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Social Studies, Grade 12, Economics, 2004

1.) Explain the role of scarcity in answering the basic economic questions of what, how, how much, and for whom to produce.

Example: opportunity cost

•  Identifying positive and negative aspects of economic growth
•  Explaining how voluntary trade between nations illustrates the benefits of comparative advantage
Example: geographic allocation of resources determining trading advantage

•  Identifying how factors of production and the circular flow of goods and services meet market needs
2.) Compare the development and characteristics of the world's traditional, command, and market economies.

•  Identifying contributors to modern economics
Examples: Adam Smith and laissez-faire, Karl Marx and Communism

•  Describing the struggle experienced by economies in transition from one type of economic system to another
Examples: Russia, Vietnam, Romania, Iraq, China

•  Explaining how the desire for growth potential, labor supplies, product supplies, and adaptive capability influence a country's choice of economic system
•  Comparing costs and benefits of economic growth
•  Explaining why the characteristics of a market economy result in a thriving economy
Examples: importance of well-defined private property rights, importance of a well-functioning price system

•  Contrasting economic systems of various countries with the market system of the United States
Examples: Japan, Germany, United Kingdom, China, Cuba, North Korea, Mexico, Canada, transitioning economies of former Soviet Union

3.) Analyze graphs to determine changes in supply and demand and their effect on equilibrium price and quality.

•  Illustrating how changes in the determinants of supply and demand affect the supply and demand for products in the market
Examples: prices of related goods, consumer tastes and preferences, expectations of future prices, number of consumers and producers

•  Explaining the impact of government-imposed price ceilings and floors and the impact of taxes and regulations on the market demand for a product
4.) Explain the impact of the labor market on the market economy of the United States.

Examples: effects of different types of labor unions, the role played by labor productivity

•  Identifying regional characteristics of the labor force of the United States
Example: providing breakdown of gender, race, socioeconomic background, education, age, and regional specialization

•  Explaining how supply and demand for labor affect wages
•  Describing characteristics that are most likely to increase wages and nonwage benefits
Examples: skills, productivity, education, occupation, mobility

5.) Explain the competitive nature of the market system.

Examples: purely competitive markets, oligopolistic markets, governmental-created monopolies, natural monopolies

•  Comparing structures of sole proprietorships, partnerships, corporations, and cooperatives
•  Describing costs and benefits of entrepreneurial decisions
•  Describing how market exchange serves as a means of economic planning for producers
•  Describing the structure and functions of financial markets, including the stock market and the bond market
6.) Explain costs and benefits of government intervention in the economy of the United States.

•  Identifying economic goals for the economy of the United States
Examples: economic growth, economic efficiency, economic security, economic freedom

•  Tracing the impact of government regulations on business and labor relations
•  Explaining conditions under which government intervention may be chosen
Examples: absence of incentives, negative externalities, need for consumer and labor protection

•  Comparing principles and systems of taxation at national, state, and local levels
Examples: flat tax; progressive, regressive, and proportional taxes; income, sales, property, and excise taxes

•  Predicting the effect of public policy decisions on the individual
Examples: positive and negative externalities, public goods and services versus private goods and services

•  Explaining costs and benefits of running a deficit and large national debt in an economy
Examples: rising interest rates, crowding-out effect, hyperinflation of currency, stimulation of a sluggish economy

•  Describing the effect of the patent system of the United States on the number of inventions produced by American inventors
7.) Describe methods by which the United States measures domestic output, national income, and price level.

Examples: Gross Domestic Product (GDP), National Income (NI), Personal Income (PI), Disposable Income (DI), price indexes, Consumer Price Index (CPI), GDP deflator

•  Identifying the contribution of final goods and services to the computation of the GDP
•  Comparing data from various regions of the United States and other national economies
•  Describing the function and construction of the CPI
Examples: construction of the market basket, current versus real dollars

8.) Describe the effect of fluctuations in national output and its relationship to the causes and costs of unemployment and inflation.

•  Identifying factors involved in the business cycle
Examples: phases, causes, indicators

•  Contrasting monetary, cost-push, and demand-pull inflation
•  Contrasting frictional, structural, seasonal, and cyclical unemployment
•  Describing components of the unemployment statistic as defined by the Bureau of Labor Statistics
•  Identifying reasons for regional differences in unemployment statistics
•  Discussing the positive and negative aspects of government policies affecting unemployment and underemployment
Examples: minimum wage, age regulations

•  Comparing causes for unemployment in Alabama to those of the nation
9.) Describe economic stabilization policies of the United States.

•  Explaining how levels of taxes, government spending, and interest rates affect consumer consumption and saving
•  Explaining fiscal policy options for manipulating levels of output and inflation
Examples: Keynesian theory, supply-side theory, monetarist theory, rational expectations theory

10.) Explain the role of money and the structure of the banking system of the United States.

Examples: Federal Reserve bank, United States Treasury, federally funded insurance programs

•  Contrasting the effectiveness of bartering and money exchange in an economic system
•  Explaining the creation of money through the multiplier effect
•  Explaining the origins of the Federal Reserve bank and its influence on inflation and deflation
•  Explaining the function of federally funded insurance programs in protecting consumers' savings
Example: protection of personal bank accounts by Federal Savings and Loan Insurance Corporation (FSLIC) and Federal Deposit Insurance Corporation (FDIC)

11.) Explain the past and present impact of the Federal Reserve bank on the economy of the United States.

•  Describing the structure and monetary policies of the Federal Reserve bank
•  Describing tools available to the Federal Reserve bank to stabilize the economy
Examples: altering reserve requirement, changing discount rate, performing federal open-market operations

•  Identifying primary responsibilities of the Federal Reserve bank
Examples: serving as "Bankers' Bank," creating a stable banking system, conducting monetary policy, stabilizing the business cycle and inflation rate

12.) Explain basic elements of international trade.

•  Analyzing the impact of developing nations on the global economy
•  Analyzing the impact of the trade deficit on the economy of the United States
•  Explaining how trading according to the Law of Comparative Advantage affects both poor and wealthy trading nations
•  Analyzing the impact of trade policy on international trade
•  Describing political and economic alliances
Examples: OPEC, General Agreement on Tariffs and Trade (GATT), NAFTA, European Economic Community (EEC), European Union

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