Standards for The Early 1980s: A Tough Time For Home Builders and Mortgage Bankers

Standard: 14

Name: Banks, Interest Rates, and Financial Markets

Banks connect savers and borrowers by accepting deposits and making loans, with the interest rate serving as the price of money borrowed or saved. Businesses can also obtain funds by issuing debt or selling ownership shares in the company.

• K-5: At the elementary school level, students learn about the role of banks and interest.
• 6-8: Middle school students understand what a bank does with the money people deposit and how interest rates are determined by markets.
• 9-12: High school students learn about financial markets, including stock and bond markets. The concept of real interest rate is introduced, as is how interest rates impact lenders and borrowers.Benchmark Students will know that: Students will use this knowledge to: 14.E.1 Banks are businesses where people save money and earn interest, and where people borrow money and pay interest.Role-play bankers taking in deposits from customers who earn interest and other customers taking out loans and paying interest.E: ELEMENTARY STUDENTS

Standard: 18

Name: Fiscal Policy and Taxation

Fiscal policy refers to government taxation and spending decisions. The federal government’s budget policy influences the overall levels of employment, output, and prices. Taxation impacts the behaviors and circumstances of individuals and businesses.

• 6-8: Middle school students learn the sources of government revenues and how those revenues are spent.
• 9-12: High school students learn about how changes in fiscal policy affect the spending of consumers and producers and therefore influence the economy. Various types of taxes are introduced as well as the concept of tax progressivity. Finally, the funding of federal budget deficits is described.Benchmark Students will know that: Students will use this knowledge to: 18.M.1 Most federal government tax revenue comes from personal income and payroll taxes. Additional revenue sources include corporate taxes, excise taxes, and other taxes.Use U.S. federal budget data from the Congressional Budget Office to construct a pie chart depicting major categories of federal revenue and discuss why most revenue comes from income and payroll taxes. Explain why federal tax revenues increase when the economy expands. 18.M.2 Payments to Social Security recipients, the costs of national defense and homeland security, medical expenditures (such as Medicare), transfers to state and local governments, and interest payments on the national debt constitute the bulk of federal government spending.Use data from the U.S. federal budget to construct a pie chart depicting the major categories of federal expenditures. Explain why federal government expenditures decrease when the economy expands. 18.M.3 Although the sources of revenue vary greatly by state, typical sources of state and local government revenues include sales taxes, grants from the federal government, personal income taxes, and property taxes.Identify the various sources of state and local revenues and various categories of state and local expenditures in their state. 18.M.4 The bulk of state and local government revenue is spent on education, public welfare (including hospitals and health), road construction and repair, and public safety.Describe local government services that are used by the residents of their community and explain where the funds come from to pay for those services.M: MIDDLE SCHOOL STUDENTS National Content Standards in K–12 Economics | 61 Standard 18: Fiscal Policy and Taxation

Standard: 17

Name: Monetary Policy

Monetary policy refers to interest rate and money supply decisions made by a central bank. In the United States, the Federal Reserve uses monetary policy to promote maximum employment and a low, stable rate of inflation.

• 6-8: Middle school students learn that the Federal Reserve is the central bank of the United States and are introduced to the goals of the Federal Reserve.
• 9-12: High school students learn about the composition of the Federal Reserve. They then learn about how monetary policy is implemented and how a change in the federal funds rate can impact the economy.Benchmark Students will know that: Students will use this knowledge to: 17.M.1 The Federal Reserve is the central bank of the United States. A country’s central bank oversees and regulates the banking system and sets monetary policy to promote a healthy economy.Explain how a central bank provides benefits for citizens, the banking system, and the economy overall. 17.M.2 Monetary policy is the actions taken by a central bank that influence interest rates and overall financial conditions in an economy.Discuss how changes in interest rates affect a business’s or individual’s decision whether to save or invest. 17.M.3 The Federal Reserve has a dual mandate from the U.S. Congress to promote maximum employment and price stability in the U.S. economy.Explain why both maximum employment and price stability are important to consumers, producers, and the economy overall.

Name: Investing

Standard: 4

• Students will understand that: People can choose to invest some of their money in financial assets to achieve long-term financial goals, such as buying a house, funding future education, or securing retirement income. Investors receive a return on their investment in the form of income and/or growth in value of their investment over time. People can more easily achieve their financial goals by investing steadily over many years, reinvesting dividends, and capital gains to compound their returns. Investors have many choices of investments that differ in expected rates of return and risk. Riskier investments tend to earn higher long-run rates of return than lower-risk investments. Investors select investments that are consistent with their risk tolerance, and they diversify across a number of different investment choices to reduce investment risk.

Name: Managing Credit

Standard: 5

• Students will understand that: Credit allows people to purchase and enjoy goods and services today, while agreeing to pay for them in the future, usually with interest. There are many choices for borrowing money, and lenders charge higher interest and fees for riskier loans or riskier borrowers. Lenders evaluate creditworthiness of a borrower based on the type of credit, past credit history, and expected ability to repay the loan in the future. Credit reports compile information on a person’s credit history, and lenders use credit scores to assess a potential borrower’s creditworthiness. A low credit score can result in a lender denying credit to someone they perceive as having a low level of creditworthiness. Common types of credit include credit cards, auto loans, home mortgage loans, and student loans. The cost of post-secondary education can be financed through a combination of grants, scholarships, work-study, savings, and federal or private student loans.

Name: Saving

Standard: 3

• Students will understand that: People who have sufficient income can choose to save some of it for future uses such as emergencies or later purchases. Savings decisions depend on individual preferences and circumstances. Funds needed for transactions, bill-paying, or purchases, are commonly held in federally insured checking or savings accounts at financial institutions because these accounts offer easy access to their money and low risk. Interest rates, fees, and other account features vary by type of account and between financial institutions, with higher rates resulting in greater compound interest earned by savers.