Standards for Two Sides of the Same Story

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.