Social Studies Curriculum

Economics Framework

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Economics Course

Course Description

This course is designed to teach students economics concepts and principles and to introduce them to important economic institutions.  Students will learn to apply economic reasoning to their lives as citizens, consumers, workers, and producers.

Course Goals

Through this course students will:

1. Understand the fundamental economic principles and concepts of microeconomics, macroeconomics, and international economics.
2. Understand the roles and interaction of the individual, government, and economic institutions in a market economy.
3. Develop critical thinking skills and how to apply fundamental economic concepts to their lives and important economic issues.
4. Learn and apply measurement concepts and methods such as ratios, percentage, index numbers, averages, charts, graphs, and tables.
5. Become economically literate participants in the local, national, and global economies.

Course Standards and Objectives

In Economics, students will:

Standard 1: Scarcity and Choice

1. Understand that productive resources are limited. Therefore, people can not have all the goods and services they want; as a result, they must choose some things and give up others.
2. Explain why individuals, governments, and societies experience scarcity.
3. Explain why individuals, governments, and societies must choose how to allocate their limited resources.

Standard 2: Opportunity Cost and Trade-offs

1. Understand that effective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something: few choices are all or nothing decisions.
2. Define and give examples of opportunity costs.
3. Discuss the production tradeoffs which face societies using the Production Possibilities Frontier.

Standard 3: Economic Systems

1. Understand that different methods can be used to allocate goods and services.
2. Understand that people acting individually or collectively through government must choose which method to use to allocate different kinds of goods and services.
3. Understand that a capitalist economic system is defined by the existence of profits, prices that are determined by the forces of supply and demand, and private property rights.
4. Compare and contrast the ways goods and services are allocated differently by traditional, command and market economies.

Standard 4: Economic Incentives

1. Understand that people respond predictably to positive and negative incentives.
2. Understand that entrepreneurs are people who take risks of organizing productive resources to make goods and services. Profit is an important incentive that leads entrepreneurs to accept the risks of business failures.
3. List costs and benefits in particular situations and make predictions given changes in incentives.
4. Explain the importance of prices, the incentive of profits and existence of property rights in a market economy.

Standard 5: Economic Institutions

1. Understand that institutions evolve in market economies to help individuals and groups accomplish their goals. Banks, labor unions, corporations, legal systems, and not-for-profit organizations are examples of important institutions.
2. List ways that private institutions such as banks, unions, or corporations influence resource allocation in a market economy.
3. List ways that public institutions such as the Federal Reserve, governmental regulatory agencies, and laws influence resource allocation in a market economy.
4. Explain the role of an important institution in making trading easier and describe how this improves social welfare.

Standard 6: Exchange, Money, and Interdependence

1. 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 usually among individuals or organizations in different nations.
2. Explain money's role as a medium of exchange, a store of value, and a standard of value.
3. Understand that money makes it easier to trade, borrow, save, invest, and compare the value of goods and services.
4. Describe how people gain from the voluntarily exchange of goods and services.
5. Identify ways that free trade increases the material standard of living.

Standard 7: Markets and Prices

1. Markets exist when buyers and sellers interact. This interaction determines market prices and thereby allocates scarce goods and services.
2. Explain how the interaction of buyers and sellers determines price in a particular situation.
3. Explain the role of price in allocating resources to different goods & services.
4. Compare and contrast other methods for allocating resources with the use of market prices.

Standard 8: Supply and Demand

1. Understand that prices send signals and provide incentives to buyers and sellers.
2. Understand that when supply or demand changes, market prices adjust, affecting incentives.
3. Distinguish between demand and quantity demanded; and supply and quantity supplied.
4. Describe the reasons for changes in demand and supply.
5. List examples of products with a highly elastic demand.
6. Describe the effect of price ceilings and price floors on supply and demand.
7. Predict changes in real world markets using supply and demand analysis.
8. Create and interpret graphs of supply and demand.

Standard 9: Competition and Market Structure

1. Understand that competition among sellers lowers costs and prices and encourages producers to produce more of what consumers are willing and able to buy.
2. Understand that competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them.
3. Discuss the element of risk in creating a new business.
4. Explain the role of an entrepreneur in the market economy.
5. Provide an example and discuss the significance of a particular entrepreneur in US history. Define barriers to entry and identify particular real world examples.
6. Explain why new firms enter an industry.
7. Use supply and demand curves to show the effect when new firms enter an industry.
8. List the advantages and disadvantages of proprietorship, partnership, and corporation as types of business organization.
9. List the characteristics and give examples of oligopolistic, monopolistic, competitive, and monopolistic competitive industries.

Standard 10: Income Distribution

1. Understand that income for most people is determined by the market value of the productive resources they sell.
2. Understand that what workers earn depends, primarily, on the market value of what they produce and how productive they are.
3. List reasons for differences in income between occupations.

Standard 11: Market Failures

1. Understand that market failures occur when there is inadequate competition, lack of access to reliable information, resource immobility, externalities, and the need for public goods. An example of market failure is pollution.
2. Define and give examples of positive and negative externalities.
3. Show how a particular type of market failure affects the results of market allocation.
4. Describe the Tragedy of the Commons and apply the concept to Alaska resources.

Standard 12: Role of Government

1. Understand that there is an economic role for government in a market economy whenever the benefits of government policy outweigh the costs.
2. Understand that governments often provide schools, transportation, national defense, and address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Government policies also redistribute income.
3. 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.
4. Explain how governments provide the framework of the market by defining and enforcing property rights.
5. List the costs and benefits of a particular governmental function.
6. List government functions that limit externalities, provide public goods, redistribute income, and promote competition.
7. Define and give examples of public goods.
8. Discuss the alternative views about the effects of fiscal policy on the US economy.

Standard 13: Gross Domestic Product

1. Understand that Gross Domestic Product (GDP) is a measure of the total dollar amount of final goods and services produced in the domestic economy in one year. It is the sum of personal consumption, government spending, business investment and net exports.
2. Define GDP and identify its components.
3. Explain the limits of GDP as a measure of social welfare.
4. Explain difference between nominal and real GDP.
5. Predict the effects that changes in the quantity and quality of resources, technology, institutions and laws will have on potential GDP.

Standard 14: Aggregate Supply and Aggregate Demand

1. Understand that a nation's overall level of income, employment, and prices are determined by the interaction of spending and production decisions made by households, firms, government agencies, and others in the economy.
2. Describe the circular flow of income.

Standard 15: Unemployment

1. Understand that unemployment imposes costs on individuals and nations.
2. Understand that the unemployment rate is the number of people who are unemployed expressed as a percentage of the labor force. Significant unemployment implies that the nation is not using its scarce resources as efficiently as possible.
3. Describe the changes in unemployment and inflation over the business cycle.
4. List the costs of unemployment to individuals and the nation.
5. Describe the difference between structural, frictional, and demand deficient (cyclical) unemployment.

Standard 16: Inflation and Deflation

1. Understand that inflation is sustained increase in the general level of prices, while deflation is a sustained decrease in the general level of prices.
2. Understand that unexpected inflation or deflation imposes costs on many people and benefits on some others because it arbitrarily redistributes purchasing power.
3. Understand that price instability can reduce the rate of growth of national living standards because individuals and organizations use resources to protect themselves against the uncertainty of future prices.
4. Explain how inflation reduces the value of money, financial assets, and income.
5. Identify ways some people benefit from inflation while others lose.
6. List factors that lead to a high rate of inflation and methods used to attempt to control it.

Standard 17: Savings and Investment

1. 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.
2. Explain how changes in interest rates allocate resources between the present and future.
3. Identify ways to invest in people and explain how human capital investment increases a nation's income. (17)

Standard 18: Monetary Policy

1. Understand that monetary policy influences the overall level of employment, output, and prices.
2. Understand that the Federal Reserve System, the nation's central bank, conducts monetary policy in the US.
3. Describe the role of central banking and the Federal Reserve as the central bank of the U.S.
4. Identify the three means by which the Federal Reserve influences money supply. Explain the effects of changes in the money supply on the economy.

Standard 19: Fiscal Policy

Understand that fiscal policy: taxation and government spending decisions made by the Executive and Legislative branches influence the overall levels of employment, output, and prices.

Standard 20: Productivity

1. Understand that investment in factories, machinery, new technology, and in the health, education, and training of people can raise future standards of living.
2. Describe the ways hiring one more worker contributes to a firm's revenue.
3. Describe the economic consequences of a particular new technology.

Standard 21: Economic Growth

1. Understand that economic growth is a sustained rise in the production of goods and services.
2. Understand that economic growth is the result of an increase in the stock of resources and improvements in the technology and human capital.
3. Identify the role of improved technology in the long term growth of the economy.
4. Describe the relationship between governmental policy (i.e. changing the tax rate of capital gains) and economic growth.
5. Distinguish between economic growth and economic development.
6. Explain how economic growth results from the increase in the stock of resources, improvements in technology, increased human capital, and changes in laws, institutions and traditions that promotes efficiency.

Standard 22: Absolute and Comparative Advantage and Barriers to Trade

1. 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.
2. Explain how specialization increases the output for people and nations that trade.
3. Define opportunity cost of specialization in specific cases.
4. Discuss the difference between absolute and comparative advantage.
5. Identify goods and services for which Alaska has comparative advantage.
6. Understand that international trade results in increased global intradependence.

Standard 23: Exchange Rates and the Balance of Power

1. Understand that the exchange rate between two nations' currencies is determined by their balance of trade in goods, services, and assets.
2. Understand that exchange rates are also affected by expectations regarding price levels in various countries.
3. Compare the benefits and costs of fixed or floating exchange rates.
4. Calculate the price of US goods in another currency at a given exchange rate.
5. Predict the effects on the dollar price of German marks of rapid growth in the US economy.

Standard 24: International Aspects of Economic Development

1. Understand that economic development is a sustained expansion of a nation's standard of living.
2. Understand that differences in the level of economic development between nations are determined by each nation's government policies, institutions, and utilization of resources.

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