VOLUNTARY NATIONAL CONTENT STANDADS IN ECONOMICS BY: Lindsay Jett November 3, 2003

11/3/03Lindsay Jett2 Reasons for Standards Every high school student needs to be aware of what is going on in the economy. It affects everyone and without this knowledge it will be difficult to make informed decisions about personal choices, business decisions, and even daily consumption. Also, economics is always a large part of any government platform and without general knowledge it will be hard to do anything as simple as vote.

Microeconomics Standards 1-4 are very much concerned with microeconomics- the study of firms in a large aggregate economy. It includes the concepts of scarcity and decision making. For instance: Standard 1:Standard 1: Productive resources are limited. Standard 2:Standard 2: Effective decision making requires comparing the additional costs of alternatives with the additional benefits Standard 3:Standard 3: Different methods can be used to allocate goods and services Standard 4:Standard 4: People respond predictably to positive and negative incentives.

11/3/03Lindsay Jett4 Trade Because goods are scarce, people must trade to get what they want and increase their well-being. Also, when people work in their own self interest, they increase both their well-being and society’s. Standard 5: Voluntary exchange occurs only when all participating parties expect to gain.Standard 5: Standard 6: 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 6: Standard 7: Markets exist when buyers and sellers interact.Standard 7: Standard 11: Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services.Standard 11:

Investment and Interest Rates Most people don’t realize that money today is worth more then money tomorrow or if they do know, they don’t think about it in terms of the choices they make. This is the concept of time value of money and it has much to do with every day decisions. For instance, everything you do has a cost both direct (money) and indirect (opportunity cost). Standard 12:Standard 12: Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, thus affecting the allocation of scarce resources between present and future uses. Standard 14:Standard 14: Entrepreneurs are people who take the risks of organizing productive resources to make goods and services. Standard 15:Standard 15: Investment in factories, machinery, new technology, and the health, education, and training of people can raise future standards of living.

Market Equilibrium Markets automatically move towards equilibrium. If price is to high or low, consumers don’t buy and this upward or downward pressure pushes price towards equilibrium. Standard 8:Standard 8: Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives. Standard 9:Standard 9: Competition among sellers lowers costs and prices, and encourages producers to produce more of 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.

11/3/03Lindsay Jett7 Macroeconomics This involves the economy on a much bigger scale then microeconomics. It is important to know that government does play a role and that a lot of policies enacted by the government have to do with lobbying by specific groups of people. Standard 16: There is an economic role for government to play in a market economy whenever the benefits of a government policy outweigh its costs.Standard 16: Standard 17: Costs of government policies sometimes exceed benefits.Standard 17: Standard 18: A nation's overall levels of income, employment, and prices are determined by the interaction of spending and production decisions made by all households, firms, government agencies, and others in the economy.Standard 18: Standard 19: Unemployment imposes costs on individuals and nations.Standard 19: Standard 20: Federal government budgetary policy and the Federal Reserve System's monetary policy influence the overall levels of employment, output, and prices.Standard 20: