Social Studies (Grades 5–12) Subtest 2

Subarea III. Economics

0019

Understand basic economic concepts, microeconomics, and consumer economics and personal finance.

recognizing basic economic concepts and theories (e.g., scarcity, opportunity cost, economic incentives, competition, specialization, exchange, economies of scale, the law of diminishing returns, Keynesianism, monetarism) and using those concepts and theories to analyze economic events and public policy issues
comparing basic characteristics of market, traditional, command, and mixed economic systems and examining how values and beliefs influence economic decisions in different societies
demonstrating knowledge of the factors of production (i.e., land, labor, capital, and entrepreneurship); the risks and opportunities associated with entrepreneurship; and the relationship between production, distribution, and consumption in establishing socially desirable outcomes for resolving public issues
recognizing how supply and demand, prices, incentives, and competition function in a market economy and analyzing various market structures (e.g., oligopoly, monopolistic competition)
interpreting economic information presented in various visual formats (e.g., supply and demand charts, price indexes, circular flowcharts, production possibility curves)
demonstrating knowledge of different forms of business organization and analyzing factors affecting the operation of business firms (e.g., strategies for allocating scarce resources, methods of increasing worker productivity, marketing and distribution considerations)
recognizing basic factors affecting consumer economics (e.g., sources of consumer information, principles of budgeting, forms of credit, purchasing options for goods and services, types of consumer marketing and advertising, consumer protection laws) and examining common consumer savings, investment, loan, and purchasing decisions

0020

Understand macroeconomics and international economics.

demonstrating knowledge of the relationships among the major economic institutions that comprise the U.S. economic system (e.g., banks and other financial institutions, financial markets, governments, corporations, wage earners, labor unions, consumers)
analyzing the causes and effects of unemployment, inflation, and deflation
demonstrating knowledge of the stages of the business cycle, the causes and consequences of economic fluctuations, basic measures of overall economic performance, and concepts used to measure the national economy
demonstrating knowledge of principles and concepts related to fiscal policy and examining factors shaping fiscal policy
defining monetary policy and analyzing how the Federal Reserve uses the tools of monetary policy to promote price stability, full employment, and economic growth
identifying different forms of government regulation and analyzing the costs and benefits to society of allocating goods and services through private and public sectors
demonstrating understanding of the basic principles and components of international economics (e.g., the concepts of absolute and comparative advantage, the principles of free trade and protectionism) and examining the interaction between domestic and global economic systems
analyzing factors influencing the operation of the international economic system (e.g., exchange rates, trade restrictions, the balance of payments, international economic agencies) and examining economic relationships between the United States and other countries (e.g., the effect of U.S. foreign policy on the economies of developing nations)

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