Explain how economics influences a personal financial plan.
DefinitionExplanation should include
- describing how the key economics principles influence personal financial planning—i.e., that applying the principles affects the decisions made by individuals
- describing how changing economic conditions can influence a personal financial plan
- describing how fiscal policy actions can affect an individual’s current and future income.
Related Standards of Learning
History and Social Science
The student will demonstrate skills for historical thinking, geographical analysis, economic decision making, and responsible citizenship by
- planning inquiries by synthesizing information from diverse primary and secondary sources;
- analyzing how political and economic trends influence public policy, using demographic information and other data sources;
- comparing and contrasting historical, cultural, economic, and political perspectives;
- evaluating critically the quality, accuracy, and validity of information to determine misconceptions, fact and opinion, and bias;
- constructing informed, analytic arguments using evidence from multiple sources to introduce and support substantive and significant claims;
- explaining how cause-and-effect relationships impact political and economic events;
- taking knowledgeable, constructive action, individually and collaboratively, to address school, community, local, state, national, and global issues;
- using a decision-making model to analyze the costs and benefits of a specific choice, considering incentives and possible consequences;
- applying civic virtues and democratic principles to make collaborative decisions; and
- communicating conclusions orally and in writing to a wide range of audiences, using evidence from multiple sources and citing specific sources.
Other Related Standards
Economics and Personal Finance Standards of Learning
The student will demonstrate knowledge of basic economic concepts and structures by
- describing how consumers, businesses, and government decision makers face scarcity of resources and must make trade-offs and incur opportunity costs;
- explaining that choices often have long-term unintended consequences;
- describing how effective decision making requires comparing the additional costs (marginal costs) and additional benefits (marginal benefits);
- identifying factors of production;
- comparing the characteristics of market, command, tradition, and mixed economies; and
- identifying Adam Smith and describing the characteristics of a market economy.
The student will demonstrate knowledge of the role of producers and consumers in a market economy by
- describing how consumers, producers, workers, savers, investors, and citizens respond to incentives;
- explaining how businesses respond to consumer sovereignty;
- identifying the role of entrepreneurs;
- comparing the costs and benefits of different forms of business organization, including sole proprietorship, partnership, corporation, franchise, and cooperative;
- describing how costs and revenues affect profit and supply;
- describing how increased productivity affects costs of production and standard of living;
- examining how investment in human capital, capital goods, and technology can improve productivity;
- describing the effects of competition on producers, sellers, and consumers;
- explaining why monopolies or collusion among sellers reduces competition and raises prices; and
- illustrating the circular flow of economic activity.
The student will demonstrate knowledge of the role of government in a market economy by
- identifying goods and services provided by government to benefit society;
- identifying the role the government plays in providing a legal structure to protect property rights and enforce contracts;
- providing examples of government regulation of the market;
- explaining that governments redistribute wealth; and
- explaining that taxes and fees fund all government-provided goods and services.
The student will demonstrate knowledge of personal financial planning by
- identifying short-term and long-term personal financial goals;
- identifying anticipated and unanticipated income and expenses;
- examining components and purposes of a personal net worth statement;
- developing a personal budget;
- investigating the effects of government actions and economic conditions on personal financial planning; and
- explaining how economics influences a personal financial plan.