Economic Literacy, according to the 1997 California History-Social Science Framework, is defined in the following manner:
To develop economic literacy, students must:
Understand the basic economic problems confronting all societies. Basic to all economic decision making is the problem of scarcity. Scarcity requires that all individuals and societies make choices about how to use their productive resources. Students need to understand this basic problem confronting all societies and to examine the ways in which economic systems seek to resolve the three basic economic problems of choice (determining what, how, and for whom to produce) created by scarcity.
Understand comparative economic systems. Beginning in the elementary school, students should be introduced to the basic processes through which market economies function and to the growing network of markets and prices that reflect shifting supply and demand conditions in a market economy. In later years, students should be able to compare the origins and differentiating characteristics of traditional, command, market, and “mixed” economic systems. Students should understand the mechanisms through which each system functions in regulating the distribution of scarce resources in the production of desired goods and services, and they should analyze their relationships to the social and political systems of the societies in which they function.
Understand the basic economic goals, performance, and problems of our society. Students need to be able to analyze the basic economic goals of their society; that is, freedom of choice, efficiency, equity, full employment, price stability, growth, and security. Students should also recognize the existence of trade-offs among these goals. They need to develop analytical skills to assess economic issues and proposed governmental policies in light of these goals. They also need to know how to explain or describe the performance of the nation’s economy. Finally, students need opportunities to examine some of the local, national, and global problems of the nation’s mixed economy, including (1) inflationary and deflationary pressures and their effects on workers’ real earnings; (2) underemployment and labor; (3) the persistence of poverty in a generally productive economy; (4) the rate of growth and worker production and hence material output; and (5) the successes and failures of governmental programs.
Understand the international economic system. Students need to understand (1) the organization and importance of the international economic system; (2) the distribution of wealth and resources on a global scale; (3) the struggle of the “developing nations” to attain economic independence and a better standard of living for their citizens; (4) the role of the transnational corporation in changing rules of exchange; and (5) the influence of political events in the international economic order.