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1 ) Explain why productive resources are limited and why individuals, businesses, and governments have to make choices in order to meet needs and wants. • Explaining scarcity as a basic condition that exists when unlimited wants exceed limited productive resources
• Explaining land (an example of a natural resource), labor (an example of a human resource), capital (an example of a physical or human resource), and entrepreneurship to be the factors of production
• Explaining opportunity cost as the next best alternative to relinquish when individuals, businesses, and governments confront scarcity by making choices
Alabama Alternate Achievement Standards
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2 ) Explain how rational decision making entails comparing additional costs of alternatives to additional benefits. • Illustrating on a production-possibilities curve how rational decision making involves trade-offs between two options
• Explaining rational decision making as the comparison between marginal benefits and marginal costs of an action
Alabama Alternate Achievement Standards
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3 ) Describe different economic systems used to allocate scarce goods and services. • Defining command, market, and mixed economic systems
• Describing how different economic systems answer the three basic economic questions of what to produce, how to produce, and for whom to produce
• Evaluating how each type of system addresses private ownership, profit motive, consumer sovereignty, competition, and government regulation
Alabama Alternate Achievement Standards
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4 ) Describe the role of government in a market economy, including promoting and securing competition, protecting private property rights, promoting equity, providing public goods and services, resolving externalities and other market failures, and stabilizing growth in the economy. • Explaining how government regulation and deregulation policies affect consumers and producers
Alabama Alternate Achievement Standards
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5 ) Explain that a country's standard of living depends upon its ability to produce goods and services. • Explaining productivity as the amount of outputs, or goods and services, produced from inputs, or factors of production
• Describing how investments in factories, equipment, education, new technology, training, and health improve economic growth and living standards
Alabama Alternate Achievement Standards
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6 ) Describe how specialization and voluntary exchange between buyers and sellers lead to mutually beneficial outcomes. • Illustrating on a circular-flow diagram the product market; the factor market; the real flow of goods and services between and among businesses, households, and government; and the flow of money
• Constructing examples of specialization and exchange
• Illustrating on a table and graph the law of supply and demand
• Describing the role of buyers and sellers in determining market clearing price
• Illustrating on a table and graph how supply and demand determine equilibrium price and quantity
• Illustrating on a graph of supply and demand how price movements eliminate shortages and surpluses
• Illustrating on a graph how different factors cause changes in a market supply and demand
• Explaining how prices serve as incentives in a market economy
Alabama Alternate Achievement Standards
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7 ) Describe the organization and role of business. • Comparing types of business firms, including sole proprietorships, partnerships, and corporations
• Explaining the role of profit as an incentive, including short-term versus long-run decisions, for all firms
• Describing basic characteristics of pure competition, monopoly, monopolistic competition, and oligopoly
• Explaining ways firms finance operations, including retained earnings, stocks, and debt, and the advantages and disadvantages of each
• Explaining ways firms engage in price and nonprice competition
• Recognizing the role of economic institutions, including labor unions and nonprofit organizations, in market economies
Alabama Alternate Achievement Standards
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8 ) Explain the impact of the labor market on the United States' economy. • Identifying regional characteristics of the labor force of the United States, including gender, race, socioeconomic background, education, age, and regional specialization
• Explaining how supply of and demand for labor affect wages
• Describing characteristics that are most likely to increase wage and nonwage benefits, including skill, productivity, education, occupation, and mobility
• Explaining how unemployment and inflation impose costs on individuals and nations
• Determining the relationship of Alabama and the United States to the global economy regarding current technological innovations and industries (Alabama)
Examples: World Wide Web, peanut industry, telecommunications industry, aerospace industry • Tracing the history of labor unions and methods of contract negotiation by labor and management (Alabama)
Alabama Alternate Achievement Standards
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9 ) Describe methods used to measure overall economic activity, including the Gross Domestic Product (GDP), the Consumer Price Index (CPI), inflation, and unemployment. • Explaining how overall levels of income, employment, and prices are determined by spending decisions of households, businesses, and government; net exports in the short run; and production decisions of firms and technology in the long run
• Identifying structural, cyclical, and frictional unemployment
• Describing stages of the business cycle and how employment and inflation change during those stages
Alabama Alternate Achievement Standards
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10 ) Explain the structure, role, and functions of the United States Federal Reserve System. • Describing how the United States Federal Reserve System oversees the banking system and regulates the quantity of money in the economy
• Defining monetary policy
• Describing how the central bank uses its tools of monetary policy to promote price stability, full employment, and economic growth
Alabama Alternate Achievement Standards
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11 ) Explain how the government uses fiscal policy to promote the economic goals of price stability, full employment, and economic growth. • Defining fiscal policy and the use of taxation and government purchases
• Comparing government deficits and the national debt
Alabama Alternate Achievement Standards
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12 ) Explain why individuals, businesses, and governments trade goods and services in the global economy. • Defining absolute advantage and comparative advantage
• Explaining how gains from trade, whether between two individuals or two countries, are based on the principle of comparative advantage
• Defining exchange rates
• Explaining how changes in exchange rates impact purchasing powers of individuals and businesses
• Explaining tariffs, quotas, embargoes, standards, and subsidies as trade barriers
• Explaining why countries sometimes impose trade barriers and sometimes advocate free trade
Alabama Alternate Achievement Standards
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