Focus: Understanding Economics in Civics and Government

National Standards in Economics

Below are the National Standards in Economics that most closely relate to the following lesson.

Grades: 9-12

Standard: 4

Grades: 4-12

Incentives
Students will understand that: People usually respond predictably to positive and negative incentives.
Students will be able to use this knowledge to: Identify incentives that affect people's behavior and explain how incentives affect their own behavior.

Standard: 2

Grades: 4-12

Decision Making
Students will understand that: Effective decision making requires comparing the additional costs of alternatives with the additional benefits. Many choices involve doing a little more or a little less of something: few choices "are all or nothing" decisions.
Students will be able to use this knowledge to: Make effective decisions as consumers, producers, savers, investors, and citizens.

Standard: 3

Grades: 4-12

Allocation
Students will understand that: Different methods can be used to allocate goods and services. People acting individually or collectively must choose which methods to use to allocate different kinds of goods and services.
Students will be able to use this knowledge to: Evaluate different methods of allocating goods and services, by comparing the benefits to the costs of each method.

Standard: 14

Grades: 4-12

Entrepreneurship
Students will understand that: 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.
Students will be able to use this knowledge to: Identify the risks and potential returns to entrepreneurship, as well as the skills necessary to engage in it. Understand the importance of entrepreneurship and innovation to economic growth, and how public policies affect incentives for and, consequently, the success of entrepreneurship in the United States.

Standard: 5

Grades: 4-12

Trade
Students will understand that: Voluntary exchange occurs only when all participating parties expect to gain. This is true for trade among individuals or organizations within a nation, and among individuals or organizations in different nations.
Students will be able to use this knowledge to: Negotiate exchanges and identify the gains to themselves and others. Compare the benefits and costs of policies that alter trade barriers between nations, such as tariffs and quotas.

Standard: 11

Grades: 4-12

Money and Inflation
Students will understand that: Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services. The amount of money in the economy affects the overall price level. Inflation is an increase in the overall price level that reduces the value of money.
Students will be able to use this knowledge to: Explain how their lives would be more difficult in a world with no money, or in a world where money sharply lost its value.

Standard: 6

Grades: 4-12

Specialization
Students will understand that: 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.
Students will be able to use this knowledge to: Explain how they can benefit themselves and others by developing special skills and strengths.

Standard: 10

Grades: 4-12

Institutions
Students will understand that: Institutions evolve and are created to help individuals and groups accomplish their goals. Banks, labor unions, markets, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy.
Students will be able to use this knowledge to: Describe the roles of various economic institutions and explain the importance of property rights in a market economy.

Standard: 1

Grades: 4-12

Scarcity
Students will understand that: Productive resources are limited. Therefore, people cannot have all the goods and services they want; as a result, they must choose some things and give up others.
Students will be able to use this knowledge to: Identify what they gain and what they give up when they make choices.

Standard: 17

Grades: 4-12

Government Failure
Students will understand that: Costs of government policies sometimes exceed benefits. This may occur because of incentives facing voters, government officials, and government employees, because of actions by special interest groups that can impose costs on the general public, or because social goals other than economic efficiency are being pursued.
Students will be able to use this knowledge to: Identify some public policies that may cost more than the benefits they generate, and assess who enjoys the benefits and who bears the costs. Explain why the policies exist.

Standard: 8

Grades: 4-12

Role of Prices
Students will understand that: Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives.
Students will be able to use this knowledge to: Predict how changes in factors such as consumers' tastes or producers' technology affect prices.

Standard: 12

Grades: 4-12

Interest Rates
Students will understand that: Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, which affects the allocation of scarce resources between present and future uses.
Students will be able to use this knowledge to: Explain situations in which they pay or receive interest, and explain how they would react to changes in interest rates if they were making or receiving interest payments.