I.
Fundamental Economic Concepts* 15%
A. Productive resources are
limited. Therefore, people cannot have all of the goods and services
they want; as a result, they must choose some things and give up
others.*
1. The basic economic problem: unlimited wants and limited
resources*
a) Scarcity and choice*
b) Opportunity costs and trade-offs*
2. Productive resources (factors of production), definitions, and
examples*
a) Natural resources*
b) Human resources*
c) Capital resources*
d) Entrepreneurial resources*
3. Production of goods and services*
a) Goods and services are used to satisfy wants.*
b) Demand for resources, derived demand*
c) Production costs—fixed, variable, marginal, total*
d) Production possibilities*
4. Present, future, intended, and unintended consequences of
choices*
B. Effective
decision-making requires a comparison of the additional costs of
alternatives with the additional benefits. Most choices involve
doing a little more or a little less of something; few choices are
all-or-nothing decisions.*
1. Benefit–cost analysis*
2. Marginal benefits and marginal costs*
3. Individual and social goals*
a) Positive and normative economics*
b) Optimization*
C. Different methods can be
used to allocate goods and services. People, acting individually or
collectively through government, must choose which methods to use to
allocate different kinds of goods and services.*
1. The basic economic questions*
a) What to produce?*
b) How to produce?*
c) Who receives the benefits of production?*
2. Economic systems and their characteristics*
a) Market*
b) Planned/command*
c) Mixed market*
3. Central planning versus market mechanisms; historical and
current examples*
4. Competition in a market economy*
D. People respond predictably to
positive and negative incentives.*
1. Incentives, rewards/benefits, penalties/costs*
2. Values and self-interest influence choices.*
3. Monetary and non-monetary incentives*
E. Voluntary exchange
occurs only when all participating parties expect to gain. This is
true of trade among individuals or organizations within a nation and
among individuals and organizations in different nations.*
1. Markets*
a) Types*
b) Dynamics*
c) Interdependence*
2. Trade and exchange (domestic and foreign)*
3. Barter and money*
F. When individuals,
regions, and nations specialize in what they can produce at the
lowest opportunity cost and then trade with others, both production
and consumption increase.*
1. Specialization and division of labor*
2. Resource distribution and interdependence*
3. Absolute and comparative advantages*
a) Definitions*
b) Examples*
4. Free trade and trade barriers*
a) Quotas and tariffs*
b) Other forms of protectionism*
5. Imports and exports*
a) Trade deficit*
b) Balance of trade*
II. Microeconomics*
30%
A. Markets exist when
buyers and sellers interact. This interaction determines market
prices and thereby allocates scarce goods and services.*
1. Prices, market prices, and relative prices*
2. Market clearing/equilibrium price*
3. Supply and quantity supplied*
4. Demand and quantity demanded*
B. Prices send signals and
provide incentives to buyers and sellers. When supply or demand
changes, market prices adjust, affecting incentives.*
1. Laws of supply and demand*
2. Graphing supply and demand*
a) Supply schedule and supply curve*
b) Demand schedule and demand curve*
3. Shifts in supply and demand*
4. Factors influencing supply*
a) Number of producers*
b) Costs of production*
c) Opportunity costs*
5. Factors influencing demand*
a) Utility*
b) Income*
c) Price elasticity of demand*
d) Substitutes*
e) Complementary goods*
C. Competition among sellers lowers costs
and prices and encourages producers to produce more of what
consumers are willing and able to buy. Competition among buyers
increases prices and allocates goods and services to those people
who are willing and able to pay the most for them.*
1. Competition and competitive markets; incentives*
2. Price and non-price competition*
3. Market structures (basic types and examples)*
a) Monopoly*
b) Monopolistic competition*
c) Oligopoly*
d) Pure competition*
4. Investment decisions*
a) Innovation*
b) Technology*
D. Institutions evolve in market
economies to help individuals and groups accomplish their goals.
Banks, labor unions, corporations, legal systems, and not-for-profit
organizations are examples of important institutions. A different
kind of institution "clearly defined and well-enforced property
rights" is essential to a market economy.*
1. Financial intermediaries*
a) Roles*
b) Savings*
c) Interest*
2. Labor unions*
a) Basic functions*
b) Market power and strikes*
3. Property rights*
a) Importance to market decision-making*
b) "Tragedy of the Commons"*
c) Constitutional protections in the United
States*
(1) Due process*
(2) Patents and copyrights*
E. Money makes it easier to
trade, borrow, save, invest, and compare the values of goods and
services.*
1. Money and currencies*
2. Functions of money*
a) Medium of exchange*
b) Store of value*
c) Standard of value*
3. Money supply and changes in the supply of money*
a) Types of money—currency, demand deposits, savings
accounts, money market*
b) Definitions of money supply*
4. Interest rates: borrowing, saving, and investment spending*
F. Income for most people is determined
by the market value of the productive resources they sell. What
workers earn depends primarily on the market value of what they
produce and how productive they are.*
1. Income, wages, and salaries*
a) Rent*
b) Wages*
c) Interest*
d) Profit*
2. Derived demand and labor markets*
a) Demand for labor*
b) Wage rates*
G. Human Capital Development and Labor Productivity*
1. Factors influencing incomes*
2. Returns on investment in education*
3. Labor productivity*
4. Technology and productivity*
H. Investments in
factories, machinery, new technology, and the health, education, and
training of people can raise future standards of living.*
1. Human and physical capital*
2. Standard of living*
a) Definition*
b) Real growth*
c) Global income distribution—examples*
I. Entrepreneurs are people who take the risks of organizing
productive resources to make goods and services. Profit is an
important incentive that leads entrepreneurs to accept the risks of
business failure.*
1. Entrepreneurial risk and reward*
2. Profit and incentives*
3. Property rights*
III. Macroeconomics*
30%
A. A nation's overall
levels of income, employment, and prices are determined by the
interaction of spending and production decisions made by households,
firms, government agencies, and others in the economy.*
1. Aggregate demand*
a) Measurement*
b) Graphing*
2. Aggregate supply*
a) Measurement*
b) Graphing*
3. Gross domestic product and national income*
a) Nominal GDP*
b) Real GDP*
c) Per capita GDP*
4. The circular flow of the economy*
5. Economic growth*
a) Definitions: growth, recession, depression*
b) Measurements—nominal and real, GDP deflator*
B. Unemployment imposes
costs on individuals and nations. Unexpected inflation imposes costs
on many people and benefits others because it arbitrarily
redistributes purchasing power. Inflation can reduce the rate of
growth of national living standards because individuals and
organizations use resources to protect themselves against the
uncertainty of future prices.*
1. Labor force*
a) Definitions*
b) Measurements*
2. Employment and unemployment*
a) Employment rate*
b) Unemployment rate*
3. Unemployment—causes and types*
a) Structural unemployment*
b) Cyclical unemployment*
c) Frictional unemployment*
4. Unions and market power*
C. Money and the Money Supply*
1. Money supply—components and measures*
a) M1*
b) M2 and other measures*
2. Consumer price index*
3. Inflation*
4. Interest rates, adjusted for inflation, rise and
fall to balance the amount saved with the amount borrowed and thus
affect the allocation of scarce resources between present and future
uses.*
a) Nominal interest rates*
b) Types of interest rates; the "prime rate"*
c) Real/adjusted*
D. There is an economic
role for government to play in a market economy whenever the
benefits of a government policy outweigh its costs. Governments
often provide national defense, address environmental concerns,
define and protect property rights, and attempt to make markets more
competitive. Government policies also redistribute income.*
1. Public goods and services*
2. Basic taxes—federal and state*
a) Personal income*
b) Corporate income*
c) Sales*
d) Property*
e) Excise*
f) Capital gains*
3. Promoting competition*
a) U.S. Constitution commerce clause*
b) Antitrust laws*
4. Positive and negative externalities of public policy*
5. Income security and redistribution*
a) Social Security*
b) Welfare/Aid to Families with Dependent Children*
c) Unemployment compensation*
E. The costs of government policies sometimes exceed the benefits.
This may occur because of incentives facing voters, government
officials, and government employees, because of actions by special
interest groups that can impose costs on the general public, or
because social goals other than economic efficiency are being
pursued.*
1. Public policy goals*
a) Special interest groups*
b) Trade-offs*
c) Equity vs. efficiency*
2. Policy debates*
a) Immigration*
b) Environmental protection*
3. Price and wage controls*
a) Options and rationales*
b) Historical examples*
F. The federal government's budgetary policy and the Federal
Reserve System's monetary policy influence the overall levels of
employment, output, and prices.*
1. Fiscal policy goals and fiscal policy tools*
a) Federal taxes—major types*
b) Federal spending*
c) Fiscal policy options, spending, and
tax policy*
d) Keynesian economics*
2. National debt*
a) Size and composition*
b) Debt vs. deficit*
3. Federal Reserve System*
a) Structure*
b) Basic functions*
c) Operations*
4. Monetary policy goals*
a) Price stability*
b) Full employment*
c) Economic growth*
5. Monetary policy tools*
a) Open-market operations*
b) Discount rate*
c) Reserve requirements*
6. Supply-side policies*
IV.
International Trade and
Global Economic Development* 10%
A. Economic Growth and Development—Basic Concepts*
1. Global development patterns*
2. Problems of less-developed countries*
3. Economic development organizations*
a) World Bank*
b) International Monetary Fund*
c) Other organizations*
B. Foreign Trade and Exchange*
1. Absolute and comparative advantage*
2. Exchange rates, U.S. dollar, Japanese yen, and
European Union euro*
C. United States' Trade*
1. Exports, imports*
2. Trade balance and deficits*
D. International Organizations and Trade Agreements*
1. Tariffs and other trade barriers*
a) NAFTA, European Union, GATT*
b) Tariffs, quotas, protectionism*
c) Free trade debate*
2. Conflict resolution; recent uses of trade
sanctions*
V.
Slavery and the Economics of
the U.S. Civil War 15%
A. Slavery
1. Slavery in colonial America
2. Slavery after the American Revolution
3. Westward settlement and the slave question
B. The Economic Analysis of Slavery
1. The profitability of slavery
2. The viability of the slave system
3. The efficiency of slave agriculture
C. Slavery and Southern Economic Development
1. Property rights and incentives
2. Slavery and economic development
D. The Economics of the Civil War
1. Economics and the causes of the war
2. The costs of the war
3. Financing the war
4. The National Banking Act
5. Southern cotton exports and the Union blockade
E. The Legacy of the Civil War
1. Adapting to emancipation
2. Sharecropping and agricultural tenancy
F. Southern Economic Performance after the Civil War
The topics in sections I through III of the outline were developed
in accordance with and modeled on the Voluntary National Content
Standards in Economics, developed by the National Council on
Economic Education in partnership with the National Association of
Economic Educators and the Foundation for Teaching Economics. New
York: National Council on Economic Education, 1997.
*Asterisks indicate topics that students will need to research
independently (sections I, II, III, and IV of the outline).
Information relevant to sections I–IV ("Fundamental Economic
Concepts," "Microeconomics," "Macroeconomics," and "International
Trade and Global Economic Development") can be found in most general
economics textbooks as well as USAD's Economics Basic Guide.
