"Essential of Economics"
from the Foundation of Economic Education
Sea Change: How a New Economics Went Mainstream, Roosevelt Institute (November 16, 2023)
- Rather than worrying about spending too much—as policymakers did when they crafted a response to the Great Recession—in 2021, policymakers decided that going too small was a bigger risk.
- They prioritized getting money in people's pockets and workers back into jobs instead of stabilizing the financial sector.
Buying into Dominant Ideas about Wealth and Poverty: An Examination of U.S. and Canadian Financial Literacy Standards. Teachers College Record (March 2020).
- The analysis revealed that, overall, financial literacy standards framed financial wellbeing as a personal doing while neglecting to consider the broader social, economic, and political forces influencing financial outcomes.
- This research demonstrates how financial literacy discourses, rooted in ideologies of merit, often tell an incomplete story about the origins and determinants of both wealth and poverty.
Economics Content Standards
Topic 1: Scarcity and Economic Reasoning
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 various economic systems (traditional, market, command, mixed) try to answer the questions: What to produce? How to produce it? And for whom to produce?
8. Describe how clearly defined and enforced property rights are essential to a market economy.
9. Use a productive possibilities curve to explain the concepts of choice, scarcity, opportunity costs, tradeoffs, unemployment, productivity, and growth.
Topic 2: Supply and Demand
1. Define supply and demand
2. Describe the roles of buyers and sellers in determining 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
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 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 the ways 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 workers are determined by the market value of the product produced and workers' productivity.
Topic 4: The Role of Government
1. Explain how government responds to perceived social needs by providing public goods and services.
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.
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 of social or political goals other than economic efficiency being pursued.
7. Predict how changes in federal spending and taxation would affect budget deficits and surpluses and the national debt.
8. Define and explain fiscal and monetary policy.
9. Analyze how 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
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 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
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 function 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
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.
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