Section III – Statement of the Critical Importance of Economic
and Financial Literacy for Students and Missouri Citizens
Part C: Content Standard and Benchmarks
Content Standard
Students will have knowledge of economics and personal finance concepts (including productivity, market system, spending, saving, and use of credit) and principles (including supply, demand, risk-return, and creditworthiness).
Benchmarks for Economics and Personal Finance
Kindergarten
1. People make choices because they cannot have all the goods and services they want. (EC/PF)
2. Consumers use goods and services. (EC/PF)
1. Producers make goods and provide services. (EC)
2. Whenever a choice is made, something is given up (opportunity cost). (EC/PF)
3. People save to buy goods and services in the future. (EC/PF)
1. Entrepreneurs, natural resources, human resources, and capital resources are combined to produce goods and services. (EC)
2. Trade is the exchange of goods, services, and resources using barter or money. (EC)
3. Saving is the part of income not spent and not paid in taxes. (EC/PF)
4. People pay for goods and services in different ways. (PF)
1. People can develop their human capital and use it when they work. (EC/PF)
2. There are different methods to distribute goods and services and there are advantages and disadvantages to each. No method of distributing goods and services can satisfy all wants. (EC)
3. Positive incentives and negative incentives affect people’s choices and behavior. (EC/PF)
4. People choose to trade because they expect to be better off. (EC)
5. Everyone specializes to some degree, and everyone depends on others to produce many of the things he or she consumes. (EC)
6. Banks, credit unions, and savings and loan associations are places where people save money and earn interest, and where other people borrow money and pay interest. (EC/PF)
7. A budget helps people plan their spending and saving. (PF)
1. The opportunity cost of a choice is the value of the best alternative given up. (EC/PF)
2. Most decisions require trade-offs. (EC/PF)
3. In markets, prices are determined when buyers and sellers interact. (EC)
4. Sellers compete on the basis of price, product quality, customer service, product design and variety, and advertising. (EC)
5. People can earn income by exchanging their work for wages or salaries or by receiving money as a gift. (EC/PF)
6. Workers can improve their productivity by gaining new knowledge, skills, and experiences; by using capital resources; and by specializing in specific tasks. (EC/PF)
7. Governments provide some goods and services and pay for them with taxes collected from citizens. (EC/PF)
8. When people use credit, they are borrowing money. Responsible borrowers repay as promised, showing that they are creditworthy. (PF)
1. Financial and non-financial choices that people make have benefits and costs and consequences. (EC/PF)
2. Resources can be used in different ways to produce different goods and services. (EC)
3. Money is anything widely accepted as final payment for goods and services. (EC/PF)
4. Entrepreneurs have many incentives including profit, self-employment, recognition, and creative satisfaction. (EC/PF)
5. Increases in productivity result from technological change and other sources. (EC)
6. Decisions involve trade-offs; decisions usually involve getting a little more of one thing by giving up a little of something else. (EC/PF)
1. Scarcity exists because there aren’t enough resources to satisfy everyone’s wants. (EC/PF)
2. Scarcity requires the use of some distribution method. In each economy, some distribution decisions are made in markets and some are made by governments. (EC)
3. Voluntary exchange, such as exports and imports among people or organizations in different countries, gives people a broader range of choices. (EC)
4. Standards of living increase as the productivity of labor improves. (EC)
5. Gross Domestic Product (GDP) is a basic measure of a nation’s economic output and income. (EC)
6. A key to financial well-being is to spend less than you earn and save the difference. (PF)
7. People perform basic financial tasks, such as paying bills on time and balancing a checkbook, to manage money. Some payment methods are more expensive than others. (PF)
Seventh Grade
1. Responses to incentives are predictable because people usually pursue their self-interest. Incentives can be monetary or non-monetary. (EC/PF)
2. Compound interest is earned on both principal and previously earned interest. The interest earned depends on time, interest rate, and the amount saved. (PF)
3. People’s incomes, in part, reflect choices they have made about education, training, skill development, and careers. People with few skills are more likely to be poor. (EC/PF)
4. At higher prices, consumers tend to purchase less of a good or service. At lower prices, consumers tend to purchase more. (EC/PF)
5. At higher prices, producers tend to produce more of a good or service because it is more profitable. At lower prices, producers tend to produce less. (EC)
6. Many workers receive employee benefits in addition to their pay. (PF)
7. Wages/salaries minus payroll deductions equals take-home pay. (PF)
8. Financial investment products differ in their potential rate of return, liquidity, and level of risk. (PF)
1. Many nations employ trade barriers for national defense reasons or because some companies and workers are hurt by free trade. (EC)
2. More productive workers are likely to be of greater value to employers and earn higher wages than less productive workers. (EC/PF)
3. If a good or service cannot be withheld from those who do not pay for it, providers expect to be unable to sell it and therefore will not produce it. In market economies, governments provide some of these public goods. (EC)
4. Most federal tax revenue comes from personal income taxes and payroll taxes and is spent on public goods and transfer payments. (EC/PF)
5. Most state and local government revenues come from sales taxes, grants from the federal government, personal income taxes, and property taxes. These revenues are spent for education, public welfare, road construction and repair, and public safety. (EC/PF)
6. Inflation reduces the purchasing power of income and the value of the return on a financial investment. (EC/PF)
7. When unemployment exists, an economy’s production is less than it could be. (EC)
8. Government transfer payments provide unearned income to some households. (EC/PF)
9. Laws and regulations exist to protect consumers from a variety of seller and lender abuses. (PF)
1. The evaluation of choices and opportunity costs is subjective; such evaluations differ across individuals and societies. (EC/PF)
2. As long as the extra benefit of an activity exceeds the extra cost, people are better off doing more of it; when the extra cost exceeds the extra benefit, they are better off doing less of it. (EC/PF)
3. Trade barriers have costs, benefits and consequences, such as limited product choice, protection of some jobs, and higher consumer prices, respectively. (EC)
4. Two factors that prompt international trade are comparative advantage and international differences in the availability of productive resources. These factors can change over time. (EC)
5. Market prices are determined by the interaction of demand and supply. Market prices change as a result of changes in demand or supply. (EC)
6. Effective price ceilings cause persistent shortages and effective price floors cause persistent surpluses. (EC).
7. Labor unions represent some workers in negotiations with employers involving wages, employee benefits, and work. (EC)
8. Riskier loans command higher interest rates than safer loans because of the greater chance of default on the repayment of risky loans. (PF)
9. Higher interest rates encourage saving and discourage borrowing for consumers and businesses. (EC/PF)
10. Changes in the prices for productive resources affect the combination of those resources used by firms. (EC)
11. Government tax and regulatory policies influence the decisions of individuals and businesses. (EC/PF)
12. Productivity increases and economic growth result from investment in human capital and capital resources, research and development, technological change, and improved institutional arrangements and incentives. (EC)
13. Historically, economic growth has been the primary vehicle for alleviating poverty and raising standards of living. (EC)
14. Markets tend to allocate resources effectively unless (1) property rights are not clearly defined or enforced, (2) significant externalities exist, (3) markets are not competitive, or (4) consumers can be free riders. (EC)
15. The potential level of GDP for a nation is determined by the quantity and quality of its natural resources, the size and skills of its labor force, and the size and quality of its stock of capital resources. (EC)
16. Unexpected inflation hurts savers and people on fixed incomes; it helps people who have borrowed money at a fixed rate of interest. (EC/PF)
17. The federal government may have a balanced budget, budget deficit, or a budget surplus. Accumulated deficits make up the national debt. (EC)
18. Changes in monetary policy by the Federal Reserve System lead to changes in the money supply and the availability of credit. (EC)
19. Changes in fiscal policy affect the nation’s overall level of employment, output and prices. (EC)
20. The wage/salary paid for a given job depends on a worker’s skills and education, plus the importance of the work to society and the supply of and demand for qualified workers. (EC/PF)
21. Social Security and Medicare provide insurance against some loss of income and benefits to eligible recipients. (PF)
22. People pay taxes on many types of income, such as wages or salaries, interest, dividends, capital gains, tips, commissions and profit from a self-owned business. (PF)
23. Deductions, exemptions, and tax credits reduce taxable income. (PF)
24. Employer-sponsored savings plans provide many advantages to workers. (PF)
25. Risk management strategies include risk avoidance, risk control, and risk transfer through insurance. (PF)
26. A personal financial plan includes financial goals, a net worth statement, an income and expense record, an insurance plan, a saving plan, and a budget. Financially responsible individuals accept the fact that they are accountable for their financial future. (PF)
27. Legal contracts can be an important part of financial planning. (PF)
28. For any given loan amount and interest rate, the longer the loan period, the smaller the monthly payment and the larger the total cost of credit. Making minimum payments on credit card balances increases the total cost and repayment time. (PF)
29. Credit bureaus maintain credit reports, which record borrowers’ histories of repaying loans. Negative information in credit reports can affect a person’s financial future. (PF)
30. There are consequences when people borrow more money than they are able to repay. Consumers with excessive debt have a number of options. Bankruptcy provides debt relief, but has serious negative consequences. (PF)
31. Leasing, borrowing to buy, and rent-to-own options have different contract terms and costs. (PF)
32. Tax-exempt and tax-deferred financial investments significantly increase an investor’s total return over time. (PF)
33. Wealth increases with regular saving, time, and frequent compounding. (PF)
34. Diversification reduces risk by spreading assets among several types of financial investments and industry sectors. (PF)