national econ social standards
TRANSCRIPT
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VoluntarynationalContEnt
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Voluntary
nationalContEnt
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ii Voluntary national Content StandardS in eConoMiCS
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
Vanderbilt University
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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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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v
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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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
Vanderbilt University
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.
At the completion of Grade 8, students will
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
At the completion of Grade 12, students will
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.
At the completion of Grade 12, students will
use this knowledge to:
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
At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
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At the completion of Grade 4, students will
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.
At the completion of Grade 8, students will
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
Evalae dieren mehods of allocaing goods and services, by comparing he benes o he
coss of each mehod.
Content
Standard 3:Allocation
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9Cntnt Stndrd 3: Ctn
Benchmarks: Grade 8
At the completion of Grade 8, students will
know the Grade 4 benchmarks for this
standard, and also that:
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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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.
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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.
Students will be able to use this knowledge to:
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).
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Benchmarks: Grade 4
At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
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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. 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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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.
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At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
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
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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. 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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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.
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15Cntnt Stndrd 6: SPCtn
At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
Explain how hey can bene hemselves and ohers by developing special skills and srenghs.
Content
Standard 6: Specialization
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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. 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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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.
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At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
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
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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. 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.
At the completion of Grade 8, students will
use this knowledge to:
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?
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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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At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
Predic how changes in facors sch as consmers ases or prodcers echnology aec prices.
Content
Standard 8: Role of Prices
Benchmarks: Grade 8
At the completion of Grade 8, students will
know the Grade 4 benchmarks for this
standard, and also that:
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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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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At the completion of Grade 4, students will
know that:
1. Compeiio akes place whe hee ae ma
bes a selles o simila pocs.
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
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
At the completion of Grade 8, students will
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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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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At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
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
At the completion of Grade 8, students will
know the Grade 4 benchmarks for this
standard, and also that:
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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
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
At the completion of Grade 4, students will
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.
At the completion of Grade 4, students will
use this knowledge to:
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
At the completion of Grade 8, students will
know the Grade 4 benchmarks for this
standard, and also that:
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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 4 and Grade 8 benchmarks
for this standard, and also that:
1. the basic moe sppl i he uie Saes
cosiss o cec, cois, a checkig accoeposis.
At the completion of Grade 12, students will
use this knowledge to:
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.
Students will be able to use this knowledge to:
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
At the completion of Grade 8, students will
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.
At the completion of Grade 8, students will
use this knowledge to:
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.
Benchmarks: Grade 12
At the completion of Grade 12, students will
know the Grade 8 benchmarks for this
standard, and also that:
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.
At the completion of Grade 12, students will
use this knowledge to:
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