Unit 1: What challenges does a market economy address?
Students develop a foundational understanding of the principles and dynamics of a market economy. (12.1 & 12.6)
CONTENT
ENDURING UNDERSTANDINGS
Economic Fundamentals
 6 Principles of Economic Thinking (Ch. 1.2-1.4):
1.
2.
3.
4.
5.
6.
o
What is economic thinking?
No free lunch
Cost benefit analysis
Incentives matter
Trade increases wealth
Markets coordinate trade
Future consequences count
rational behavior model
 Scarcity (Ch. 2.2-2.4, pgs 43-44):
o What, how and for whom to produce?
o market economy
o factors of production
o entrepreneurship
o circular flow of the economy
o opportunity costs
 Trade (Ch. 4.2 & 4.4):
o specialization, wealth
In a market economy, how does the circular flow of the economy address scarcity?
How does trade increase wealth?
Critical Thinking Reflection: Which of the 6 principles of economic thinking most applies to addressing scarcity?
$ Income from sale of factors
(gross and net)
$ Payments for factors
Factor Markets
Factors of Production:
Land, Labor, Capital
Factors of Production:
Land, Labor, Capital
Businesses/
Firms/
Producers/
Suppliers
Individuals/
Consumers/
Households
Goods & Services
Goods & Services
Product Markets
$ Consumer Spending
$ Profit from sale of goods and services
(gross and net)
Unit 2: What makes a market economy work?
Students analyze the relationship between demand and supply and the role of banking and savings in a market economy. (12.2)
CONTENT
ENDURING UNDERSTANDINGS
Demand, Supply and Price 2.1

Demand (Ch. 5.2-5.3 & 5.6):
o demand curve
o law of demand
o change in quantity demanded vs. change in demand
o demand shifter (determinants)
o demand elasticity

Supply (Ch. 5.4-5.5 & 5.7):
o supply curve
o law of supply
o change in quantity supplied vs. change in supply
o supply shifters (determinants)

Price (Ch. 6.2-6.6 & 2.2):
o interaction of supply and demand
o market equilibrium
o shortages and surpluses
o price ceilings and price floors
Select any product and graph a demand curve for the product and explain and graph changes in
quantity demanded. Graph and explain changes in demand with specific reference to demand
shifters (determinants). Graph and explain demand elasticity.
Select any product and graph a supply curve for the product and explain and graph changes in
quantity supplied. Graph and explain changes in supply with specific reference to supply shifters
(determinants). Explain supply elasticity.
As a form of incentive, how do prices help markets coordinate trade?
What is the purpose of price ceilings and price floors? How do they sometimes produce unintended
consequences?
Banking, Saving and Investing 2.2
 Money and Financial Institutions (Ch. 8.2-8.3):
o functions of money
o currency
o assets
o liquidity
o loans and bank reserves
Individual deposits contribute to the circular flow of the economy. How are deposits an example of
the ‘future consequences count’ principle?
 Personal Savings and Investment (Ch. 8.3-8.5, 9.5):
o interest rates
o stocks and bonds
o corporations: limited liability
o consumer credit and debt
o diversification
o funding retirement
Since future consequences count, what habits should you develop when you
 save?
 invest?
 incur debt ?
Unit 3: What do markets fail at?
Students analyze markets, failures, and regulations in a market economy. (12.2, 12.4)
CONTENT
ENDURING UNDERSTANDINGS
Markets, Failures and Regulations

Market Structures (Ch. 7.2 -7.5):
o perfect competition
o monopoly
o oligopoly
o monopolistic competition
Given the economic principle of ‘trade increases wealth’, when is a monopoly an appropriate way to
structure a market?

Market Failures (Ch. 7.6, 11.4)
o externalities
o public goods
What is the connection between public goods and the economic principle that ‘incentives matter’?

Labor Market (Ch. 10.2-10.3 & 10.5):
o outsourcing and offshoring
o human capital: education and skills
o salary and wages, benefits
o unions
In a market economy, why do labor unions exist?

Regulating Markets (Ch. 11.3-11.4, 7.6):
o regulatory agencies
o deregulation
Since the circular flow of the economy ‘coordinates trade’, why does government regulation exist?
Critical Thinking Reflection: Choose a specific market and analyze successes and failures. For example: labor market, specific product market,
stock market, on-line market, bond market, currency market, or any other market approved by your teacher.
Unit 4: What is the proper role of government in a market economy?
Students analyze the role of government in measuring and managing the growth of the U.S. economy. (12.3 & 12.5)
CONTENT
ENDURING UNDERSTANDINGS
Alternatives to a Market Economy 4.1
 Alternative Economic Systems (Ch. 3.3):
o traditional
o command
Which of the six economic principles do not play a role in a command economy?
 Mixed Economies (Ch. 3.4-3.5):
o mixed market
o U.S. capitalism and it’s characteristics
Why is government intervention in the economy necessary in order to fulfill the six economic principles?
Measuring the Economy 4.2

Measuring the Economy (Ch. 13.2-13.5):
o GDP
o inflation
o unemployment
o business cycle: recession, depression
Why does the government measure inflation in the circular flow of the economy?
Why does the government measure unemployment in the circular flow of the economy?
What role does the government play in the business cycle?
Managing the Economy 4.3

Monetary Policy (Ch. 14.4, Ch. 8.3 pg. 149-150):
o Federal Reserve
o loans and the money supply
o tight money policy
o easy money policy
Under what circumstances should the Federal Reserve engage in tight money policy or easy money
policy?

Fiscal Policy (Ch. 12.2-12.4):
o legislative and executive branches
o taxes
o budget priorities
o entitlements
o discretionary spending,
What role does fiscal policy play in the circular flow of the economy?

Supply Side and Demand Side Economics (Ch. 14.2-14.3 & 14.5):
o expansionary and contractionary policy
o automatic stabilizers
o debt and deficit spending
What are the limits of monetary policy and fiscal policy in encouraging economic growth?
Critical Thinking Reflection: What are the responsibilities, if any, of consumers, producers, financial institutions and the government in ensuring
economic justice in the U.S.?
Key Term Map for: ____________________________
1. Definition
2. Examples and opposites
≠
3. Related course principles
4. Symbolic graphic, specific current application, multiple perspectives, convergence, paradox, contribution,
interdisciplinary connection
Box #1 – Definition: Use any of the following to help create the definition: the glossary at the end of the
textbook, the “Speaking of Economics” section at the beginning of each chapter, the related section in the
textbook, and/or guided reading and note-taking packet
Box #2 – Examples and opposites ≠: List examples from previous units, your historical study, current events or
hypotheticals. Also list example(s) that are opposite or is in contrast to the key term, and tag all opposites with
the ≠ symbol.
Box #3 – Related course principles: List the economic thinking principles that are most closely related to the
key term.
Box #4 – Choose one or more of the following:







symbolic graphic: draw a picture that is a metaphorical representation of the key term
specific current application: identify and explain a current event that exemplifies the key term
multiple perspectives: explain an alternative or opposing point of view
convergence: identify how the key term merges or interrelates with another term
paradox: explain inconsistencies or contradictions that are associated with this key term
contribution: explain the origin of the key term and/or identify what this term makes possible
interdisciplinary connection: identify instances, analogies, or insights from other fields of study