As part of the Goals 2000: Educate America Act of 1994, the National Council on Economic Education (NCEE) was asked by the Department of Education to develop the standards in economics—one of nine core subject areas.

After much deliberation and input from numerous sources, the NCEE developed the 20 standards listed below. The standards are primarily for educators and, in their complete form, include correlations with existing NCEE materials so that teachers have direction and suggestions for how to teach to the standards. For more information on the standards, visit EconomicsAmerica, on the Web.

Following are the 20 content statements, as well as the decision-making and reasoning skills that should result from students' fully understanding each of those content statements.

1. Productive resources are limited. Therefore, people can not 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.

2. Effective decision making requires comparing 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. Students will be able to use this knowledge to make effective decisions as consumers, producers, savers, investors, and citizens.
   

3. 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. Students will be able to use this knowledge to evaluate different methods of allocating goods and services, by comparing the benefits and costs of each method.
   

4. People 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.
   

5. Voluntary exchange occurs only when all participating parties expect to gain. This is true for trade among individuals or organizations within a nation, and usually among individuals or organizations in different nations. Students will be able to use this knowledge to negotiate exchanges and identify the gains to themselves and others. They will be able to compare the benefits and costs of policies that alter trade barriers between nations, such as tariffs and quotas.
   

6. When individuals, regions, and nations specialize in what they can produce at the lowest cost and then trade with others, both production and consumption increase. Students will be able to use this knowledge to explain how they can benefit themselves and others by developing special skills and strengths.

7. Markets exist when buyers and sellers interact. This interaction determines market prices and therefore allocates scarce goods and services. Students will be able to use this knowledge to identify markets in which they have participated as a buyer and as a seller and describe how the interaction of all buyers and sellers influences prices. They will also be able to predict how prices change when there is either a shortage or surplus of the product available.

8. Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives. Students will be able to use this knowledge to predict how prices change when the number of buyers or sellers in a market changes, and explain how the incentives facing individual buyers and sellers are affected.
   

9. 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. Students will be able to use this knowledge to explain how changes in the level of competition in different markets can affect them.

10. 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 enforced property rights, is essential to a market economy. Students will be able to use this knowledge to describe the roles of various economic institutions.

11. Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services. 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.

12. 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.

13. 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. Students will be able to use this knowledge to predict future earnings based on their career plans for education, training, and career options.
    

14. 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 failures. Students will be able to use this knowledge to identify the risks, returns, and other characteristics of entrepreneurship that bear on its attractiveness as a career.
    

15. Investment in factories, machinery, new technology and in the health, education, and training of people 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.
    

16. There is an economic role for government in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also redistribute income. Students will be able to use this knowledge to identify and evaluate the benefits and costs of alternative public policies, and assess who enjoys the benefits and who bears the costs.
    

17. Costs of government sometimes exceed 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. Students will be able to use this knowledge to identify some public policies that may cost more than the benefits they generate, and explain why the policies exist.
    

18. A nation's overall levels of income, employment, and prices are determined by the interaction of spending and production decisions made by all households, firms, government agencies, and others in the economy. Students will be able to use this knowledge to interpret media reports about current economic conditions and explain how these conditions can influence decisions made by consumers, producers, and government policy makers.
    

19. Unemployment imposes costs on individuals and nations. Unexpected inflation imposes costs on many people and benefits some 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. Students will be able to use this knowledge to make informed decisions by anticipating the consequences of inflation and unemployment.
    

20. Federal government budgetary policy and the Federal Reserve System's monetary policy influence the overall levels of employment, output, and prices. Students will be able to use this knowledge to anticipate the impact of federal government and Federal Reserve System macroeconomic policy decisions on themselves and others.

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The Economic Literacy Project

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