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ECONOMICS Curriculum Framework

Scarcity and Economic Reasoning


Students will understand that productive resources are limited; therefore, people cannot have all the goods and services
they want. As a result, they must choose some things and give up others.

Standard Essential Content Resources
E.1 Define each of the
productive resources (natural,
human, capital) and explain why
they are necessary for the
production of goods and
services. (E)

Natural Resources: anything found in nature; need
raw materials in the production process for creating
new tools and mfg. new products.
Human Resources: labor that is utilized in
implementing the production process
Capital: tools that are necessary for the creating
new goods and services.
Differences:
http://smallbusiness.chron.co
m/differences-capital-
resource-human-resource-
natural-resource-60792.html
Glencoe pg. 8

E.2 Explain how consumers and
producers confront the condition
of scarcity, by making choices
that involve opportunity costs
and tradeoffs. (E)

Scarcity is the basic problem in Economics in that
consumers evaluate decisions based on wants/needs,
and the availability of resources.
Each economic decision is accompanied by a trade-
off or choice that is given up for the alternative. For
instance a producer that grows wheat and corn must
evaluate the opportunity cost or value of the choice
that is given up in place of something else, i.e.: how
much or how little acreage to use growing wheat vs.
corn?
Defined
http://www.tutor2u.net/econo
mics/revision-notes/as-
markets-scarcity-and-
choice.html
Glencoe pg. 7, 15,16

E.3 Identify and explain the
broad goals of economic policy
such as freedom, efficiency,
equity, security, growth, price
stability, and full employment.
(C, E)

Freedom: having the ability to buy or sell any goods
and services
Efficiency: wise use of available resources so as to
obtain the greatest benefits possible
Equity: the attempt to balance an economic policy
so that everyone benefits fairly
Security: protection offered through government
social programs against risks beyond our control-
accidents on the job, natural disasters, poverty, etc.
Growth: expansion of the economy to produce
more goods, jobs, and wealth
Price Stability: value of currency and prices within
the market stay relatively stable with only small
adjustments for inflation
Full Employment: condition when the
unemployment rate is lower than a certain
percentage established by economists studies
Goals Flash Cards
http://quizlet.com/13084704/
economics-unit-1-
fundamentals-flash-cards/


E.4 Describe how people
respond predictably to positive
and negative incentives. (C, E)

Profit is a positive incentive lending to motivation
for more production of goods and services
Negative incentives result from a diminution in
personal choices, government handouts, etc.
Basics of incentives intro:
http://www.econedlink.org/le
ssons/index.php?lid=379&typ
e=student
More advanced breakdown of
financial incentives:
http://www.econedlink.org/le
ssons/index.php?lid=390&typ
e=student


E.5 Explain that voluntary
exchange occurs when all
participating parties expect to
gain. (E)

Voluntary Exchange takes place when a buyer and
seller come to a mutually beneficial agreement of
exchanging goods and services.
Stossel clip on voluntary
exchange:
http://www.criticalcommons.o
rg/Members/fsustavros/clips/s
tossel-2011-economics-of-
voluntary-exchange/view
Voluntary Exchange in the
classroom:
http://www.youtube.com/wat
ch?v=gWaJCI9hqfo


E.6 Compare and contrast how
the various economic systems
(traditional, market, command,
mixed) try to answer the
questions: What to produce?
How to produce it? For whom to
produce? (E)

Implement the 3 basic question in Economics,
What to produce?/ How to produce it?/ For whom to
produce? into discussion of the 4 basic Economic
Systems:
Traditional: decisions based on customs and beliefs
that have been handed down from generation to
generation
Command: government controls the factors of
production and makes all decisions about their use
Market: individuals own the factors of production
and make economic decisions through free
interaction while looking out for their own and their
families best interests.
Mixed: combine characteristics of more than one
type of economy
Economic Systems:
http://www.shmoop.com/eco
nomic-systems/types.html

Glencoe pg. 36

Other examples of economic
systems:
http://gozips.uakron.edu/~ely
2/three%20economic%20syst
ems.htm



E.7 Describe how clearly defined
and enforced property rights are
essential to a market economy.
(E)

Private Property rights are essential in a free
market economy in that the founding fathers
recognized that such rights were the invisible engine
for creating wealth and prosperity.
Glencoe pg. 46
Article on Economics of
Property Rights:
http://www.heritage.org/rese
arch/reports/2010/08/the-
economic-principles-of-
america-s-founders-property-
rights-free-markets-and-
sound-money
Article #2
http://www.quebecoislibre.or
g/younkins5.html


E.8 Use a production
possibilities curve to explain the
concepts of choice, scarcity,
opportunity cost, tradeoffs,
Show a production possibilities curve on a graph
and describe the concepts through the utilization of a
PPC.
Show a Guns-n-Butter graph and the trade-offs
Guns and Butter Graph
http://www.investopedia.com
/terms/g/gunsandbutter.asp

unemployment, productivity, and
growth. (E)

required in determining what/how much to produce
with the limited resources available.

E.9 Compare and contrast the
theoretical principles of the
economic systems of capitalism,
socialism, and communism, and
use historical examples to
provide evidence of their
effectiveness. (E, H)

Capitalism: encompasses ideas of a market
economy by placing an emphasis on personal
freedom, individual initiative, and individuality.
Socialism: Differences between democratic and
authoritarian socialism. Also discuss little private
property ownership, benefits to society as a whole,
less individuality, and loss of individual incentive.
Communism: discuss Marxs original ideas for
Communism; discuss where Communism is in the
world today and what actually happened in the
evolution of the system of government.
Show historical examples of each system:
Capitalism: Reagans U.S., Germany
Socialism: FDRs U.S., Denmark, Sweden,
Communism: China, Cuba, North Korea
Glencoe pg. 51

Commanding Heights
Interactive Map

E.10 Examine informational text
and primary sources to analyze
the major ideas of the following
economists:

Adam Smith
Thomas Malthus
Karl Marx
John Maynard Keynes
Friedrich Hayek
Milton Friedman
Ben Bernanke

Smith: Economy works best with minimal
government interference; if individuals are left to
follow their own self-interest, the economy moves
forward as if guided by an invisible hand; wrote The
Wealth of Nations
Malthus: Believed that population growth and
economic growth was limited by the earths ability to
sustain that growth; a dismal scientist; wrote An
Essay on the Principle of Population
Marx: Believed that capitalism would fail and
communism would emerge in its place; wrote The
Communist Manifesto
Keynes: Believed govt should increase govt
spending when necessary to avoid/end recessions;
wrote The General Theory of Employment, Interest
and Money
Hayek: Disagreed with Keynes; was against central
planning and believed that the market would self-
correct; wrote The Road to Serfdom
Friedman: Also disagreed with Keynes; monetarist
Bernanke: Current Fed Chairman; learned from
mistakes of the Great Depression and cut interest
rates to stimulate spending to end 2008-09 recession
Smith: Glencoe pg. 11, 43







Marx: Glencoe pg. 52-53,
270, 510
https://www.marxists.org/arc
hive/marx/works/index.htm

Keynes: Glencoe pg. 424, 448
Video: Keynes vs. Hayek
Round 2
Video: Keynes vs. Hayek Rap
Anthem (YouTube)
Friedman: Glencoe pg. 453,
458
Video: Friedman on the Phil
Donahue show
Bernanke: Glencoe pg. 397,
398, 455

Supply and Demand
Students will understand the role that supply and demand, prices, and profits play in determining production and
distribution in a market economy.

E.11 Define supply and demand
and provide relevant examples.
(E)
Demand: Law of Demand, Demand Schedule, and
Demand curve
Supply: Law of Supply, Supply Schedule, and
Glencoe pg. 172 - 179,
Video: Economic Lowdown-
Demand
Supply Curve
Glencoe pg. 187 - 189
Video: Economic Lowdown-
Supply

Contrast Supply and Demand
(Venn Diagram)
http://www.math-
aids.com/cgi/pdf_viewer_10.c
gi?script_name=venn_2set_gr
aphic.pl&lines=1&language=0
&memo=&answer=1&x=117
&y=22

E.12 Describe the role of buyers
and sellers in determining the
equilibrium price. (E)
Equilibrium price: What price consumers are willing
to pay in conjunction with what price producers are
willing to offer their products for sale. The interaction
between these two determinants helps to set price
equilibrium.
Shortage: define, graph, describe responses of
buyers and sellers
Surplus: define, graph, describe responses of
buyers and sellers
Glencoe pg. 195-197

Graphs and examples
http://www.oswego.edu/~ed
unne/200ch3_3.html



E.13 Describe how prices of
products as well as interest rates
and wage rates send signals to
buyers and sellers of products,
loanable funds, and labor. (E)
A shortage is a signal that price is too low
A surplus is a signal that price is too high

Interest rates are the price of money
Wage rates are the price of labor

Glencoe pg. 197


Glencoe pg. 399



E.14 Explain that consumers
ultimately determine what is
produced in a market economy
(consumer sovereignty). (C, E)
Freedom of Choice (one of the characteristics of a
Pure Market economy)
If consumers dont want (demand) a product,
producers wont make it
Schools dont print homecoming shirts in spring
because students dont want them

Glencoe pg. 44

E.15 Explain the function of
profit in a market economy as an
incentive for entrepreneurs to
accept the risks of business
failure. (C, E)
Profit incentive (one characteristic of pure market
economy)
Famous entrepreneurs with failures
Glencoe pg.45

Article: 10 Entrepreneur Risks
Worth Taking in Every Startup
Entrepreneur

http://www.youtube.com/wat
ch?v=zLYECIjmnQs


E.16 Demonstrate how supply
and demand determine
equilibrium price and quantity in
the product, resource, and
financial markets, including
drawing and reading supply and
demand curves. (E)
Creating Demand and Supply Curves

Locating Equilibrium Price



Interpreting graphs of Changes in quantity
demanded and supplied




Interpreting graphs on Change in demand and
supply
Glencoe pg. 178-179, pg.
188-189
Glencoe pg. 195-196 graph
http://www.peoi.org/Courses/
Coursesen/mic/fram1.html

Glencoe pg. 182 graph
http://instruction.blackhawk.e
du/ghoffarth/economics/ecou
nit3.htm

Glencoe pg. 180-182, 190-
192
graphs
http://www.pcecon.com/note
s/demand.html

http://thismatter.com/econom
ics/supply.htm

Graph paper
http://www.vertex42.com/Exc
elTemplates/graph-paper.html


E.17 Identify factors that cause
changes in market supply and
demand. (E)
Determinants of demand - changes in population,
fads, and income, substitutes, and complementary
products (Change in Demand)
Determinants of supply - Taxes, Technology, cost
of inputs, and # of firms in industry (Change in
supply)
Price as a signal (Change in quantity demanded and
change in quantity supplied)
Law of Diminishing Marginal Utility
Law of Diminishing Returns
Glencoe pg. 180 - 181


Glencoe pg. 190 - 192

Glencoe pg. 182, 192

Glencoe pg. 174
Glencoe pg. 192

Show segment of Cool Hand
Luke (Egg Eating Contest)
(Law of Diminishing Marginal
Utility)

E.18 Demonstrate how changes
in supply and demand influence
equilibrium price and quantity in
the product, resource, and
financial markets. (E)
Increase in demand increases equilibrium price;
curve shifts right
Decrease in demand decrease equilibrium price;
curve shifts left

Increase in supply decreases equilibrium price;
curve shifts right
Decrease in supply increases equilibrium price;
curve shifts left
Glencoe pg. 180-181




Glencoe pg. 190-191






Graph
http://sbhsgovecon.wordpres
s.com/category/supply-curve/


E.19 Demonstrate how
government wage and price
controls, such as rent controls
and minimum wage laws, create
shortages and surpluses. (E)
Price Floor - Government-established minimum
price that can be charged for goods and services
Example-minimum wage






Price Ceiling - Government-established maximum
price that can be charged for goods and services
Example-Rent controlled apartments



Glencoe pg. 197-199
pg. 199
Stossel on minimum wage
http://www.criticalcommons.o
rg/Members/fsustavros/clips/s
tossel-meca-07-unintended-
consequences-of-min/view


Stossel on Rent control
http://www.youtube.com/wat
ch?v=R0h8kfA4i_A

Video: Economics of Seinfeld-
Price Ceiling


E. 20 Cite evidence from
appropriate informational texts
to argue in an opinion piece for
or against the minimum wage.
(E)
Unintentional consequences of minimum wage Article against minimum wage
http://articles.latimes.com/20
13/mar/10/opinion/la-oe-
hassett-the-case-against-the-
minimum-wage-20130310

Article on teens and minimum
wage
http://online.wsj.com/article/
SB1000142405297020344010
4574402820278669840.html

Article showing both sides
http://www.investopedia.com
/articles/07/minimum_wage.a
sp


E.21 Use concepts of price
elasticity of demand and supply
to explain and predict changes in
quantity as prices fluctuate. (E)
Price as a signal to buyers and sellers
Elastic - define and graph
Inelastic - define and graph
Examples of elastic products and characteristics
(lots of substitutes, luxury goods, and large % of
income)
Examples of inelastic products and characteristics
(few substitutes, necessities, and small % of income)

Glencoe pg. 182 - 183
Glencoe pg. 182
Glencoe pg. 184 - 185

Glencoe pg. 184 - 185
Video: Real World Economics
- Elasticity of Demand

E.22 Explain how financial
markets, such as the stock
market, channel funds from
savers to investors. (E)
Businesses issue stock to raise funds for expansion;
investors purchase stock from businesses to share in
businesses expected profits
Businesses issue bonds to raise funds for
expansion; investors purchase bonds from
businesses to earn interest paid by businesses
Businesses borrow money from banks for
expansion; savers put money in banks to earn
interest paid by banks
Glencoe pg. 147

Stock Market Rap

Stocks Made Easy



Market Structures
Students will understand the organization and role of business firms and analyze the various types of market structures in
the United States economy.

E.23 Compare and contrast the
following forms of business
organization: sole proprietorship,
partnership, and corporation. (E)
Basics of entrepreneurship; famous entrepreneurs
Decisions on business structure cost/benefit
analysis
Taxes, Risk/Return, Profits, Dividends, Overhead
Sole Proprietorship: 1 person/ unlimited personal
liability/ set own schedule/ sole keeper of profits
Partnership: Joint Venture/ LLPs/ differences
between general partnership and LLP/ shared profits
and risk/ personalities of partners, shared
responsibility
Corporation: no personal liability/ dividends/ double
taxation/ difficult to start-up
Entrepreneurs
http://www.msnbc.msn.com/i
d/5519861/ns/business-
small_business/t/historys-
greatest-
entrepreneurs/#.UH96pRjajv
Interactive learning for
business organizations:
http://www.wisc-
online.com/objects/ViewObjec
t.aspx?ID=HRM102
Pros and Cons of Business
Organizations:
https://www.boundless.com/fi
nance/introduction-to-the-
field-and-goals-of-financial-
management/business-
organization-types/sole-
proprietorship-pros-and-cons/


E.24 Analyze the various ways
and reasons that firms grow
either through reinvestment of
financial capital obtained through
retained earnings, stock issues
Discuss methods of growth: Reinvestment of profits
into the company OR stock market investments
Business loans/Expansion efforts
Rockefeller/Carnegie differences in horizontal and
vertical merger.
How to grow a business:
http://www.bankofscotlandbu
siness.co.uk/business-
guidance/business-growth/
Men Who Built America
and borrowing, or through
horizontal, vertical, and
conglomerate mergers. (E)
Venture Capitalist firms
JP Morgan

History Channel series: See
youtube.com
Venture Capitalist video
http://www.youtube.com/wat
ch?v=y-e-jluN114
Potential Investors:
See Shark Tank episodes on
youtube.com


E.25 Analyze key details and
central ideas from diverse forms
of informational text to
summarize the role and historical
impact of economic institutions,
such as labor unions,
multinationals, and nonprofit
organizations, in market
economies. (E)
Development and Decline of labor unions in the
U.S. (reasoning)
Cause and Effect of multi-national outsourcing
Business make-up of non-profit organizations.
Discuss what nonprofits do with revenue. Benefits to
Society

Labor Unions historical
impact:
http://www.shmoop.com/hist
ory-labor-
unions/summary.html
Multinationals:
Glencoe pg. 528


E.36 Describe the characteristics
of natural monopolies and the
purposes of government
regulation of these monopolies,
such as utilities. (E, P)
Types of monopolies:
Government - created by govt; owned by
govt.
Natural - created by govt; run by an outside
firm
Geographic - due to lack of demand in a
geographic area
technological - created by patents and
copyrights
Purpose of natural monopoly: Govt believes one
firm can provide good/service more efficiently than
many. Examples of natural monopoly: Utilities

Natural Monopolies:
https://www.boundless.com/e
conomics/monopolies/the-
origins-of-
monopolies/monopolies-
initiated-by-government/


E.26 Identify the basic
characteristics of monopoly,
oligopoly, monopolistic
competition, and pure
competition. (H, E)
Monopoly: one producers in a particular industry
Oligopoly: very few producers in an industry
Mon. Comp.: several producers in an industry
Pure Competition: many producers in an industry.
Characteristics
http://www.buzzle.com/article
s/characteristics-of-
monopoly.html

Video: Market Structures


E.27 Explain how competition
among many sellers lowers costs
and prices and encourages
producers to produce more. (E)
The more firms in an industry the greater the
competition, resulting in a reduction in prices in order
to further competition and increase production.
Explanations:
http://www.consumerpsychol
ogist.com/food_Production_C
osts.html

E.28 Demonstrate how firms
with market power can
Firms will continue to produce goods as long as
their profit and revenue continue to exceed costs of
https://www.boundless.com/
marketing/pricing/inputs-to-
determine price and output
through marginal analysis. (E)
production.

pricing-decisions/marginal-
analysis/

Marginal Analysis Explanation


E.29 Explain ways that firms
engage in price and non-price
competition. (E)
Discuss brand loyalty/product
differentiation/Advertising/Target audiences
PowerPoint with examples of
both:
http://www.google.com/url?s
a=t&rct=j&q=&esrc=s&sourc
e=web&cd=5&ved=0CFkQFjA
E&url=http%3A%2F%2Fghec
onomics.wikispaces.com%2Ffi
le%2Fview%2FPrice%2Band
%2BNon-
price%2BCompetition.ppt&ei
=hCfLUamkHYmQ9QSn74CgB
g&usg=AFQjCNEbtYOQK5OPd
MDKf-
wNX7AbOoNexg&sig2=KsmZ
OC5ZEY2uqYlz6idXKw&bvm=
bv.48340889,d.eWU


E.30 Examine informational text
in diverse formats and media to
analyze how investment in
research and development,
equipment and technology, and
training of workers increases
productivity. (E)
Productivity is a measure of how much work gets
done. Advances in any avenue that lends to an
increase in productivity as well as new training
techniques that do the same.

Glencoe pg. 9

Article: Obamas Obsession
puts students at risk - Loosely
fits standard - discusses how
we are pushing kids to college
when some would be better
off training for a career

E.31 Describe how the earnings
of workers are determined by
the market value of the product
produced or service provided,
workers productivity, incentives,
collective bargaining, and
discrimination. (E)
Factors for determining income (education,
experience, blue-collar/white-collar/service industry)
Factors contributing to increases in workers
productivity, i.e.: machines, skills, etc.
Elements of incentive based contracts (pay scales)
Collective Bargaining and negotiations from
mediation to arbitration with examples such as union
efforts in specific trade organizations.
Department of Labor
Agreements on File:
http://www.dol.gov/olms/regs
/compliance/cba/
How are Wages Determined:
http://www.clevelandfed.org/
research/commentary/1990/0
215.pdf
NFL lockout and Collective
Bargaining:
http://www.huffingtonpost.co
m/gabriel-a-feldman/the-
legal-issues-behind-
t_b_820579.html


E.32 Analyze the role and Reintroduce entrepreneurs Job creation clip
productivity of entrepreneurs in
a free-enterprise system and
how entrepreneurial decisions
are influenced by tax, regulatory,
education, and research support
policies. (E, C)
In a free enterprise system taxation is influenced by
what type of business structure the entrepreneur
chooses. Government regulation assists in efforts of
research and development by supporting patents and
offering copyrights of original work.
http://stosselintheclassroom.o
rg/videos/job_creation_gone_
wrong/


The Role of Government
The student will understand the roles of government in a market economy are the provision of public goods and services,
redistribution of income, protection of property rights, and resolution of market failures.

E.33 Explain how government
responds to perceived social
needs by providing public goods
and services. (E, P)
Examples of how government responds to social
needs:
Welfare, food stamps, public housing,
Affordable Care Act
Roads, national defense
These programs are paid for with tax revenues.
Political parties disagree about how much assistance
government should provide.

Glencoe pg. 419

E.34 Describe major revenue
and expenditure categories and
their respective proportions of
local, state, and federal budgets.
(E, P)
Revenue Categories: Income Taxes, SS Taxes,
Excise Taxes
Expenditure Categories: SS, Medicare, Defense
See Fig. 16.3, pg 426 for pie chart of category
proportions

Glencoe pg. 426-429;
Budget Hero Game - students
attempt to balance the
Federal Budget

E.35 Identify laws and
regulations adopted in the United
States to promote competition
among firms. (E, H, P)
Explain how consumers benefit when firms must
compete.
Regulations: Sherman Anti-Trust Act, Federal Trade
Commission, other agencies on page 248
Glencoe pg. 248
FTC - You are Here - Go to
the Food Court - learn how
the FTC regulates monopolies
and oversees mergers

E.37 Define progressive,
proportional, and regressive
taxation. (E, H, P)
Progressive - Tax take takes a larger percentage of
higher incomes; example - federal income tax
Proportional - Tax takes the same percentage of all
incomes; example - flat tax
Regressive - Tax that takes a larger percentage of
lower incomes; example - sales tax on food
Glencoe pg. 433
Lesson Plan

E.38 Use appropriate
informational text to analyze
costs and benefits of
government policies (Social
Security, Medicare, Earned
Income credits) and cite
Social Security - federal program that provides
monthly payments to people that are retired or
unable to work
Medicare - Govt provided health insurance for
elderly
Earned Income Credits - Provides incentive for poor
ProCon.org - Privatize Social
Security?

ProCon.org - Is Affordable
Care Act Good for America?
evidence from multiple sources
to argue for or against one
example of such a government
policy or program. (E, H, P)
people to go to work by giving them a tax credit for
income tax owed, up to a limit


E.39 Research textual evidence
in diverse formats to write a
problem-solution piece
recommending a course of action
in regard to the national debt.
(E, P)
Deficits occur when govt spends more than they
take in
Deficits are funded by govt borrowing (bonds)
National Debt - The sum of our nations deficits
Currently $16.7 trillion (June 2013)
Glencoe pg. 429
US National Debt Clock

E.40 Define and explain fiscal
and monetary policy and the
various schools of thought
including Keynesian, Supply-
siders, and Monetarists on how,
when and if these policies should
be used to stabilize the
economy. (E, P)
Fiscal Policy - Govt use of taxes and expenditures to
affect the economy
Monetary Policy - Fed adjusting the money supply
to affect the economy
Keynes - Believed that govt should increase
spending to end recessions
Supply-siders - Believe that tax cuts would increase
consumer spending and end recessions
Monetarists - Fed adjusts money supply to end
recessions
Glencoe pg. 447-451

Glencoe pg. 399, 402-405

Glencoe pg. 424 (Keynes)

Glencoe pg. 450-451

Glencoe pg. 453-457

E.41 Analyze how the
government uses taxing and
spending decisions (fiscal policy)
to promote price stability, full
employment, and economic
growth. (E, P)
Fiscal Policy must be approved by Congress
Examples of fiscal policy
Government spends money to build a new
interstate
Government lowers taxes
2009 - American Recovery and Reinvestment
Act
Govt spent $831 billion to get US Economy out of
recession


Glencoe pg. 447-451

Khan Academy Video:
Monetary and Fiscal Policy

Pres. Obamas Speech in Jan
2009 about ARRA {primary
source}

E.53 Describe the organization
and functions of the Federal
Reserve System and identify the
current Federal Reserve
chairperson. (E)
Current Fed Chairman - Ben Bernanke
Twelve Fed districts
Clarksville is in District 6
Federal Open Market Committee
Function of Fed: Execute Monetary Policy (see
E.42)
Glencoe pg. 392-396
Fed Today Video

The Fed in Plain English Video

E.42 Analyze how the Federal
Reserve uses monetary tools to
promote price stability, full
employment, and economic
growth. (E, P)
Monetary Policy Tools:
Open Market Operations
Adjust Reserve Requirements
Change Discount Rate

Loose Policy - Goal: Increase spending; avoid/end
Glencoe pg. 402-407
Video: Tools of Monetary
Policy

Fed Today Video

recession
Buy Bonds, Lower Reserve Requirement,
Lower Discount Rate

Tight Policy - Goal: Slow down spending; avoid/end
high inflation
Sell Bonds, Raise Reserve Requirement,
Raise Discount Rate
The Fed in Plain English Video

Fed Chairman Game


National Economic Performance
Students will understand the means by which economic performance is measured.

E.43 Define aggregate supply
and demand, Gross Domestic
Product (GDP), economic
growth, unemployment, and
inflation. (E)
Aggregate supply -is the total supply of all goods
and services being produced in an economy.
Aggregate demand- is the total demand for all
goods and services in an economy.
GDP- is the total value of all final goods and
services produced in a country within a given period
of time, usually a year.
Economic growth- is the expansion of an economy
to produce more goods, jobs, and wealth.
Unemployment- is the measure of a countrys
civilian labor force that in not working but is actively
looking for work.
Inflation- is the continued rise in the general price
level of final goods and services.
Glencoe pg. 348 in the
textbook.

The following link provides
lessons, powerpoints and
video clips over GDP,
unemployment, and inflation.
The Classroom Economist





E.44 Explain how Gross
Domestic Product (GDP),
economic growth,
unemployment, and inflation are
calculated. (E)
A countrys gross domestic product is calculated by
using the formula (GDP=C+I+G+NX) where C=
consumer spending, I= the investment of businesses
in resources that will improve production, G=
government spending on goods and services, and
NX= the value of a countrys exports minus the value
of its imports.

Unemployment is calculated by dividing the number
of unemployed people in a country by the countrys
labor force. An unemployed person is defined as a
person who has not worked in the past week and has
actively sought employment within the last four
weeks.
A countrys labor force is the total number of
people who are employed plus those who are
unemployed.

Types of Unemployment:
Cyclical - Unemployment due to changes in business
cycle
Timmy loses his job during a recession, gets
it back during a recovery

Structural - Unemployment caused by changes in
the economy
Resources for GDP, CPI, and
unemployment are available
in the Building Blocks of
Economics folder found on
the sharing server, as well as
at the website found above.


Unemployment video







Glencoe pg. 443
Timmy loses his job at a car wash because
he is replaced by an automated car wash
Seasonal - Unemployment caused by changes in
seasons or weather
Timmy doesnt work at his construction job
in the winter because the weather is too cold

Frictional - Temporary unemployment between jobs
because of firings, layoffs, job searches
Timmy is unemployed from the time he got
fired at Burger King to the time he got hired
at Wendys

Inflation is measured using the Consumer Price
Index (CPI). The CPI is calculated by the government
purchasing a market basket of goods and services
consisting of around 80,000 items from 8 major
groups such as food, housing, apparel, etc. the total
value of these items are then compared against the
value of the same items in previous years.

E.45 Analyze the impact of
events in United States history,
such as wars and technological
developments, on business
cycles. (E, H)
The development of the American System of
production during the 19th century helped the U.S.
industrialize and gain footing in world markets.
During times of war increased manufacturing of
military goods often boosts the U.S. economy.
Economic booms in post World War I and World War
II eras.
U.S. business activity chart on
pg. 353.

E.46 Identify the different
causes of inflation, and explain
who gains and loses because of
inflation. (E)
Inflation is caused by having a money supply that is
increasing relative to the amount of goods and
services that it can be used to purchase.
In an inflated economy lenders lose because the
money they are paid back is worth less than the
money they lent out, and borrowers gain because
the money they pay back to lenders is worth less
than the money they originally borrowed.
People living inside an inflated economy lose
purchasing power as the value of their currency
decreases; however, other countries trading with an
inflated economy are able to import goods and
services cheaper than they would normally be able.

Video: Why not print more
money?


E.47 Explain that a countrys
overall level of income,
employment, and prices are
determined by the individual
spending and production
decisions of households, firms,
and the government. (C, E, H, P)
Reductions or increases in spending or production
cause a domino effect throughout an economy.
(Example) as prices rise due to inflation people
spend less in discretionary expenditures, when
people buy less firms start to produce less goods and
services, as firms produce less goods and services
they may reduce the number of people they employ,
this in turn reduces the amount of revenue available
Glencoe pg. 448 - Circular
flow of income and output
chart


to the government through taxation.

E.48 Illustrate and explain how
the relationship between
aggregate supply and aggregate
demand is an important
determinant of the levels of
unemployment and inflation in
an economy. (E)
Use aggregate supply and demand curves to
illustrate the effects of shifts in supply and demand
on production levels, and connect production
changes to unemployment changes.
A Phillips Curve can be used to illustrate the
relationship between unemployment and inflation.
Video: Phillips Curve


Money and the Role of Financial Institutions
Students will understand the role of money and financial institutions in a market economy.

E.49 Explain the basic functions
of money including its role as a
medium of exchange, store of
value, unit of account. (E)

Types of Money
commodity
representative
fiat
Functions of money
medium of exchange
store of value
unit of account
Characteristics of money
Accepted
portable
divisible
scarce
stable in value
durable
Glencoe pg. 370



Glencoe pg. 368-9



Glencoe pg. 370






Video: Americas Money Vault


E.50 Describe the growth of
income inequality in the United
States and worldwide using the
Lorenz curve and analyze the
reasons for this increasing
disparity of income. (E)
The Lorenz Curve is a tool for looking at income
inequality within an economy, used in conjunction
with the Gini Coefficient it is possible to create a
numerical measure of an economys level of income
inequality and compare it to others.
This video is a great resource
for teachers to better
understand the Lorenz Curve.
Video: Lorenz Curves and the
Gini Coefficient


E.51 Identify the composition of
the money supply of the United
States. (E)
The U.S. uses to basic measures of the money
supply designated as M1 and M2.
M1 is a narrow definition of the money supply and
consist of currency, checkable deposits, and travelers
checks. M1 is basically any form of money most
people would accept as payment for goods and
services.
M2 is a broader definition of the money supply and
includes all monies found under M1 plus savings
deposits, small-denomination time deposits, and
some money market type accounts. M2 consists of
Glencoe pg. 378-383
Article: Federal Reserve
defines M1 and M2

Video: Money Supply M0, M1,
and M2

the liquid monies found in M1 plus monetary assets
that can be made liquid relatively easily.

E.52 Explain the role of banks
and other financial institutions in
the economy of the United
States. (E)
Banks and other financial institutions help put
financial resources to their best use by connecting
people that do not have an immediate use for their
money with people who do.
Financial Institutions
Central Bank
commercial banks
credit unions
investment banks
Financial Services
savings
checking
loans
investments
Pg. 142-153


Trade
Students will understand why individuals, businesses, and governments trade goods and services and how trade affects
the economies of the world.

E.54 Examine evidence in
informational texts to explain the
benefits of trade among
individuals, regions, and
countries. (E, G)
Specialization - A nation should produce and export
what they are best suited to produce, based on their
factors of production
Saudi Arabia should export oil
Trade should be based on specialization; companies
should trade for the things they cannot easily
specialize in.
Gains from Trade Activity (I
play this game with my
students, but I made my own
certificates. I will share them
with anyone that wants them.
- Skau)
Video: Trade Can Make
Everyone Better Off

E.55 Define and distinguish
between absolute and
comparative advantage and
explain how most trade occurs
because of a comparative
advantage in the production of a
particular good or service. (E, G)
Absolute Advantage - Ability of one country to
produce more output per unit of input than can
another country
Comparative Advantage - Ability of one country to
produce a product at a lower opportunity cost than
another country
Example explaining the difference of AA and
CA: LeBron James can cut his lawn in 2
hours. I can cut it in 3 hours. LeBron has an
absolute advantage in lawn mowing.
However, he can make $100,000 making a
commercial with those 2 hours. I can only
make $200 teaching economics with my 3
hours. I have a comparative advantage in
lawn mowing because LeBrons opportunity
cost ($100,000) is greater than mine ($200).
Conclusion: LeBron should pay me to mow
his lawn and use his time to make a
commercial. James trades money to me to
mow his lawn to free up his time so he can
Glencoe pg. 467
Video: Khan Academy on
Absolute Advantage (watch
second)


Glencoe pg. 469
Video: Khan Academy on
Comparative Advantage
(watch first)

earn $100,000.

E.56 Define trade barriers, such
as quotas and tariffs. (E, G)
Quota - Restriction on the amount of a good that
can be imported
Tariff - A tax on an imported goods
Revenue tariff - Used to create revenue; not
a significant source of revenue today
Protective tariff - Used to make imported
goods more expensive, and domestic goods
more competitive in the market.
Embargo - Complete restriction on trade with
another country
US has a trade embargo with Cuba
Glencoe pg. 477-479







Article: Cuba Embargo; Jay-Z
and Beyonce

E.57 Explain why countries
sometimes erect barriers to trade
such as quotas and tariffs, or
through subsidies to domestic
producers and the consequences
of those trade barriers and
subsidies on consumers and
producers. (E, G, H)
Example: US currently has a tariff on orange juice
imported from Brazil. Consequently, Tropicana will
purchase OJ from a producer in Florida because its
OJ is cheaper. Another consequence is that orange
juice consumers pay more for OJ.
Glencoe pg. 477-479
Article: OJ Switcheroo?

E.58 Explain the difference
between balance of trade and
balance of payments. (E, G)
Balance of Trade - Difference in the value of a
nations exports and its imports
Balance of Payments - Includes BOT and financial
exports and imports
Glencoe pg. 475-476

E.59 Compare and contrast
labor productivity trends in the
United States and other
developed countries. (E, G)
Developed countries outsource unskilled factory
jobs (i.e. textiles) to countries with cheaper labor.
Labor Unions in developed nations oppose
the outsourcing of jobs
Video: Apples Sweatshop
Problem
Article: Is Outsourcing Good
for the Economy?





E.60 Explain how changes in
exchange rates impact the
purchasing power of people in
the United States and other
countries. (E, G)
Exchange Rate - the price of one nations currency
in terms of another nations currency
$1 US = 0.77 Euro (June 2013)
Purchasing Power Parity (PPP) - The idea that a
good in one country should cost the same as in
another country after currency is exchanged.
For example, if a pair of shoes costs $100 in
the US, it should cost $77 in Europe (June
2013).
If the USD loses value against the Euro, it costs
more USD to purchase the same amount of Euros.
p. 472-474
Online currency converter

Beginners Guide to PPP

Americans lose purchasing power in Europe.

E.61 Cite evidence from
appropriate informational text to
evaluate the arguments for and
against free trade. (E, H, G)
Review Gains from Trade
Protectionism - protecting domestic jobs by
importing more costly through quotas and tariffs
NAFTA - North American Free Trade Agreement
(1993) - agreement designed to eliminate tariffs
between US, Canada, Mexico
Protectionists opposed NAFTA because they
feared jobs would be lost
Glencoe pg. 468, 478-9


Article: Pros/Cons of NAFTA