National Standards in Economics
Below are the National Standards in Economics that most closely relate to the following lesson. Switch to National Standards in Personal Finance
Theme 5: Lesson 20 - What's the Cost of Spending and Saving?
- Decision Making
- Students will understand that: Effective decision making requires comparing the additional costs of alternatives with the additional benefits. Many choices involve doing a little more or a little less of something: few choices "are all or nothing" decisions.
- Students will be able to use this knowledge to: Make effective decisions as consumers, producers, savers, investors, and citizens.
- Students will understand that: Entrepreneurs take on the calculated risk of starting new businesses, either by embarking on new ventures similar to existing ones or by introducing new innovations. Entrepreneurial innovation is an important source of economic growth.
- Students will be able to use this knowledge to: Identify the risks and potential returns to entrepreneurship, as well as the skills necessary to engage in it. Understand the importance of entrepreneurship and innovation to economic growth, and how public policies affect incentives for and, consequently, the success of entrepreneurship in the United States.
- 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.
- Students will be able to use this knowledge to: Identify what they gain and what they give up when they make choices.
- Interest Rates
- Students will understand that: Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, which affects the allocation of scarce resources between present and future uses.
- Students will be able to use this knowledge to: Explain situations in which they pay or receive interest, and explain how they would react to changes in interest rates if they were making or receiving interest payments.
- Students will understand that: People usually respond predictably to positive and negative incentives.
- Students will be able to use this knowledge to: Identify incentives that affect people's behavior and explain how incentives affect their own behavior.
- Economic Growth
- Students will understand that: Investment in factories, machinery, new technology, and in the health, education, and training of people stimulates economic growth and can raise future standards of living.
- Students will be able to use this knowledge to: Predict the consequences of investment decisions made by individuals, businesses, and governments.
- Money and Inflation
- Students will understand that: Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services. The amount of money in the economy affects the overall price level. Inflation is an increase in the overall price level that reduces the value of money.
- Students will be able to use this knowledge to: Explain how their lives would be more difficult in a world with no money, or in a world where money sharply lost its value.