aects the allocation of scarce resources between present and future uses.

STANDARD 13: INCOME 31

Income for most people is determined by the market value of the productive resources they sell.

What workers earn primarily depends on the market value of what they produce.

STANDARD 14: ENTREPRENEURSHIP 33

Entrepreneurs take on the calculated risk of starting new businesses, either by embarking on new

ventures similar to existing ones or by introducing new innovations. Entrepreneurial innovation is

an important source of economic growth.

STANDARD 15: ECONOMIC GROWTH 35Investment in factories, machinery, new technology, and in the health, education, and training of

people stimulates economic growth and can raise future standards of living.

STANDARD 16: ROLE OF GOVERNMENT AND MARKET FAILURE 38

Tere is an economic role for government in a market economy whenever the benets of a government

policy outweigh its costs. Governments oen provide for national defense, address environmental

concerns, dene and protect property rights, and attempt to make markets more competitive. Most

government policies also have direct or indirect eects on peoples incomes.

STANDARD 17: GOVERNMENT FAILURE 41

Costs of government policies sometimes exceed benets. Tis may occur because of incentives facing

voters, government ocials, and government employees, because of actions by special interest groupsthat can impose costs on the general public, or because social goals other than economic eciency are

being pursued.

STANDARD 18: ECONOMIC FLUCTUATIONS 43

Fluctuations in a nations overall levels of income, employment, and prices are determined by the

interaction of spending and production decisions made by all households, rms, government agencies,

and others in the economy. Recessions occur when overall levels of income and employment decline.

STANDARD 19: UNEMPLOYMENT AND INFLATION 45

Unemployment imposes costs on individuals and the overall economy. Ination, both expected and

unexpected, also imposes costs on individuals and the overall economy. Unemployment increases

during recessions and decreases during recoveries.

STANDARD 20: FISCAL AND MONETARY POLICY 47

Federal government budgetary policy and the Federal Reserve Systems monetary policy inuence the

overall levels of employment, output, and prices.


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PrefaceTe Voluntary National Content Standards in Economics was rst published by the CEE in 1997 and

quickly became an essential tool informing economic education. In 2008, the CEE set out to update theStandards. Financial support for the update was assumed by the CEE and by the U.S. Department of

Education, through the Excellence in Economic Education grant program administered by the Departments

Oce of Innovation and Improvement. In addition to this nancial support, many individuals generously

contributed their time to originally produce and update these standards.

Writing Committee

In late 2007, the CEE convened a committee to update the Standards. Te committee was chaired by Alan

Krueger (Princeton University), with John Siegfried (Vanderbilt University) serving as deputy chair. When

Krueger joined the U.S. Department of reasury in early 2009, Siegfried assumed responsibility for completing

the update. Other Writing Committee members were Susan Collins (University of Michigan), Robert Frank

(Cornell University), Richard MacDonald (St. Cloud State University), KimMarie McGoldrick (University of

Richmond), John aylor (Stanford University), and George Vredeveld (University of Cincinnati).Te Writing Committee met several times from 2008 through early 2010. In October 2009, a smaller

group, consisting of Siegfried, MacDonald, and Vredeveld and supplemented by Stephen Buckles (Vanderbilt

University) and Bonnie Meszaros (University of Delaware), spent an intensive three days updating and

revising the benchmarks associated with each of the 20 Standards. Aer circulating a dra of the Standards for

public comment in late 2009, the Writing Committee signed o on the nal form of 19 of the 20 standards in

early 2010. In response to public comment on Standard 14 (Entrepreneurship), the Writing Committee sought

additional expertise in revising the standard statement. Robert Strom (Ewing Marion Kauman Foundation),

with help from James ONeill (University of Delaware), oered revised language for this standard, which the

committee accepted with only minor changes.

Te result of this substantial eort is the Voluntary National Content Standards in Economics, 2nd edition.

As in the original publication, there are 20 economics content standards. Each standard is an essential principleof economics that an economically literate student should know and a statement of what the student should be

able to do with that knowledge at grades 4, 8, and upon graduating from high school. Tis knowledge includes

the most important and enduring ideas, concepts, and issues in economics.

Benchmarks

Each standard is accompanied by a rationale for its inclusion. Te rationale explains to educators, parents,

and citizens why it is essential for students to understand that standard and how the students lives and the lives

of other citizens improve with that understanding. In addition, each standard also includes a set of benchmarks

divided into achievement levels for grades 4, 8, and 12. Te benchmarks identify building blocks underlying the

principles embedded in the standard. Tey contain assumptions, intermediate conclusions, and elaborations

for each standard. o a large extent, the benchmarks develop the economic reasoning behind the standard.

In this way, the standards and benchmarks add up to more than a simple list of things to know. As studentsobserve the reasoning process used by economists and practice it themselves, they will acquire analytical skills

they can apply to emerging economic issues unforeseen at the time these standards were written.

Instructional Resources

Te economics content standards can easily be coordinated with instructional resources. For example, content

from more than 1,200 active learning lessons from numerous publications are aligned to these standards in the

Council for Economic Educations Virtual Economics instructional resource (see http://ve.councilforeconed.

org/). In addition, every lesson found on EconEdLink (www.econedlink.org), the CEEs curricular website, is


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also aligned to the standards. Trough its long history of producing economic education instructional materials

for grades K-12 that are integrated with content standards, the CEE is committed to providing resources for

teachers that articulate the goals of economics instruction and provide the means to achieve the goals.

Te standards are primarily conceptual. Tey generally do not include important basic facts about the

American and world economies. Te introduction to the standards indicates, however, that students also should

know some pertinent facts about the American economy, including its size and the current rates of unemployment,

ination, and interest. Many of the exercises suggested in the benchmarks lead students to acquire such

information. Te relevant facts students should know about the economy change constantly, however.

Conceptual standards, on the other hand, highlight the unique contribution of economics and are enduring

principles. Tey also facilitate an emphasis on economic reasoning, encouraging students to develop the capacity

to deduce conclusions from whatever facts are pertinent to the myriad problems they will confront in their lives.

The Language of Economics

Te standards were written so that parents, teachers, students, and the general public can understand what

they mean and what the standards require students to do. Although the nomenclature of economics is avoided

in the standards, much of the language of economics, as well as many of the principles of economics, are

contained in the benchmarks. erms such as opportunity cost, marginal cost, transactions costs, comparative

advantage, equilibrium, externalities, public goods, and potential gross domestic product appear only inbenchmarks. Some other important language of economics, for example, economies of scale and the multiplier,

do not appear at all, although those concepts are included in more accessible language.

Still other common economic concepts that are invariably included in introductory college economics

courses are not in the standards at all. Tese include, for example, income eects, elasticity, absolute advantage,

and diminishing marginal returns.

Before a concept was included in the standards or benchmarks, the Writing Committees working on the

rst and second editions of the standards asked why it was essential for a high school graduate to understand

it. Understanding each standard should be necessary for citizenship, employment, and life-long learning

of economics and help a typical high school graduate grapple with the ordinary business of life. When the

committee could not explain satisfactorily why the concept was essential, or if there was doubt, especially when

the concept is dicult to convey, the concept was excluded.

Best Scholarship in the Discipline

Te standards attempt to reect consensus in the discipline. Tis goal was accomplished by using the

majority paradigm, circulating the standards widely, and considering comments and advice from readers of

various dras. Te nal standards reect the view of a large majority of economists today in favor of a neoclassical

model of economic behavior. Te Writing Committees use of this paradigm does not connote a repudiation

of alternatives. Rather, it reects the assignment to produce a single, coherent set of standards to guide the

teaching of economics in Americas schools. Including strongly held minority views of economic processes

and concepts would have confused and frustrated teachers and students who would then be le with the

responsibility of sorting the qualications and alternatives without a sucient foundation to do so.

Te standards are supposed to be correct and to reect the best scholarship in the discipline. Tis criterion

turned out to be challenging. In areas of controversy macroeconomics for example the Writing Committeefrom the rst edition struggled to identify a consensus paradigm. Te Writing Committee from the second

edition confronted similar challenges.

More dicult, however, was balancing the trade-o between accuracy and parsimony. Almost all economics

principles are conditioned on assumptions. o report all of those assumptions each time would detract from

the eectiveness of the standards, leaving readers with the responsibility of distinguishing the principle from

the assumptions. So, in numerous cases, without specifying all of the required assumptions, standards and

benchmarks imply as always true principles that are widely agreed to be true most, but not all, of the time.


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Fundamental Economic Ideas and Concepts

Te standards focus on the more fundamental economic ideas and concepts that are widely shared by

professional economists. Some very important aspects of economics are either quite complex or so controversial

that there seems to be no existing consensus. In spite of their importance, such complex or controversial

aspects of economics receive less attention in the standards for pedagogical reasons. In addition, those

aspects of economics that are more easily separated into independent components account for more of the

standards. For these reasons, there are relatively more standards about microeconomics than macroeconomics.he individual macroeconomics standards, however, are quite significant for the many citizenship,

employment, and nancial decisions a typical high school graduate will confront during his or her lifetime.

Tese national content standards for pre-college economics education make it easier to incorporate the

powerful fundamental principles of economics into elementary and secondary school curricula. Tey are

oered as a resource for states and local school districts, for individual schools, and for teachers, who are

responsible for specifying and integrating the curriculum into their schools.

Highlighted Differences from the First Edition

Te changes found in the second edition of these standards are too numerous to itemize, but some

highlights include the inclusion of concepts that were missing from the original edition. Concepts of discounting

and compounding are now found in standards 2, 12, and 15. Also new are more explicit consideration ofthe role of the income and wealth distributions in the economy and increasingly frequent observations by

behavioral economists of some predictable patterns of producer and consumer behavior that contradict the

traditional paradigm of rational wealth maximizing individuals. Benchmarks on modern instruments of

monetary policy and a greater emphasis on economic uctuations are found in the second edition.

Information about ination now appears in several standards (including those on money, economic

uctuations, unemployment and ination, and scal and monetary policy). Standard 14 on entrepreneurship

has been revised substantially to reect current scholarship in this area. In some cases, the Writing Committee

found it dicult to capture ideas in the simple form of benchmark statements. o elaborate on these ideas,

the committee created enhancement boxes to accompany the benchmarks. For example, enhancement boxes

on opportunity cost, altruism, discounting, moral hazard, and compound growth can be found in this second

edition. Te Writing Committee used these enhancement boxes in those cases in which it wished to elaborate

on economic processes and concepts. Te economic topics found in the enhancement boxes are not intended

to be treated with more importance than other topics for which a box is not provided.

Many benchmark statements have been consolidated in this second edition. Others were removed. Still

others were added. Some benchmarks have been reworded and some have moved to dierent grade bands. In

addition, all statements relating to how students should be able to use the knowledge found in the benchmarks

were carefully scrutinized for their current relevance. Many of these statements have been revised. In other

cases, the committee simply accepted entirely new language on these examples of how students can

demonstrate knowledge of benchmark statements.

Other than the changes noted above, the 20 standard statements themselves are little changed. Te Writing

Committee set a high threshold for decisions to change these statements and, for the most part, it was

concluded that the statements have withstood the test of time. Of course, the rationale for the standard

statements has been changed to reect contemporary examples. Most of the changes found in this second

edition appear in the benchmarks and activities designed for students to demonstrate understanding of

the benchmarks.

Final Words

Since their original publication in 1997, the Voluntary National Content Standards in Economics have

informed educational practices across a variety of settings. Te copies of textbooks that instructors use

are oen annotated by their alignment to the standards. Assessments (such as the National Assessment of


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viii Voluntary national Content StandardS in eConoMiCS

Educational Progress Economics 2006 assessment of high school seniors) draw heavily on the content found

in these national standards. State authorities have used the national standards in designing their states

educational requirements. Curriculum writers have used the standards throughout their creative work.

Researchers have used the standards in designing an intellectual framework for their studies. In short, the

Voluntary National Content Standards in Economics have become an indispensable element of any informed

undertaking that involves K-12 economic education.

John J. Siegfried


February 2010


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Foreword to the First EditionTe purpose of the Voluntary National Content Standards in Economics is to help raise the quality of

economic education in Americas schools.Standards in economics are for students entering a complex global economy, so that they may fully and

eectively participate in it. Te standards are the result of more than a decade of general concern on the

part of educators and other citizens regarding educational reform in the United States. Te standards are

benchmarks, guides, and concepts that foster and fortify incremental learning experiences. Standards are not

hurdles to be overcome. Tey are signposts to point the way to economic literacy, not to circumscribe it.

Te Voluntary National Content Standards in Economics provide a tool for educators, specifying what

students, kindergarten through grade 12, should learn about basic economics and the economy as they go

through school, so that they will be better-informed workers, consumers and producers, savers and investors,

and most important, citizens.

Te fact that economics is one of nine subject areas in the Goals 2000: Educate America Act of 1994

demonstrates its importance as a core subject in American schools. Te standards are designed purposefullyto advance economic literacy, which is critically important for the future of our students who are our future.

Tere are four attributes of these standards in economics for readers and users to keep in mind:

First, the standards are written for teachers; they have instructional value.

Second, the standards are written for teachers to use in practice; they outline benchmarks, guides to

application, and teaching suggestions and strategies, in the belief that all students can learn and that

learning principles of economics can be enjoyable, not dismal.

Tird, the standards are written for teachers to use to help students learn crucial reasoning and

decision-making skills that will serve them well all of their lives, in all of the many roles that they may

play as responsible and eective participants in the American economic system.

Fourth, the standards are well-written and clear, beneting from the insights and critiques of numerous

educators and economists across the nation; they are a high-quality product that is, made to serve

their purpose, made to last, and made with distinction.

Te standards in economics are commended to all who see measures of attainable knowledge as important

to the growth of individuals and the health of society and who believe with Jeerson that an educated and literate

and, we would now add, economically literate citizenry is essential for democracy to survive and to thrive.

Council for Economic Education

Additional ResourcesOn the Web

For more information on lessons and other educational resources that can be used in

standards-based economics instruction in your classroom, go to the Virtual Economics website at

http://ve.councilforeconed.org and EconEdLink at www.econedlink.org. A web-based version of the National

Content Standards in Economics, 2nd edition is available at www.councilforeconed.org/standards.


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Content

Standard 1: ScarcityStudents will understand that:Prodcive resorces are limied. Terefore, people can no have all he goods and services

hey wan; as a resl, hey ms choose some hings and give p ohers.Students will be able to use this knowledge to:

Idenify wha hey gain and wha hey give p when hey make choices.

Stut . Is playing video games the best use o their time? Is working at a

ast-ood restaurant better than the best alternative job or some other use o their time? Identiying and systematically

comparing alternatives enables people to make more inormed decisions and to recognize ofen overlooked relevant

consequences o choices they or others make.

Some students believe that they can have all the goods and services they want rom their amily or rom the

government because goods provided by amily or by governments are ree. But this view is mistaken. Resources

have alternative uses, even i parents or governments own them. For example, i a city uses land to build a ootball

stadium, the best alternative use o that land must be given up. I additional unds are budgeted or police patrols,

less money is available to hire more teachers. Explicitly comparing the value o alternative opportunities that are

sacriced in any choice enables citizens and their political representatives to weigh the alternatives in order to make

better economic decisions. Tis analysis also makes people aware o the consequences o their actions or themselves

and others, and could lead to a heightened sense o responsibility and accountability.

Benchmarks: Grade 4

At the completion of Grade 4, students willknow that:

1. People make choices becase he ca haveevehig he wa.

2. coomic was ae esies ha ca be saisfeb cosmig a goo (a objec), a sevice (a

acio), o a leise acivi.

3. Peoples choices abo wha goos a seviceso b a cosme eemie how esoces will

be se.

4. Wheeve a choice is mae, somehig is give

p becase esoces ae limie.

5. the oppoi cos o a acivi is he vale ohe bes aleaive ha wol have bee chose

isea. icles wha wol have bee oe wihhe moe spe a he ime a ohe esoces

se i eakig he acivi.

At the completion of Grade 4, students willuse this knowledge to:

1. ei some choices he have mae aexplai wh he ha o make a choice.

2. Mach a lis o was wih he coec exampleo a goo, sevice o leise acivi ha saisfes

each wa.

3. xplai wh a choice ms be mae, whe a

la owe has aleaive ses o he pope.

4. Fom a lis o o os, ask ses o akoe hei peeeces, sae hei fs choice aiei he seco o as wha is give p.

5. descibe a siaio ha eqies a choice, make

a ecisio, a iei he oppoi cos.


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3Cntnt Stndrd 1: SCrCty

PPrtunty CSto evaluate the opportunity cost associated with making a choice, identiy what

would have been gained i the best alternative use o the resources, including time,had been undertaken. When a student chooses to attend a theatrical event, thestudent not only gives up the use o the money spent to purchase the admissionticket but the student also gives up the time spent at the play. I that time wouldhave been spent babysitting, the opportunity cost is the value o the price o the

ticket and the money not earned in babysitting.

Te alternative use or resources also depends on the context in which the choice isbeing made. For example, a choice to attend school may have an opportunity cost othe wages that would be earned i a student entered the workorce instead. But, in a

period o high unemployment (when students may have little else to do), the choiceto attend school may have an opportunity cost o spending time with riends.

nHnCMnt BX

6. Pocive esoces ae he aal esoces,

hma esoces, a capial goos available omake goos a sevices.

7. naal esoces, sch as la, ae gis o a-e; he ae pese wiho hma ieveio.

8. Hma esoces ae he people who o hemeal a phsical wok o poce goos asevices.

9. Capial goos ae goos ha ae poce ase o make ohe goos a sevices.

10. Hma capial ees o he qali o labo

esoces, which ca be impove hogh ives-mes i ecaio, aiig, a healh.

11. Mos people poce a cosme. spoces he help make goos a sevices;

s cosmes he se goos a sevices osais hei was.

6. ei examples o aal esoces, hma

esoces, a capial goos.

7. use a esoce map o a sae o locae exampleso aal esoces.

8. daw pices epeseig hemselves as po-ces. lso, iei examples o hma esoces

se i he pocio o ecaio a hei school.

9. daw a pice epeseig a capial goo se

a school. lso, iei examples o capial goosse o poce a goo o sevice i hei commi.

10. Give examples o how o impove hei hmacapial. xplai how a eache ivess i his o hehma capial.

11. ei people who ae cosmes apovie examples i which ses wee cosmes

o goos a sevices. ei people who aepoces a povie examples o siaios i

which ses helpe poce goos a sevices.


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Benchmarks: Grade 8

At the completion of Grade 8, students will

know the Grade 4 benchmarks for this

standard, and also that:

1. Scaci is he coiio o o beig able o have

all o he goos a sevices ha oe was. exiss becase hma was o goos a sevicesexcee he qai o goos a sevices ha ca

be poce sig all available esoces. Scaciis expeiece b iivials, govemes, a

socieies.

2. Makig goo choices shol ivolve aig ohe expece vale o oe oppoi agais heexpece vale o is bes aleaive.

3. the choices people make have boh pesea e coseqeces.

4. the evalaio o choices a oppoicoss is sbjecive; sch evalaios ie acoss

iivials a socieies.


use this knowledge to:

1. role pla a ci cocil meeig calle o allocae

a bge o $100,000. the cocil wol like ob o ew police cas a $25,000 each a

epai wo seio ciize cees a $50,000 each.xplai wh a choice ms be mae, ecie howhe ci cocil shol allocae he moe i is

bge, escibe he ae-os mae, a ieihe oppoi cos o he ecisio.

2. deemie cieia o selecig a phoe aiei he ae-os mae whe selecig oe

phoe ove aohe.

3. alze he coseqeces o choosig o qischool a iei whe hose coseqeces occ.

4. iviall compae solios o a commopoblem, sch as whee o go o a class ip, a

explai wh solios a oppoi coss ieamog ses.

Benchmarks: Grade 12


know the Grade 4 and Grade 8 benchmarks

for this standard, and also that:

1. Choices mae b iivials, fms, o govemeofcials ae cosaie b he esoces o which

he have access.

2. Choices mae b iivials, fms, ogoveme ofcials oe have log iee

coseqeces ha ca paiall o eiel ose osppleme he iiial eecs o he ecisio.



1. Compae he choices available o high school

seios om amilies wih iee icome levels.xplai how choices will aec he ses lieimeicome.

2. xplai how a high school seios ecisio owok 20 hos pe week ig he school ea

col ece he lieime icome. lso, explai whew highwa coscio ma o ece highwa

cogesio.


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5Cntnt Stndrd 2: dCSn MnG

Students will understand that:Eecive decision making reqires comparing he addiional coss of alernaives wih he

addiional benes. Many choices involve doing a lile more or a lile less of somehing:

few choices are all or nohing decisions.

Students will be able to use this knowledge to:

Make eecive decisions as consmers, prodcers, savers, invesors, and ciizens.

Content

Standard 2: Decision Making

tt t tt tu rom the resources available, people and

organizations must weigh the benets and costs o using their resources to do more o some things, and less o

others. For example, to use their time eectively, students must weigh the additional benets and costs o spendinganother hour studying economics rather than listening to music or talking with riends. School ocials must

decide whether to use some o their unds to buy more books or the library, more helmets or the ootball team,

or more equipment or teachers to use in their classrooms. Company managers and directors must choose which

products to make and whether to increase or decrease the amount they produce. Te President, Congress, and

other government ocials must decide which public spending programs to increase, and which to decrease.

Focusing on changes in benets and comparing them to changes in costs is a way o thinking that distinguishes

economics rom most social sciences. In applying this approach, students should realize that it is impossible to

alter how resources were used in the past. Instead, past decisions only establish the starting points or current

decisions about whether to increase, decrease, or leave unchanged resource levels devoted to dierent activities.

Benchmarks: Grade 4


know that:

1. Choices ivolve geig moe o oe hig bgivig p somehig else.

2. cos is wha o give p whe o ecie o o

somehig. beef is wha saisfes o was.



1. alze how o ivie hei ime o a Saa

aeoo whe he possibiliies ae akig leaveso ea moe, goig o a movie wih ies, ashoppig a he mall wih hei a. Ses will

iei he possible ses o hei ime a explaihow i col be a all-o-ohig ecisio o a

ecisio o o a lile moe o oe acivi a alile less o aohe.

2. is he coss (wha o give p) a beefs obig a pe.


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7Cntnt Stndrd 2: dCSn MnG

4. Coss ha have alea bee ice a

beefs ha have alea bee eceive ae ska ieleva o ecisios abo he e.

5. People someimes ail o ea gais a losses

eqall, placig exa emphasis o losses.

6. Some ecisios ivolve akig isks i ha eihehe beefs o he coss col be ceai. risk

akig caies a cos. Whe isk is pese, hecoss shol be eae as highe ha whe isk is

o pese.

7. risk ca be ece b ivesifcaio.

4. xplai wh he ac ha o los o fs ickeo a pcomig coce is ieleva o whehe o

shol pchase a eplaceme. xplai wh somepeople wol cosie he cos o he los icke i

eciig whehe o pchase aohe icke eve ihe ha he moe o o so.

5. xplai wh some people migh ea $100 oo he see ieel ha $100 ha has beelos o o oes pocke.

6. xplai wh a ivesme ha pas a gaaee$1,000 a ea, is moe esiable o mos people

ha a ivesme ha pas $2,000 a ea wih a50% chace a $0 wih a 50% chace.

7. xplai wh mal s have become apopla ivesme ool. xplai wh i mighmake sese o someoe who sells mbellas o

also sell sa loio.

CMPund ntrSt nd tH ru F 72

Te benets o making a long-term commitment to saving by delaying consumption

are most evident when considering compound interest. Albert Einstein once statedthe most powerul orce in the universe is compound interest. Compound interestis interest that is earned not only on the principal amount invested, but also

on interest already earned.

Consider a one-time investment o $2,000 that earns an annual rate o return o 6 percentover a 45 year period (this is the number o years that a 22 year old college graduate willbe in the work orce beore reaching a normal retirement age o 67). At the end o this45 year period, this $2,000 initial investment will be worth $27,529 [calculated as $2,000(1 + .06)45]. One important lesson o compound interest is to try to save early in lie to

take advantage o accumulations that arise rom compounding.

Te Rule o 72 is a useul tool that can be used to understand compounding.

Dividing 72 by the rate o interest (expressed in percentage terms) approximates thenumber o years that it takes an amount to double in size. So, an investment that isearning 8% will double in size in approximately 9 years, while an investment that

earns 4% will take about 18 years to double in size.

nHnCMnt BX


17/58



know that:

1. no meho o isibig goos a sevicesca sais all was.

2. thee ae iee was o isibe goos a

sevices (b pices, comma, majoi le, coess,oce, fs-come/fs-seve, shaig eqall, loe,

pesoal chaaceisics, a ohes), a hee ae

avaages a isavaages o each.




1. defe iee was o allocaig se imeo classoom compes, iei who gais a

who loses wih each isibio meho, a cocleha o isibio meho saisfes all was.

2. Compae he avaages a isavaages oiee mehos o allocaig vaios goos asevices, sch as cookies, se ime o plago

eqipme ig ecess, elecive class ofces, a

ahleic champioships.

Iu t ut u t - t to determine

what should be produced, how it should be produced, and who will consume it. Most high school students

already understand the major advantages and disadvantages o selling concert tickets using a rst-come/rst-served system, rather than a lottery to select rom among those who applied or tickets. Unortunately, many

students have experienced the use o orce to allocate resources on the school playground. Students also know

that amilies typically use authoritarian systems to decide how resources are used Mom and Dad decide.

Te American economy uses a market system to make many allocation decisions, and it is important or students

to understand why the market system is used so extensively. Students also should be able to compare the

characteristics o a market system with alternatives used more extensively in some other countries. With this

understanding, students can assess the benets and costs o alternative allocation systems when discussing

dicult questions such as how incomes should be divided among people or who should receive a kidney

transplant and who should not.

Benchmarks: Grade 4

Students will understand that:Dieren mehods can be sed o allocae goods and services. People acing individally or

collecively ms choose which mehods o se o allocae dieren kinds of goods and services.


Evalae dieren mehods of allocaing goods and services, by comparing he benes o he

coss of each mehod.

Content

Standard 3:Allocation


18/58

9Cntnt Stndrd 3: Ctn

Benchmarks: Grade 8




1. Scaci eqies he se o some isibio

meho o allocae goos, sevices, a esoces,whehe he meho is selece explicil o o.

2. thee ae esseial ieeces bewee a makeecoom, i which allocaios esl om iivials

makig ecisios as bes a selles, a acomma ecoom, i which esoces ae allocae

accoig o ceal ahoi.

3. People i all ecoomies ms aess hee qes-ios: Wha goos a sevices will be poce?

How will hese goos a sevices be poce?Who will cosme hem?

4. naioal ecoomies va i he exe o whichhe el o goveme iecives (ceal plaig)

a sigals (pices) om pivae makes o allocaescace goos, sevices, a pocive esoces.

5. s cosmes, people se esoces i iee

was o sais iee was. Pocive esocesca be se i iee was o poce iee

goos a sevices.



1. descibe he isibio mehos se o allocae

a vaie o goos, sevices, a esoces sch as,pakig spaces, access o a ew g eame

o cace, seas o a bs, milk, a ickes o apopla a exhibi. the explai wh a isibiomeho is ecessa.

2. Compae he mehos se o allocae wokesposibiliies i homes wih hose se o allocae

wok esposibiliies i bsiess. lso, compae heavaages a isavaages o vaios allocaio

ssems sig as cieia boa social goals sch aseeom, efciec, aiess, a gowh.

3. swe he hee ecoomic qesios while

pocig a simple classoom poc.

4. Compae he peomiace o iee peso allocaio mehos i seveal coies, sch as

noh oea, Chia, Sigapoe, a he uieSaes. repea he execise o a sigle coove ime.

5. is he esoces se o poce some iema iei ohe iems ha col have bee mae

om hese esoces. repea he execise o

hosehol pocio.





1. Compaig he beefs a coss o iee

allocaio mehos i oe o choose he mehoha is mos appopiae o some specifc poblemca esl i moe eecive allocaios a a moe

eecive oveall allocaio ssem.

2. Chagig he isibio o icome o wealh

will case he allocaio o esoces o chage.



1. xamie vaios allocaio mehos ha ae

se i iee coies, o solve a paiclapoblem, a selec he oe ha povies he mos

eecive meho o allocaig esoces, a

explai wh his meho is eecive. lso, assess heeeciveess o vaios mehos o allocaig ogaasplas, hig a fshig liceses, eleciveofces, ime wih a pae, ecaio esoces,

healh cae, a milia sevice.

2. xplai how aisig he Social Seci ax o

wokes i oe o pa highe beefs o eieescases he allocaio o esoces o chage.


19/58


E t t t t people receive rom engaging in more

or less o a particular activity. Understanding rewards and penalties helps people to make the choices they need

to make in order to achieve their goals. Prices, wages, prots, subsidies, and taxes are common economic

incentives. Subsidizing an activity usually leads to more o it being provided; taxing or penalizing an activity

usually leads to less o it being provided.

People requently have good reasons to inuence the behavior o others. For example, businesses try to encourage

people to buy more o their products, workers try to persuade employers to hire them and to pay them higher

wages, and governments try to induce the production and consumption o some products and discourage the

production and consumption o others. o understand or predict behavior o people or organizations, students

must understand the economic incentives these people or organizations ace.

Students will understand that:People sally respond predicably o posiive and negaive incenives.


Idenify incenives ha aec peoples behavior and explain how incenives aec heir

own behavior.

Content

Standard 4: Incentives

BHVr CnMCS

An evolving branch o economic thought merges economics with psychology toreconsider predictions o economic models on topics such as how individuals

respond to economic incentives. While people usually respond to incentives inways predicted by standard economic theory, behavioral research suggests there

can be deviations rom strict patterns o rational behavior. Benchmarks reectingpropositions rom behavioral economics can be ound in Standard 2

(see benchmarks on impatience and on the values placed on gains and losses)and Standard 4 (see benchmark on air treatment).

nHnCMnt BX


20/58

11Cntnt Stndrd 4: nCntVS

Benchmarks: Grade 4


know that:

1. rewas ae posiive iceives ha make peoplebee o.

2. Pealies ae egaive iceives ha makepeople wose o.

3. Boh posiive a egaive iceives aec

peoples choices a behavio.

4. Peoples views o ewas a pealies ie

becase people have iee vales. theeoe,a iceive ca iece iee iivials i

iee was.



1. is examples o ewas ha ae iceives oposiive classoom behavio.

2. is examples o pealies o egaive iceivesha iscoage iappopiae behavio a home.

3. ei examples o how posiive a egaiveiceives aec behavio.

4. ei he iceives ha wol ecoage hem

o ea a book, o e hei liba books oime, o epa moe he boow om he school

caeeia o lch, a o complee hei homewokassigmes o ime; explai wh vaios ses

espo ieel o iceives o o hese higs.lso, explai wh some ses will o exa-cei

wok a some will o.

truSM

An important part o economic understanding is a recognition that people respondto incentives, both costs and benets. Behaving in a manner which is consistent

with sel-interest does not imply that people always act selshly.Many people behave in ways which are motivated by the interests o others or

o society. Such altruistic behaviors are ofen grounded in amilial relationships,such as when a parent rises in the middle o the night to eed a crying baby.

Social norms may promote altruistic behavior among unrelated persons,such as when individuals perorm volunteer activities.

Even in these instances, seemingly altruistic behavior may be motivated by theexpectations o eeling good about ones sel or deeds. I that is the case, the expected

benets may be greater than the expected costs and thus explain the behavior.

nHnCMnt BX


21/58


Benchmarks: Grade 8




1. resposes o iceives ae sall peicable

becase people omall pse hei sel-ieeso eviae om hei sel-iees i cosise was.

2. Chages i iceives sall case people o

chage hei behavio i peicable was.

3. ceives ca be moea o o-moea,o boh.



1. xplai wh he wol be willig o shovel sow

whe empeaes ae below eezig, mow lawswhe hei ies ae goig o a movie, o babsio a weeke eveig isea o speig imehagig o wih ies.

2. Peic how ses s habis will chage ihe gaig ssem chages om lee gaes o

saisaco/saisaco gaig o o gaes.

3. ei he moea a o-moea iceives

elae o akig a ives ecaio class, compleigchoes a home, akig a pa ime job, a obeig

afc laws.





1. cig as cosmes, poces, wokes, saves,

ivesos, a ciizes, people espo o iceivesi oe o allocae hei scace esoces i was

ha povie hem he highes possible e beefs.

2. decisio-makig i small a lage fms, labo

ios, ecaioal isiios, a o-o-pofogaizaios has iee goals a aces ieeles a cosais. these goals, les, a

cosais iece he beefs a coss o hosewho wok wih o o hose ogaizaios, a,

heeoe, hei behavio.

3. People e o espo o ai eame wih aieame, a o ai eame wih ealiaio,

eve whe sch eacios ma o maximize heimaeial wealh.



1. alze compeig viewpois abo he impac

(o cosmes, poces, wokes, saves, aivesos) o a icease i he miimm wage, a

ew ax polic, a a chage i iees aes.

2. Compae a coas he iceives a iivial

migh ace i sevig as a elece ofcial, heowe o a small bsiess, he pesie o a lagecompa, a he ieco o a local uie Wa

ofce i he aemah o hicae evasaio.

3. Povie a example o whe he eclie o

paicipae i a acivi i which he wolohewise have paicipae becase he hoghhe ha bee eae ail.


22/58

13


know that:

1. xchage is aig goos a sevices wih

people o ohe goos a sevices (calle bae)o o moe.

2. the oles om o exchage is bae, he iecaig o goos a sevices bewee people.

3. People volail exchage goos a se-

vices becase he expec o be bee o ae heexchage. this also ma icle he moe iomal

exchages o avos a coesies.



1. ei exchages he have mae a ell

whehe he wee moea o bae exchages.

2. ei ce a hisoical examples o bae

exchages.

3. descibe a ae he have mae, sch as oe

wih baseball cas, sickes, o lch esses, aexplai wh he agee o ae.

A ut t tt t , students usually have learned

to expect that, in most contests when one person or team wins, another person or team must lose. Voluntary

exchanges, on the other hand, are cooperative activities in which both sides expect to gain, and both usually

do. Because all o the parties to a voluntary exchange expect to gain rom trade, institutions that make trading

easier usually improve social welare.

Understanding the win-win nature o voluntary exchange helps students learn that people and organizations trade

with one another only when each party oers something that the other party values more than whatever he or

she has to trade. For example, an employer will hire a student at a wage rate o $8 per hour only i the employer

expects to receive labor services rom the student that are worth at least that much. And the student will

voluntarily work or $8 per hour only i the student values the $8 more than the best alternative use o his or her

time. Te principle that voluntary trade can improve each participants situation applies to all voluntary exchanges,

including trade between people or organizations in dierent parts o the same country, or among people or

organizations in dierent countries.

Benchmarks: Grade 4

Students will understand that:Volnary exchange occrs only when all paricipaing paries expec o gain. Tis is re

for rade among individals or organizaions wihin a naion, and among individals or

organizaions in dieren naions.


Negoiae exchanges and idenify he gains o hemselves and ohers. Compare he benes

and coss of policies ha aler rade barriers beween naions, sch as aris and qoas.

Cntnt Stndrd 5: trd

Content

Standard 5: Trade


23/58


Benchmarks: Grade 8




1. Whe people b somehig, he vale i moe

ha i coss hem; whe people sell somehig, hevale i less ha he pame he eceive.

2. Fee ae iceases wolwie maeialsaas o livig.

3. the gais om ee ae ae o isibeeqall, a some iivials o gops ma

lose moe ha he gai whe ae baies aeece.

4. despie he mal beefs om ae amog

people i iee coies, ma aios emploae baies o esic ee ae o aioal eese

easos, o poec ke isies, o becase somecompaies a wokes ae h b ee ae.

5. mpos ae oeig goos a sevices ha ae

pchase om selles i ohe aios.

6. xpos ae omesic goos a sevices ha aesol o bes i ohe aios.

7. Vola exchage amog people o ogaiza-

ios gives people a boae age o choices i

big goos a sevices.



1. descibe ece moea asacios he have

mae as be o selles. xplai wh he weewillig o ae.

2. ei he e beefs whe a ae baie sch

as sga o aomobile impo qoas is elimiae.

3. xplai how ee ae i he aomobile ismakes cosmes bee o while some ao wok-

es lose hei jobs.

4. ook a hisoical examples o peios whe he

uie Saes has impose ae baies a ex-plai wh he u.S. goveme wol impose ae

baies give he mal beefs o ee ae.

5. xamie labels o pocs i hei homes a

compile a lis o impoe pocs a he co-ies om which he ae impoe.

6. deemie wha majo pocs ae poce ihei commi o sae o expo a he coieso which he ae expoe.

7. descibe how hei ail lives wol be ieei people i he uie Saes i o ae wih

people i ohe coies.





1. mpos ae pai o b expos, savigs o

boowig.

2. Whe impos ae esice b pblic policies,cosmes pa highe pices a job oppoiies

a pofs i expoig fms ma ecease.



1. Paicipae i a aig simlaio whee sesepese people o ogaizaios i ieecoies wih specifc goos o sell a specifc

goos he wa o b; explai how each aio

pas o is impos wih is expos. e coclighe simlaio, ask ses how he migh acqieaiioal impos ae he ha exhase heiexpo evees.

2. alze he poliical a ecoomic implicaioso a popose ba o impoe pocs.


24/58

15Cntnt Stndrd 6: SPCtn


know that:

1. coomic specializaio occs whe people

coceae hei pocio o ewe vaieies ogoos a sevices ha he cosme.

2. divisio o labo occs whe he pocio o a

goo is boke ow io meos sepaae asks,wih iee wokes peomig each ask.

3. Specializaio a ivisio o labo sallicease he pocivi o wokes.

4. Geae specializaio leas o iceasig ie-epeece amog poces a cosmes.



1. name seveal als i he school o commi

who specialize i he pocio o a goo o sevice(e.g., bake, law eoceme ofce, eache, ec.)

a iei ohe goos a sevices ha hese i-ivials cosme b o o poce o hemselves.

2. Paicipae i a simlae assembl lie aiei he sepaae opeaios a he ieeasks ivolve. ei examples o goos poce

i he u.S. sig a assembl lie.

3. Wok iiviall o poce a poc a he

wok as a membe o a small gop o poce hesame poc. xplai wh moe goos sall ae

poce whe each membe o he gop peomsa paicla ask i makig he goo.

4. Compae he exe o specializaio a ie-epeece o a meica am amil i he 19hCe wih a coempoa amil ha opeaes a

cale ach i new Mexico.

E t , and everyone depends on others to produce many o the things he or she

consumes. As uture producers and workers, students should understand that they will earn more by specializing in

doing the things they can do well and that entail the least sacrice in orgone opportunities. Tey also should

understand that specialization can lead to increased production, even when everyone has similar skills and resources,

because concentrating production o some goods or services in one location can sometimes reduce production costs.

Tis understanding will help students appreciate why an economy in which people specialize and trade voluntarily

with one another results in higher overall levels o production and consumption, or individuals, regions, and nations.

Benchmarks: Grade 4

Students will understand that:When individals, regions, and naions specialize in wha hey can prodce a he lowes cos

and hen rade wih ohers, boh prodcion and consmpion increase.


Explain how hey can bene hemselves and ohers by developing special skills and srenghs.

Content

Standard 6: Specialization


25/58


Benchmarks: Grade 8




1. abo pocivi is op pe woke.

2. ike ae amog iivials wihi oe co,ieaioal ae pomoes specializaio aivisio o labo a iceases he pocivi o

labo, op a cosmpio.

3. s a esl o gowig ieaioal ecoomic

ieepeece, ecoomic coiios a policiesi oe aio iceasigl aec ecoomic coiios

a policies i ohe aios.



1. Poce a iem sig a simlae pocio

pocess a compe op pe woke.

2. xplai how he pocess o specializaio aivisio o labo esls i icease pocivi o

labo, op, a oveall cosmpio.

3. alze aa o he kis a vale o goosha Japa, Caaa, Mexico, a Gema expoo he uie Saes a peic he likel eec o

a ecessio i he uie Saes o he ecoomieso hese coies. xplai how a ai o impoe

cacao beas aecs he pocio o chocolaeca i he uie Saes a how i aecs people

i cacao-gowig coies.





1. ivials a aios have a compaaiveavaage i he pocio o goos o sevices i

he ca poce a poc a a lowe oppoicos ha ohe iivials o aios.

2. eaioal ae sems mail om acos ha

coe compaaive avaage, iclig ieaioalieeces i he availabili o pocive esoces

a ieeces i elaive pices.

3. tasacio coss ae coss (o o be cose wih

he pice o he goo o sevice) ha ae associae wih

he pchase o a goo o sevice, sch as he cos olocaig bes o selles, egoiaig he ems o a

exchage, a isig ha he exchage occs o heagee po ems. Whe asacio coss ecease,

ae iceases.

4. the goos o sevices ha a iivial, egio, o

aio ca poce a lowes oppoi cos epeo ma acos (which ma va ove ime), icligavailable esoces, echolog, a poliical a

ecoomic isiios.



1. pply he coceps o opporiy cos ad comparaive

advaage o he ollowig problem: the neherlads caprodce i oe day eiher or drill presses or eigh

embroidered ableclohs. usig he same amo o

resorces, Porgal ca prodce eiher wo drill presses orseve embroidered ableclohs. Which cory shold

specialize i prodcig drill presses ad impor ableclohs,ad why? Which cory shold specialize i prodcig

able clohs ad impor drill presses, ad why?

2. name hee higs, sch as baaas, coee a

calps oil, ha col be poce i he coiealuie Saes, alhogh pocio wol be ve cosl.

xplai i ems o oppoi coss wh he uie Saesis pobabl bee o impoig sch goos.

3. deiy rasacio coss associaed wih he prchase oa good or service. lso, explai why each o he ollowig

ecorages more efcie exchage: (1) rcks ha cacarry larger loads or he same el coss; (2) aomaed

eller machies; ad (3) credi cards.

4. usig a esaig o available esoces,

echolog, a poliical a ecoomic isiios i heu.S. a ohe coies, explai wh he u.S. o logehas a compaaive avaage i he pocio o shoes.


26/58

17


know that:

1. pice is wha people pa whe he b a gooo sevice, a wha he eceive whe he sell agoo o sevice.

2. make exiss wheeve bes a sellesexchage goos o sevices.



1. ei pices he have pai o a hambge,ech ies, a a soa, a pices he haveeceive o sellig lemoae, eeig a eighbos

pe while is owe is o vacaio, o oig ceaihosehol choes.

2. Give examples o makes i which bes aselles mee ace-o-ace a ohe makes iwhich bes a selles eve mee.

I t , t t utt that decides how many dierent kinds o sandwiches

are provided or lunch every day at restaurants and stores, how many loaves o bread are baked, how many toysare produced beore the holidays, or what the prices will be or sandwiches, bread, and toys. Students should

understand that, instead, most prices in market economies are established by interaction between buyers and

sellers.

Understanding how market prices and output levels are determined helps people anticipate market opportunities

and make better choices as consumers and producers. It will also help them realize that market allocations

are impersonal.

Benchmarks: Grade 4

Students will understand that:A marke exiss when byers and sellers inerac. Tis ineracion deermines marke prices

and hereby allocaes scarce goods and services.


Idenify markes in which hey have paricipaed as a byer and as a seller and describe how

he ineracion of all byers and sellers inences prices. Also, predic how prices change

when here is eiher a shorage or srpls of he prodc available.

Cntnt Stndrd 7: MrtS nd PrCS

Content

Standard 7: Markets and Prices


27/58


Benchmarks: Grade 8




1. Make pices ae eemie hogh he big

a sellig ecisios mae b bes a selles.

2. the em elaive pice ees o he pice o oe

goo o sevice compae o he pices o ohegoos a sevices. relaive pices ae he basic

meases o he elaive scaci o pocs whepices ae se b make oces (sppl a ema).

3. the make cleaig o eqilibim pice o a

goo o sevice is he pice a which qai spplieeqals qai emae.

4. a pice is above he make cleaig pice, i

will eveall all, casig selles o poce lessa bes o pchase moe; i i is below hemake cleaig pice, i will eveall ise, casigselles o poce moe a bes o pchase less.

5. exchage ae is he pice o oe aioscec i ems o aohe aios cec. ike

ohe pices, exchage aes ae eemie b heoces o sppl a ema. Foeig exchagemakes allocae ieaioal cecies.



1. Pla a make game i which bes a selles

eemie he make pice o a commo poc,o example whea, apples, o baseballs.

2. xplai wha will happe o he elaive pice oa goo i i becomes iceasigl scace.

3. deemie he make cleaig pice whe givea sppl schele a a ema schele o

apples.

4. ei examples o pocs o which he pice

ell becase selles i o sell all he ha pocea he iiial pice; iei examples o ohe pocso which he pice ose becase cosmes wae

o b moe ha poces wee pocig a heiiial pice.

5. Calclae he ollowig: (1) he Biish pois woh $2.10. How mch wol o have o pa

i gla o a shi ha coss $16.00? (2) heMexica peso is eqal o $0.10 i u.S. ollas, whais he peso eqivale o $15.00? (3) i akes 33

ia pees o b $1.00, how mch is a iasweae pchase o 1,000 pees i u.S. ollas?





1. Make ocomes epe o he esocesavailable o bes a selles, a o goveme

policies.

2. shoage occs whe bes wa o pchase

moe ha poces wa o sell a he pevailig pice.3. spls occs whe poces wa o sell

moe ha bes wa o pchase a hepevailig pice.



1. xplai wha wol happe o esieial hosig

pices i he eeal goveme elimiae axecibili o mogage iees.

2. xplai wh hee is sall a shoage o baeies

i aeas whee oecases peic a hicae.3. xplai wh hee is oe a lae-seaso splso ickes available o he home coess o abaseball eam ha loses mos o is games.


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19Cntnt Stndrd 7: MrtS nd PrCS

4. Shoages o a poc sall esl i piceiceases i a make ecoom; splses sall

esl i pice eceases.

5. Whe he exchage ae bewee wo cecies

chages, he elaive pices o he goos a sevicesae amog coies sig hose cecies chage;

as a esl, some gops gai a ohes lose.

4. xplai wha happes (a wh) o he pice ococe ickes pchase om scalpes whe, a

pevailig pices, ma moe people wa o aehose eves ha he mbe o seas available.

lso explai wha will happe o co pices ig

a sall avoable gowig seaso.

5. use he ollowig sceaios o aalze he eecs

o ae o a chage i exchage aes: oeea, he u.S. olla eqale 150 Japaese e;

i he ollowig ea, he u.S. olla eqale 100e; a i he hi ea, i eqale 125 e. acamea coss 60,000 e a a aio coss 10,000

e: (1) Wha will be he pice i ollas o hesewo pocs i each ea o a meica? (2) Will

a meica wa o b moe o ewe Japaesepocs i ea oe, i ea wo, o i ea hee?

xplai.


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know that:

1. Highe pices o a goo o sevice povieiceives o bes o pchase less o ha goo

o sevice, a o poces o make o sell moeo i. owe pices o a goo o sevice povie

iceives o bes o pchase moe o ha gooo sevice, a o poces o make o sell less o i.



1. Peic how cosmes wol eac i he pice o

pecils ose o $10 each (a explai he peicio).Peic how he wol eac i he pice ell o $.01each (a explai he peicio). xplai how

poces wol eac i each siaio.

Ut t t helps people make better choices as

producers and consumers. It also helps citizens understand the consequences and weigh the costs and benets

o price controls, such as minimum-wage laws and rent ceilings, that set legal minimum or maximum prices

and may result in sustained surpluses or shortages.

Benchmarks: Grade 4

Students will understand that:Prices send signals and provide incenives o byers and sellers. When spply or demand

changes, marke prices adjs, aecing incenives.


Predic how changes in facors sch as consmers ases or prodcers echnology aec prices.

Content

Standard 8: Role of Prices

Benchmarks: Grade 8




1. icease i he pice o a goo o seviceecoages people o look o sbsies, casig

he qai emae o ecease, a vice vesa.this well-esablishe elaioship bewee pice a

qai emae, kow as he law o ema,

exiss as log as ohe acos iecig emao o chage.

2. icease i he pice o a goo o seviceecoages poces o sppl moe, a vice

vesa. this elaioship bewee pice a qaispplie is omall e as log as ohe acos

iecig coss o pocio a sppl o ochage.



1. Sve ses i ohe classes a school egaighow ma glasses o oage jice ses wol

be willig a able o b a vaios pices. alzehe aa o show he elaioship bewee pice a

qai emae. ei he sbsies ses

se whe he pice is highe. xplai wh sbsiesae o ieical o all ses.

2. Sae he mbe o hos spe bab siig hewol be willig a able o sppl a vaios hol

wages. Sae a geealizaio abo he elaioshipamog pice (wage), cos, a qai spplie

om he aa.


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21Cntnt Stndrd 8: r F PrCS

3. Makes ae ieelae; chages i he pice ooe goo o sevice ca lea o chages i pices

o ma ohe goos a sevices.

4. Scace goos a sevices ae allocae i a

make ecoom hogh he iece o pices opocio a cosmpio ecisios.

3. xplai how a ecease i he pice o movieeals col case a ecease i he pice o popcoa movie heaes.

4. xplai he was i which poces a cosmes

chage behavio whe he pice o peas ises owhe gasolie pices all, a wh he behave ihis wa.





1. dema o a poc chages whe hee is a

chage i cosmes icomes, peeeces, he

pices o elae pocs, o i he mbe ocosmes i a make.

2. Sppl o a poc chages whe hee aechages i eihe he pices o he pociveesoces se o make he poc, he echolog

se o make he poc, he pof oppoiiesavailable o poces om sellig ohe pocs,

o he mbe o selles i a make.

3. Chages i sppl o ema case elaive

pices o chage; i , bes a selles ajshei pchase a sales ecisios.

4. Goveme-eoce pice ceiligs se belowhe make-cleaig pice a goveme-eoce

pice oos se above he make-cleaig piceiso pice sigals a iceives o poces

a cosmes. Pice ceiligs ca case pesiseshoages, while pice oos ca case pesisesplses.



1. Peic he chage i ema o a paicla

ba o jeas whe a exesive a campaig

o he ba ages eeages, hei allowacesoble, he pice o ohe pas iceases, o jeasbecome a popla iem amog als.

2. Peic he chages i sppl a make piceo ew cas whe he cos o labo iceases, moe

oboics ae se o poce cas, he pices ocks ise, o whe he mbe o ca maaceseceases.

3. ei pocs se i hosehol pocio

ha have become moe o less expesive (compaeo ohe pocs) as a esl o chages i sppl

a ema a explai how he pice chagesaece pocio a cosmpio ecisios i

he hosehol.

4. descibe wha is likel o happe i he govemeimposes a pice ceilig o gasolie a a pice

oo o milk.


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know that:

1. Compeiio akes place whe hee ae ma

bes a selles o simila pocs.



1. deiy compeiors i heir commiy, sig he

yellow pages o he elephoe book or a ere sie.

Ft- tut tt t t , or give slow, unriendly service, risk losing customers to

competing restaurants that oer lower prices, higher-quality products, and better service. In this way,

competition benets consumers. Understanding the benets o competition and the costs o limiting competition

helps students evaluate public policies that aect the level o competition in various markets. It also helps

students understand their own roles as producers and consumers in a market economy in terms o opportunities

to compete with others and in terms o the limits that competition places on their incomes, career plans, and

what they can buy and consume.

Productivity is a measure o the quantity o goods and services produced or a given amount o resources.

Competition helps improve productivity by orcing all suppliers to be the best that they can be. Productivity

improvements, in turn, oster economic growth.

Benchmarks: Grade 4

Students will understand that:

Compeiion among sellers sally lowers coss and prices, and encorages prodcers o prodce

wha consmers are willing and able o by. Compeiion among byers increases prices and

allocaes goods and services o hose people who are willing and able o pay he mos for hem.


Explain how changes in he level of compeiion in dieren markes can aec price and

op levels.

Content

Standard 9: Competition andMarket Structure

Benchmarks: Grade 8


know the Grade 4 benchmarks for thisstandard, and also that:

1. Selles compee o he basis o pice, poc

qali, csome sevice, poc esig avaie, a aveisig.

2. Compeiio amog sellers resls i lower coss adprices, higher prodc qaliy, ad/or beer csomer

service. Whe compeiio amog sellers is limied,sellers have some corol over he prices hey se.



1. Give examples o pice a o-pice compeiioi he ahleic shoe make.

2. xplai how he opeig o a seco pizza shop

i a small commi aecs pices, pofs, sevice,qali, a choices.


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23Cntnt Stndrd 9: CMPttn nd Mrt StruCtur

3. Compeiio amog bes o a poc eslsi highe poc pices.

3. e plaig seveal os o a make game iwhich he mbe o bes is chage amaicall

i each o, explai he impac o hese chageso pice.





1. the prsi o sel-ieres i compeiive markessally leads o choices ad behavior ha also

promoe he aioal level o well-beig.

2. the level o compeiio i a idsry is aeced

by he ease wih which ew prodcers ca eer heidsry, ad by cosmers iormaio abo he

availabiliy, price ad qaiy o sbsie goodsad services.

3. Some marke srcres are domiaed by large

frms, oe compeig agais oly a ew oher frms.Prices i sch markes may be higher ha hey wold

be i more compeiive markes.

4. Collsio amog byers or sellers redces he level

o compeiio i a marke. Collsio is more difcli markes wih large mbers o byers ad sellers.

5. the irodcio o ew prodcs ad prodciomehods is a impora orm o compeiio adis a sorce o echological progress ad ecoomic

growh.



1. xplai how people moivaed by heir owsel-ieres help marke ecoomies promoe aioal

well-beig hrogh acive compeiio amog byersad sellers.

2. xplai why, i he las e years, here have bee

o u.S. compaies emergig o maacre loco-moives, b may o maacre silk scree t-shirs.

lso, predic wha will happe o prices o ew booksi a acive ere marke or sed books is creaed.

3. valae he impac o he domiaio by a ewfrms i he u.S. cereal marke. deiy oher markes

which are domiaed by a ew large frms.

4. xplai why collsio is more likely o work amogieraioal airlies ha amog u.S. armers ha

prodce whea.

5. Creae a imelie showig oable iovaiopromped by erepreers, corporae research,

ad goverme programs ad wrie a brie essayo heir impac o ecoomic growh, compeiio,

echological progress, ad job opporiies.

Standard 16 (Role o Government and Market Failure) addresses situationsthat can arise when markets are not competitive.

rFrnC BX


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know that:

1. Baks ae isiios whee people save moea ea iees, a whee ohe people boowmoe a pa iees.

2. Savig is he pa o icome o spe o axes ocosmpio.



1. xplai he elaioship bewee savig moea eaig iees a boowig moe a

paig iees, ae paicipaig i a acivi iwhich he ole pla saves a boowes.

2. Pla a bge o a allowace. the bge willicle speig o goos a sevices, chaiableoaios, sales axes, a savig.

Ittut u t . Property rights help insure that peoplebear the costs and reap the benets o their decisions. Property rights and contract enorcement encourage

investment by assuring investors that they will reap the rewards o deerring consumption and assuming risk

i these investments perorm well. Limiting individual liability and allowing people to pool their investment

resources through joint stock corporations also increases investment and uture income.

Other institutions lower the costs o bringing buyers and sellers together. For example, banks match savers with

borrowers; and investment banks match entrepreneurs who organize new rms with investors who provide

the needed unds. Many institutions work to promote the goals o certain interest groups. Labor unions, or

example, increase the negotiating power o workers in their dealings with employers.

Understanding economic institutions and the purposes they serve will help students use institutions more

eectively and help them evaluate proposed new institutions or changes in the existing legal and institutional

environment.

Benchmarks: Grade 4

Students will understand that:Insiions evolve and are creaed o help individals and grops accomplish heir goals.

Banks, labor nions, markes, corporaions, legal sysems, and no-for-pro organizaions

are examples of imporan insiions. A dieren kind of insiion, clearly dened and

enforced propery righs, is essenial o a marke economy.


Describe he roles of varios economic insiions and explain he imporance of propery

righs in a marke economy.

Content

Standard 10: Institutions


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25Cntnt Stndrd 10: nSttutnS

Benchmarks: Grade 8




1. the hosehol is a impoa isiio i

which cosmpio a pocio ake place.

2. Baks a ohe facial isiios chaels om saves o boowes a ivesos.

3. abo ios have iece laws ceae i

make ecoomies a, hogh he pocess ocollecive bagaiig wih emploes, labo ios

epese some wokes i egoiaios ivolvigwages, ige beefs, a wok les.

4. no-o-pof ogaizaios ae esablishe

pimail o eligios, healh, ecaioal, civic, osocial pposes a ae exemp om ceai axes.



1. descibe he impac o hosehols a he wie

ecoom o icease labo oce paicipaio owome.

2. daw a iagam illsaig he ole baks a

ohe facial isiios pla amog saves,boowes, a ivesos.

3. rea abo he esablishme o a labo io

a explai wh i emege, how i iece heu.S. ecoom, a wha pocees i se o gai

beefs o is membes a wokes i geeal.

4. ei a o-o-pof ogaizaio a explai

is cios a is soce o evees.





1. Pope ighs, coac eoceme, saaso weighs a meases, a liabili les aeciceives o people o poce a exchage

goos a sevices.

2. copoaio allows fms o accmlae sfciefacial capial o make lage-scale ivesmes

a achieve ecoomies o scale. copoaio alsoeces he isk o ivesos b limiig sockholesliabili o hei shae o oweship o he copoaio.



1. Peic wha migh happe i hee wee o legalwa o sele boa ispes o i eve sae ha

is ow ssem o weighs a meases. xplai

how sic poce liabili o poc eecsaecs he behavio o cosmes a poces

a how i aecs he pice o a goo o sevice.

2. Pla he ole o a bsiess cosla hie o

avise a paeship o he avaages i colejo b icopoaig; wie a lee oliig hese

beefs o hei clie.


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Students will understand that:Money makes i easier o rade, borrow, save, inves, and compare he vale of goods and

services. Te amon of money in he economy aecs he overall price level. Inaion is

an increase in he overall price level ha redces he vale of money.


Explain how heir lives wold be more dicl in a world wih no money, or in a world where

money sharply los is vale.

Mt u t . Students, however, ofen ail to understand that the real

value o money is determined by the goods and services money can buy. Doubling the amount o money in aneconomy overnight would not, by itsel, make people better o, because there would still be the same amount

o goods and services produced and consumed, only at higher prices. Te use o money in buying and selling

goods and services is important to an economy, however, because as it replaces barter, it makes exchange less

costly. As a result, people are more likely to specialize in what they produce, and then use money to buy whatever

they want to consume. Tis increases the overall levels o production and consumption in a nation.

Understanding what determines the real buying power o money and earnings will help students make better

decisions in their personal and proessional lives. Understanding the importance o money to society will also

help them make more inormed decisions about national policies related to banking, controlling the supply o

money, and ination.

Content

Standard 11: Money and Ination

Additional benchmarks on ination are in Standard 18 (Economic Fluctuations),Standard 19 (Unemployment & Ination), and Standard 20

(Fiscal & Monetary Policy).

rFrnC BX


know that:

1. Moe is ahig wiel accepe as falpame o goos a sevices.

2. Moe (cec, cois, o checks) makes aigeasie b eplacig bae.



1. ei higs ha have bee se as moea iee imes a i iee socieies acoies. xplai wh some higs ca be se

eecivel o moe a some higs cao.

2. is fve goos a sevices he wa, a escibe

was o obaiig hese goos a sevices, wihosig moe. the explai wh sig moe makes

i easie o ge he same fve iems.

Benchmarks: Grade 4


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27Cntnt Stndrd 11: Mny nd nFtn

Benchmarks: Grade 8




1. s a soe o vale, moe makes i easieo people o save a ee cosmpio il

he e.

2. s a i o acco, moe is se o compaehe make vale o iee goos a sevices.

3. Moe ecoages specializaio b eceasig

he coss o exchage.

4. aio eces he vale o moe.



1. demosae hei esaig o moe asa soe o vale i espoig o he ollowig:

whea ame was o save o he fve-ea olaghes college ecaio. Wh is she bee o

sellig he whea o moe a savig he moeha she wol be i she save whea o exchage

o he aghes college iio?

2. xplai he avaages o beig able o semoe o compae pices o a gallo o milk i

hee iee soes as oppose o whe pices aeexpesse as oe gallo o milk eqals 10 pecils,

o 6 apples, o hal o a po o oas bee.3. xplai how lie migh chage o a oco who

specializes as a caiologis, a o ohes i hecommi, i o socie became a bae ecoom.

4. Compae he goceies ha col be pchase

o $10 i 1977 wih hose ha ca be pchaseo $10 oa. xplai how he vale o moe

has chage.





1. the basic moe sppl i he uie Saes

cosiss o cec, cois, a checkig accoeposis.



1. xplai wh eposis i checkig accos aecosiee moe b asses sch as socks abos ae o. lso explai wh a cei ca

shol o be cosiee moe.

3. People cosme goos a sevices, o moe;moe is sel pimail becase i ca be se ob goos a sevices.

4. Poces se aal esoces, hma esoces,a capial goos (o moe) o make goos a

sevices.

5. aio is a icease i mos pices; eaio isa ecease i mos pices.

3. decie whehe he wol ahe have a sicasell o moe o oe ll o oo whe sae oa esee isla, a explai hei aswe.

4. xplai wh, whe give moe, he ae ableo poce pape weighs o sell a he ohcomig

school ca ai less he exchage he moe opocive esoces.

5. deemie i which eas iaio occe givehe pices o a make baske o goos a sevices

o hee iee eas.


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29

Itt t u t o individuals, households, rms and government

agencies.

It is important or students to understand the incentive eects o interest rates. Interest payments compensatesavers or postponing current consumption; they compensate lenders or letting others use their resources and

the risk that borrowers might deault on their loan.

Benchmarks: Grade 8

Students will understand that:Ineres raes, adjsed for inaion, rise and fall o balance he amon saved wih he amon

borrowed, which aecs he allocaion of scarce resorces beween presen and fre ses.


Explain siaions in which hey pay or receive ineres, and explain how hey wold reac o

changes in ineres raes if hey were making or receiving ineres paymens.

Cntnt Stndrd 12: ntrSt rtS

Content

Standard 12: Interest Rates


know that:

1. iees ae is a pice o moe ha is booweo save.

2. ike ohe pices, iees aes ae eemie bhe oces o sppl a ema.



1. ei he ce aes o iees o iee

kis o savigs ismes a iee kis oloas. xplai wh hese aes ie.

2. deemie he iees ae o 30-ea fxe-aecoveioal home mogages ove he las 15eas a explai wh his ae ose a ell.





1. the eal iees ae is he omial o ce

make iees ae mis he ae o iaio.

2. Highe eal iees aes icease he ewas osavig a make boowig moe expesive.



1. Collec aa o he ae o iaio a ie-

es aes o vaios kis o loas a savigsismes ove he pas 15 eas. usig hisiomaio, esimae he eal ae o iees ihese iee eas.

2. Collec aa o iees aes, he ae o iaio,a ew hosig sas ove he pas 25 eas. Sae

how chages i eal iees aes aec peoplesecisios o boow i oe o b a hose.


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3. real iees aes omall ae posiive becase

people ms be compesae o eeig he seo esoces om he pese io he e.

4. riskie loas comma highe iees aes ha

sae loas becase o he geae chace o eal

o he epame o a isk loa.

5. Highe eal iees aes ece bsiessivesme speig a cosme speig o

hosig, cas, a ohe majo pchases.

6. real iees aes ise a all o b

national econ social standards

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