Voluntary National Content Voluntary National Content Standards For EconomicsStandards For Economics

Presented by Joe LockerdPresented by Joe Lockerd

Introduction to StandardsIntroduction to Standards

Endorsed by the following organizationsEndorsed by the following organizations the Foundation for Teaching Economics the Foundation for Teaching Economics the NCEE and its network of affiliated councils and the NCEE and its network of affiliated councils and

centers centers the National Association of Economic Educators the National Association of Economic Educators the American Economic Association's Committee on the American Economic Association's Committee on

Economic Education Economic Education

Purpose is to guide Economic instruction in Purpose is to guide Economic instruction in American schools.American schools.

Standard 1: ScarcityStandard 1: Scarcity

Productive resources are limited. Productive resources are limited. Therefore, people cannot have all the Therefore, people cannot have all the goods and services they want; as a result, goods and services they want; as a result, they must choose some things and give up they must choose some things and give up others. others.

Standard 2: Cost/BenefitStandard 2: Cost/Benefit

Effective decision making requires Effective decision making requires comparing the additional costs of comparing the additional costs of alternatives with the additional benefits. alternatives with the additional benefits. Most choices involve doing a little more or Most choices involve doing a little more or a little less of something; few choices are a little less of something; few choices are all-or-nothing decisions. all-or-nothing decisions.

Standard 3: Methods for AllocationStandard 3: Methods for Allocation

Different methods can be used to allocate Different methods can be used to allocate goods and services. People, acting goods and services. People, acting individually or collectively through individually or collectively through government, must choose which methods government, must choose which methods to use to allocate different kinds of goods to use to allocate different kinds of goods and services. and services.

Standard 4: IncentivesStandard 4: Incentives

People respond predictably to positive and People respond predictably to positive and negative incentives.negative incentives.

Standard 5: Voluntary ExchangeStandard 5: Voluntary Exchange

Voluntary exchange occurs only when all Voluntary exchange occurs only when all participating parties expect to gain. This is participating parties expect to gain. This is true for trade among individuals or true for trade among individuals or organizations within a nation, and among organizations within a nation, and among individuals or organizations in different individuals or organizations in different nations. nations.

Standard 6: SpecializationStandard 6: Specialization

When individuals, regions, and nations When individuals, regions, and nations specialize in what they can produce at the specialize in what they can produce at the lowest cost and then trade with others, lowest cost and then trade with others, both production and consumption both production and consumption increase. increase.

Standard 7: MarketsStandard 7: Markets

Markets exist when buyers and sellers Markets exist when buyers and sellers interact. This interaction determines interact. This interaction determines market prices and thereby allocates market prices and thereby allocates scarce goods and services. scarce goods and services.

Standard 8: PricesStandard 8: Prices

Prices send signals and provide incentives Prices send signals and provide incentives to buyers and sellers. When supply or to buyers and sellers. When supply or demand changes, market prices adjust, demand changes, market prices adjust, affecting incentives. affecting incentives.

Standard 9: CompetitionStandard 9: Competition

Competition among sellers lowers costs Competition among sellers lowers costs and prices, and encourages producers to and prices, and encourages producers to produce more of what consumers are produce more of what consumers are willing and able to buy. Competition willing and able to buy. Competition among buyers increases prices and among buyers increases prices and allocates goods and services to those allocates goods and services to those people who are willing and able to pay the people who are willing and able to pay the most for them. most for them.

Standard 10: Financial InstitutionsStandard 10: Financial Institutions

Institutions evolve in Institutions evolve in market economies to help market economies to help individuals and groups individuals and groups accomplish their goals. accomplish their goals. Banks, labor unions, Banks, labor unions, corporations, legal corporations, legal systems, and not-for-systems, and not-for-profit organizations are profit organizations are examples of important examples of important institutions. A different institutions. A different kind of institution, clearly kind of institution, clearly defined and enforced defined and enforced property rights, is property rights, is essential to a market essential to a market economy. economy.

Standard 11: Standard 11:

Money makes it easier to trade, borrow, Money makes it easier to trade, borrow, save, invest, and compare the value of save, invest, and compare the value of goods and services. goods and services.

Standard 12: Interest RatesStandard 12: Interest Rates

Interest rates, adjusted for inflation, rise Interest rates, adjusted for inflation, rise and fall to balance the amount saved with and fall to balance the amount saved with the amount borrowed, thus affecting the the amount borrowed, thus affecting the allocation of scarce resources between allocation of scarce resources between present and future uses. present and future uses.

Standard 13: IncomeStandard 13: Income

Income for most people is determined by Income for most people is determined by the market value of the productive the market value of the productive resources they sell. What workers earn resources they sell. What workers earn depends, primarily, on the market value of depends, primarily, on the market value of what they produce and how productive what they produce and how productive they are. they are.

Standard 14: EntrepreneursStandard 14: Entrepreneurs

Entrepreneurs are people who take the Entrepreneurs are people who take the risks of organizing productive resources to risks of organizing productive resources to make goods and services. Profit is an make goods and services. Profit is an important incentive that leads important incentive that leads entrepreneurs to accept the risks of entrepreneurs to accept the risks of business failure. business failure.

Standard 15: InvestmentStandard 15: Investment

Investment in Investment in factories, machinery, factories, machinery, new technology, and new technology, and the health, education, the health, education, and training of people and training of people can raise future can raise future standards of living. standards of living.

Standard 16: GovernmentStandard 16: Government

There is an economic role for government There is an economic role for government to play in a market economy whenever the to play in a market economy whenever the benefits of a government policy outweigh benefits of a government policy outweigh its costs. Governments often provide for its costs. Governments often provide for national defense, address environmental national defense, address environmental concerns, define and protect property concerns, define and protect property rights, and attempt to make markets more rights, and attempt to make markets more competitive. Most government policies competitive. Most government policies also redistribute income. also redistribute income.

Standard 17: DefecitsStandard 17: Defecits

Costs of government policies sometimes Costs of government policies sometimes exceed benefits. This may occur because exceed benefits. This may occur because of incentives facing voters, government of incentives facing voters, government officials, and government employees, officials, and government employees, because of actions by special interest because of actions by special interest groups that can impose costs on the groups that can impose costs on the general public, or because social goals general public, or because social goals other than economic efficiency are being other than economic efficiency are being pursued. pursued.

Standard 18: National EconomyStandard 18: National Economy

A nation's overall levels of income, A nation's overall levels of income, employment, and prices are determined by employment, and prices are determined by the interaction of spending and production the interaction of spending and production decisions made by all households, firms, decisions made by all households, firms, government agencies, and others in the government agencies, and others in the economy. economy.

Standard 19:UnemploymentStandard 19:Unemployment

Unemployment imposes Unemployment imposes costs on individuals and costs on individuals and nations. Unexpected nations. Unexpected inflation imposes costs on inflation imposes costs on many people and benefits many people and benefits some others because it some others because it arbitrarily redistributes arbitrarily redistributes purchasing power. By purchasing power. By creating uncertainty about creating uncertainty about future prices, inflation can future prices, inflation can reduce the rate of growth reduce the rate of growth of national living of national living standards. standards.

Standard 20: Budgetary Standard 20: Budgetary Policy/Monetary Policy Policy/Monetary Policy

Federal government budgetary policy and Federal government budgetary policy and the Federal Reserve System's monetary the Federal Reserve System's monetary policy influence the overall levels of policy influence the overall levels of employment, output, and prices. employment, output, and prices.

ConclusionConclusion

The preceding standards are currently The preceding standards are currently being used in schools throughout the being used in schools throughout the country to teach economics.country to teach economics.

These standards communicate only the These standards communicate only the basic principles of economics.basic principles of economics.