understands the characteristics of a market economy.

understands the components of fiscal policy.

understands the tools of monetary policy.

understands the effects of incorporation on investment and economies of scale.

understands the components of money supply.

understands the role of government in the transfer of income.

understands the applications of economic indicators.

understands the difference between a budget deficit and the national debt.

explains the importance of property rights, contract enforcement, standards for weights and measures, and liability rules in providing incentives for production.

examines the impact of public policy decisions on prices, job opportunities, and profits.

analyzes the impacts of taxes and government spending on economic growth and stability.

analyzes the impacts of interest rates and money supply on economic growth and stability.

explains the role fo the Federal Reserve in determining monetary policy.

compares the tools of monetary policy (e.g., purchases and sales of government securities, changes in the discount rate, increases or decreases in the reserve requirement).

analyzes the effects of government transfers of income (e.g., Social Security, Termporary Aid to Needy Families).

analyzes the relationship between economic indicators (e.g., unemployment claims, stock prices, money supply, changes in inventories, personal income, orders for new equipment) and economic decisions.

examines the impact of economic growth.

explains that when the government runs a budget deficit, it must borrow to finance that deficit.

analyzes the impact of continuing national debt on economic growth and stability.

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Frequently Asked Questions - 2005-2006 Testing Schedule - What to Expect on the Day of the Test

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