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Grade 12e Standards
Principles of Economics

In addition to studying government in grade twelve, students will also master fundamental economic concepts, applying the tools (graphs, statistics, equations) from other-subject areas to the understanding of operations and institutions of economic systems. Studied in a historic context are the basic economic principles of micro- and macroeconomics, international economics, comparative economic systems, measurement, and methods.

12e.1 Students understand common economic terms and concepts and economic reasoning.
12e.1.1 Examine the causal relationship between scarcity and the need for choices.
12e.1.2 Explain opportunity cost and marginal benefit and marginal cost.
12e.1.3 Identify the difference between monetary and nonmonetary incentives and how changes in incentives cause changes in behavior.
12e.1.4 Evaluate the role of private property as an incentive in conserving and improving scarce resources, including renewable and nonrenewable natural resources.
12e.1.5 Analyze the role of a market economy in establishing and preserving political and personal liberty (e.g., through the works of Adam Smith).
12e.2 Students analyze the elements of America's market economy in a global setting
12e.2.1 Understand the relationship of the concept of incentives to the law of supply and the relationship of the concept of incentives and substitutes to the law of demand.
12e.2.2 Discuss the effects of changes in supply and/or demand on the relative scarcity, price, and quantity of particular products.
12e.2.3 Explain the roles of property rights, competition, and profit in a market economy.
12e.2.4 Explain how prices reflect the relative scarcity of goods and services and perform the allocative function in a market economy.
12e.2.5 Understand the process by which competition among buyers and sellers determines a market price.
12e.2.6 Describe the effect of price controls on buyers and sellers.
12e.2.7 Analyze how domestic and international competition in a market economy affects goods and services produced and the quality, quantity, and price of those products.
12e.2.8 Explain the role of profit as the incentive to entrepreneurs in a market economy.
12e.2.9 Describe the functions of the financial markets.
12e.2.10 Discuss the economic principles that guide the location of agricultural production and industry and the spatial distribution of transportation and retail facilities.
12e.3 Students analyze the influence of the federal government on the American economy.
12e.3.1 Understand how the role of government in a market economy often includes providing for national defense, addressing environmental concerns, defining and enforcing property rights, attempting to make markets more competitive, and protecting consumers' rights.
12e.3.2 Identify the factors that may cause the costs of government actions to outweigh the benefits.
12e.3.3 Describe the aims of government fiscal policies (taxation, borrowing, spending) and their influence on production, employment, and price levels.
12e.3.4 Understand the aims and tools of monetary policy and their influence on economic activity (e.g., the Federal Reserve).
12e.4 Students analyze the elements of the U.S. labor market in a global setting.
12e.4.1 Understand the operations of the labor market, including the circumstances surrounding the establishment of principal American labor unions, procedures that unions use to gain benefits for their members, the effects of unionization, the minimum wage, and unemployment insurance.
12e.4.2 Describe the current economy and labor market, including the types of goods and services produced, the types of skills workers need, the effects of rapid technological change, and the impact of international competition.
12e.4.3 Discuss wage differences among jobs and professions, using the laws of demand and supply and the concept of productivity.
12e.4.4 Explain the effects of international mobility of capital and labor on the U.S. economy.
12e.5 Students analyze the aggregate economic behavior of the U.S. economy.
12e.5.1 Distinguish between nominal and real data.
12e.5.2 Define, calculate, and explain the significance of an unemployment rate, the number of new jobs created monthly, an inflation or deflation rate, and a rate of economic growth.
12e.5.3 Distinguish between short-term and long-term interest rates and explain their relative significance.
12e.6 Students analyze issues of international trade and explain how the U.S. economy affects, and is affected by, economic forces beyond its borders.
12e.6.1 Identify the gains in consumption and production efficiency from trade, with emphasis on the main products and changing geographic patterns of twentieth-century trade among countries in the Western Hemisphere.
12e.6.2 Compare the reasons for and the effects of trade restrictions during the Great Depression compared with present-day arguments among labor, business, and political leaders over the effects of free trade on the economic and social interests of various groups of Americans.
12e.6.3 Understand the changing role of international political borders and territorial sovereignty in a global economy.
12e.6.4 Explain foreign exchange, the manner in which exchange rates are determined, and the effects of the dollar's gaining (or losing) value relative to other currencies.

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