Why it's Important to Understand Economics | Federal Reserve Bank of Minneapolis - 1 views
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The case for economic literacy is a strong one.
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Economic literacy certainly contributes to the first class of knowledge. People like to think and talk about the economic issues that affect them as consumers, workers, producers, investors, citizens and in other roles they assume over a lifetime.
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Economic literacy also gives people the tools for understanding their economic world and how to interpret events that will either directly or indirectly affect them.
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For some economic decisions, such as buying a home or investing in the stock market, it is possible to hire professional or technical help when making a choice, but in most cases it is neither economical nor practical for an individual to hire a skilled professional every time an economic decision needs to be made.
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The development of economic literacy must begin in the schools. Even young children are capable of learning basic economic concepts that help them understand their economic world. In the secondary years, that initial foundation can be expanded to include instruction in a broader set of economic ideas and concepts
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Some may think that economics is too difficult a subject to be taught to children and youth, and that such instruction should wait until college
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Waiting until students are in college to teach economics is simply a matter of "too little and too late." The majority of students end their formal education with secondary school, and even those students who continue their learning at a college or university may not take an economics course.
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Economic literacy improves the competence of each individual for making personal and social decisions about the multitude of economic issues that will be encountered over a lifetime.
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First, teachers must be knowledgeable about the subject and be able to help students learn how to use basic economic concepts to analyze personal and social issues. Second, good curriculum guides and instructional materials are needed that present economic content at an appropriate level for the student to understand. Third, economics must have a central place in the school curriculum—similar to math, science, history and language arts—so that substantial classroom time is devoted to economics instruction
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A study of high school transcripts shows that only about 44 percent of high school students take a separate course in economics. This course is usually offered in the 12th grade as an elective and lasts for only a semester.
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Given this situation—that fewer than half of high school graduates take a course in economics—it should not be surprising that study after study show that there is widespread economic illiteracy among youth and the American public.
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Some 87 percent of high school seniors rated their knowledge and understanding of economic and economic issues as only fair or poor.
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Knowing what determines prices in a market economy and accepting the outcomes are two different things. If demand or supply conditions change, prices in a competitive market will rise and fall. Having a basic understanding of how markets work does not always mean that people will like price changes, especially if prices rise, but it should increase the probability of accepting the market outcome
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The development of basic economic literacy is an important goal for a democratic society that relies heavily on informed citizenry and personal economic decision-making.
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To achieve that goal will require that significant gaps in the economic education of youth be closed by giving economics a more central place in the school curriculum. More economics coursework at the precollege level sets a foundation for economic literacy, but it is only the beginning.