2110,141 1 2:71.Some of the basic material in this report has been previously publishedfor the purpose of making available to business education teachers suggestionsfor including economic understandings in business education courses.Thesesuggestions were developed at a workshop and reviewed at conferences of business meta and business educators.This release contains the material included in the original report plus anexpanded and up-to-date bibliography and an outline of a one - semester, course inthe American economy which was developed by the Bureau of Scondary Education ofthe California State Department of Education.Miss M. Claire O'Brien, Consultant, Bureau of Business Education, conductedthe economic education workshop and the business education conferences andassumed the responsibility for developing this release.The State Superintendent of Public Instruction, the State Board of Education, as well as businessmen and industrial leaders are very much concernedabout the need to expand the extent and scope of teaching economics in the publicschools of California.Business educators have a very important part to play inthis new effort.We hope that this report will be valuable to business teachers in implementing some of the suggestions made by businessmen and educators.It is hoped,also, that business teachers will be resourceful in developing new methods ofintroducing economic understandings in business courses.R. C. Van Wagenen, ChiefBureau of Business Education

TABLE OF CONTENTSIntroductioniiAcknowledgments.OOOOOO OOOOOOOOOOOOOEconomic Understandings in Business and Distributive Subjectsiv1Bookkeeping and Economic Education15Business Law and Economic Education19Business Mathematics and Economic Education23General Business and Economic Education31Merchandising and Economic Educatior40Shorthand, Typewriting, Business English and Economic Education.45Selected Sources of Materials in Economic Education46Selected Bibliography in Economic Education48Appendix A:Generalizations from Economics50Appendix B:The American Economy56i

INTRODUCTIONThis publication is basedupon a report of a workshop heldduring the summerof 1961. The workshopwas sponsored by theBureau of Business Educationfor thepurpose of developing some examplesof materials relative toeconomic understandings which could be includedin business educationsubjects.The participants inthe workshop were the Californianswho attended theNational Workshop on Economicsfor Business EducationTeachers at Montclair StateCollege, New Jersey, in 1960.The personnel of the workshopfollows:Leo A.Dierks, Chairman of BusinessEducation Department, SamuelAyer High School, Milpitas;Lionel B. Goularte,Chairman, Business EducationDepartment, Woodside High School,Redwood City;Peter Kanonchoff, Chairman,Business Education Department, MonroeHigh School,Los Angeles; Dr. RichardS. Perry, Chairman,Business Education Department, SanFernando Valley State College,Northridge; Robert D. Rankin,Business EducationTeacher, Taft High School,Los Angeles; Dr. RobertJ. Thompson, Chairman,BusinessEducation Department, FoothillCollege, Los Altos. Miss M. ClaireO'Brien,Consultant in Business Education,Bureau of Business Education,California StateDepartment of Education,was the director of theworkshop.Dr. Harold Bienveru,Director of the SouthernCalifornia Council on EconomicEducation, and Dr. VernonOuellette, Director of theNorthern California Councilon Economic Education,were consultants to the group.The preliminary draft of thereport was produced in the 1961summer workshop. The materialincluded in this publicationis the result of suggestionsmadeby groups and individualsto whom the report wassubmitted for review.Dr. James D. Calderwood,Professor, School of BusinessAdministration,University of SouthernCalifornia, reviewed the report and madesuggestions forits 7711,AALS,7

The workshop was organized as the result of a recommendation of an advisorycommittee formed to consider ways in which the Bureau of Business Educationcould encourage the teaching of oconomics in business education subjects in highschools and of encouraging business education teachers to participate in teaching courses in economics.The participants in the workshop agreed that a high school course in economics should be offered to all students in order to bring together economicunderstandings which had been presented in many courses in elementary and highschool either as a planned part of the course of study or as incidental information.Topics may be introduced into most business education subjects which wouldprovide information concerning economic problems.These topics afford appropriateset'-,ings in which to examine and to discuss the application of basic economicprinciples.In all discussions relating to economic understandings, the studentsshould be encouraged to appreciate the relationship between economics and thesubjects they are studying in addition to developing skills in analyzing economicproblems and in making intelligent choices based on accurate information.The information contained in this report are examples of economic understandings which could be used in business subjects and are designed for teacheruse rather than student use.It is hoped this information will stimulate teachersto find additional ways of including economic principles in the courses they teachin order to increase the students' understanding of the American economic system.iii

Appreciation is extended to the people who attended the conferences whichwere conducted to review the material developed in the workshop.ences were held in Sacramento, Los Angeles, and Hayward.Three confer-The nams of the con-ference participants follow:Phillip Ashworth, Supervisor, Business Education, San Diego City Schools, SanDiegoFrank Baker, Chairman, Business Education Department, Hiram Johnson Senior HighSchool, SacramentoSelmer H. Berg, Superintendent, Oakland Unified School District, OaklandRonald Bernard, Business Education Teacher, Arroyo High School, San LorenzoJoseph Blanchard, District Superintendent and Principal, Manteca Union HighSchool, MantecaMike Bronner, Business Education Teacher, Andrew Hill High School, San JoseGeorge P. Brubaker, President, Brubaker Inc., Los Angeles, Young Presidents'Organization representativeVerlin Burchard, Principal, Tracy High School, TracyIvor Calloway, Principal, Polytechnic High Schools San FranciscoRay P. Carreon, Business Education Teacher, Napa High School, NapaWilliam A. Clark, Chairman, Business Education Department, Pacific High Schml,San LeandroM. L. Crawford, Secretary to the Faculty, San,Diego State College, San DiegoDr. Gerald D. Cresci, Consultant, Bureau of Junior College Education, SacramentoDon Dachner, Business Education Teacher, Davis Senior. High School, DavisRoger A. Davey. Director of Business Education, Stockton Unified School District,StocktonSid Davidson, Dean, Samuel Ayer High School, MilpitasJames Deitz, Business Education Department, University of California, Los AngelesOrville De Jong, Business Education Teacher, Lodi High School, LodiLeo Dierks, Chairman, Business Education Department, Samuel Ayer High School,MilpitasDr. Lawrence W. Erickson, Professor of Education, University of California, LosAngelesGeorge Fernandez, Principal, Cupertino High School, SunnyvaleClyde E. Ford, Teacher, San Gabriel High School, San GabrielDorothy M. Ford, Consultant, Business and Distributive Education, Los AngelesCounty Schools, Los AngelesDr. Albert C. Fries, Chairman, Division of Business, Chico State College, ChicoBlossom E. George, Director of Instruction, Colton Union High School District,ColtonLionel B. Goularte, Chairman, Business Education Department, Woodside High School,Redwood CityDr. Jessie C. Gustafson, Head, Department of Business Education, Los Angeles StateCollege, Los AngelesRichard Helm, Director of Business Education, Fresno City Schools, FresnoGary E. Howard, Coordinator of Distributive Education, Berkeley Unified SchoolDistrict, Berkeley-e--"7'747 5;a7.7:77.1-5,-.737,zi.,-WaNC: WEI

Peter Kanonchoff, Chairman, Business Education Department, Monroe High School,Los AngelesBernard Kerne, Business Education Teacher, Castlemont High School, OaklandMead. B. Kibbey, President, Black Diamond Company, Sacramento; Representing YoungPresidents' OrganizationMildred Lee, Chairman, Business Education Department, San Gabriel High School,San GabrielDr. John H. Linn, President, California Business Education Association, San Francisco State College, San FranciscoDr. William Mason, Director, Center on Economic Education, San Francisco StateCollege, San FranciscoMilton C. McDowell, Chairman, Business Education Department, Capuchino HighSchool, San BrunoWarren Meyer, Business Education Teacher, Woodland High School, WoodlandTillie Neft, Chairman, Business Education Department, Aviation High School, SouthBay Union High School District, Redondo BeachJames Norton, Director of Guidance, San Rafael City Schools, San RafaelDr. Vernon Ouellette, Director, Northern California Council on Economic Education,San Francisco State College, San FranciscoJoanne Pamer, Business Education Teacher, John Burroughs High School, BurbankDr. Richard S. Perry, Chairman, Business Education Department, San Fernando ValleyState College, NorthridgeRobert E. Phillips, President, Wm. E. Phillips Company, Los Angeles, Young Presidents' Organization representativeDr. Paul Plowman, Secondary Consultant, Washington Unified School District, WestSacramentoRobert Rankin, Business Education Teacher, Taft Senior High School, WoodlandHillsJames Reusswig, District Superintendent, Antioch Unified School District, AntiochLeland Russell, Assistant Superintendent of Education, Acalanes High School,LafayetteJ. B. Schaefer, President, Young Presidents' Foundation of the Young Presidents'Organization, San FranciscoRuby Shipp, Business Education Department, Culver City High School, Culver CityDr. Wayne Sorenson, Director of Instruction, Hayward Union High School District,HaywardDolores W. Stevens, Chairman, Business Education Department, Rosemead High School,RosemeadDr. Robert Thompson, Chairman, Business Education Department, Foothill College,Los Altos HillsDr. Willard Thompson, Associate Professor of Business Administration, SacramentcState College, SacramentoJ. R. Toothaker, Director Vocational Education, Pasadena City Schools, PasadenaEvelyn J. Twaddle, Director of Business Education, Shasta High School and JuniorCollege District, ReddingMildred Wilber, Assistant Principal, Santa Monica High School, Santa MonicaMary Van Winkle, Business Education Teacher, Washington Union High School, FremontMary Alice Wittenberg, Supervisor, Business Education, Los Angeles City Schools,Los AngelesMarlea Young, Social Studies Teacher, Antioch Junior High School, AntiochV

ECONOMIC UNDERSTANDINGS IN BUSINESS AND DISTRIBUTIVE SUBJECTSIn recent years, specialists of all kinds have been urging that more timeshould be devoted to their subject in the high school curriculum.The mathe-maticians, the physicists, and the language specialists have among others allmade strong cases that young people should know more about their particularfield.Now come the economists urging the same thing.Teachers may sometimeswonder how space can be found in the already crowded curriculum for more ofthese subjects regardless of their importance.Economics, however, enjoys something of an advantage over other disciplinesin that it can be introduced into a large number of existing courses with theresult that students can acquire considerable economic understanding withouttaking a course devoted exclusively to it.Economics can easily be introducedinto business education courses as well as such courses as civics, problems ofdemocracy, world history, American history; geography, home economics, and evenliterature.It is vitally important that our young people have some understanding ofthe complex economic issues which confront our nat:.on and on which they are goingto be voting in a few years.It is not necessary for business education teachersto convert their courses into economics courses.The teaching of business sub-jects has other purposes besides the promotion of an understanding of oureconomic system.Business education courses provide almost limitless opportuni-ties for gaining an understanding of many of these economic issues.Economic problems are everybody's business because they are part of everybody's life.You and your students read newspapers and watch television news-casts dealing with such subjects as government spending, foreign aid, grossnational product, balance of payments, and full employment.sents an economic problem that should concern every American.Each of these pre-

-2-THE NATURE OF ECONOMIC UNDERSTANDINGBecause it does concern many things which are current and dramatic and because for the most part economists use everyday language to talk about thesethings (in contrast, for example, to the doctors and lawyers), many people areunder the mistaken impression that economics is just a matter of common sense.Nothing could be further from the truth.One does not acquire economic understand-ing by reading about current events or by memorizing a collection of historicalfacts.Economics is a social science.In order to have real economic understand-ing one must be able to arrange economic information in an orderly and meaningfulpattern of systematic relationships.One needs a logical framework of analysisinto which economic problems can be fitted so that they hang together in a related whole.Once one possesses the tools of economic analysis, one can findone's way through the forest ofever-changing facts which surround us.The ultimate test of economic understanding is whether or not one has theability to deal with future economic problems as they arise.When new problemsarise - in such fields as labor-management relations or foreign trade, forexample, will they just seem a bewildering collection of "facts" or will we havea feeling of familiarity because we know how to approach and analyze them?The study of history teaches us that constant change has characterized ournational life over the years.our political and social life.This is as true of our economic life as it is ofTherefore, it is essential that we possess someof the tools of economic analysis.Acquiring these is not as difficult a task asone might think and experience has shown that it is not beyond the capabilitiesof high school students.To help form opinions on current issues which have economic implicationsand ti help make rational judgments concerning economic problems, business students need to become familiar with the facts and methods to be used in theIfrorna.ess.,-**a

-3analysis of economic problems.This publication is concerned with selectedapproaches to economic analysis that can be followed by teachers of Bookkeeping,Business English, Business Law, Business Mathematics, General Business, Merchan-dising, Shorthand and Typewriting in preparing students to vote intelligently,serve in the community, and make judgments in regard to issues that affect theeconomic life of their environment.WHERE AND HOW TO STARTIf you're a normal business teacher you will say at this point, "Yes, I knowall of that and I'm anxious to present economic understandings, but how and wheredo I start in X course?"On the pages which follow, you will find informationthat will help you in getting started on how to include economic concepts invarious business courses.Just start.Economic analysis doesYou start by thinking with the students.not deal with explanations and solutions ready-made, as does Business English orBookkeeping, for deals with a developmental process, a way of think-Its principal purpose is to replace emotional, unreasoned judgments abouteconomic issues by objective, rational analysis.Once this lesson is learnedthe most difficult, as well as the most important, step toward realizing theYou start byattainment of the goals of economic education will have been taken.priming your mind and those of your students with the basic tenets of economics.Pose a question about WANTS.You don't even need a textbook (in fact dowithout one) to germinate a discussion about the wants of people.have certain basic needs such as food, clothing, and shelter.this question.All peopleAsk the students"If you could have everything you want in this world, what wouldyou select first and how extensive can you make your list of wants?"The studentswill furnish you with a list that will be limited only by their imagination.t,'All

-4-you have to do is direct their thinking.In reality, one of the basic assump-tions that an economist must make is that human beings maximize satisfactionsand are guided by their selfish interests.board.Write a list of wants on the chalk-Their suggestions will include basic needs and luxuries.At this point,you and the class have recognized the first basic tenet of an economic system-WANT.Consider SCARCIT,Now the students are ready for the second basic tenet ofan economic system, one that is inherent in every society; democratic and totalitarian, SCARCITY.productionScarcities in natural and human resourcesconstitute the limits to human needs and wants.the means ofAs you developsome of these scarcities with the students, you should again sketch the ideas onthe ,;.MEANS OF l economic problem--WANT versus SCARCITY.The fact that there isno end or limit to total human wants creates a scarcity of resources.scarcity of resources is always relative to the magnitude of wants.problem that results must be faced by every society.41,Thus,The economicThis basic fact of scarcitygives rise to the need for economizing--that is, for allocating the available proAductive resources so as best to satisfy the wants of the people.A clear recogni-tion of this fact is fundamental to economic understanding and rational decisionmaking.To cope with this economic problem, a nation must develop an economicorganization or system.The fact of scarcity is no cause for despa&r, however,because it has been with us from the beginning.On the contrary, its existenceis a reason for optimism provided expanding wants are for goods and services that-

.,s.-S1 .1.Z.141 IMierbleMillIgitahlIMIM5-will serve to lead our nation to even greater economic competence and efficiency.SCARCITIESUNLIMITEDWANTSEconomic System.Thus, economics becomes a study of how society produces anddistributes the goods and servicee it wants and how society allocates its limitedresources, both natural and manpower.More specifically, the study of economicsincludes an examination of the activities in whicheople engage -- such as:producing, saving, spending, and so on, for the purpose of satisfying their wants forfood and shelter; providing for their wants for modern conveniences and comforts;and providing for their collective wants for such things as national defense,education, and other social benefits.The idea of a system may be a little difficult for the student to comprehendunless you relate it to some system with which he is familiar, such as that usedby banks in processing a check; by bookkeepers for balancing the accounts; by con-sumers when calculating the cost of installment buying; by writers in determiningwhether they have written a complete sentence; and by football coaches inpreparing the players to work as a an objective.A system constitutes a way of accomplish-To the football team, it's a touchdown.To a nation, it's thesatisfaction of human wants.Choice-making.Since individuals or rations cannot possibly satisfy alleconomic wants, they must decide which to choose and how to achieve them.Economic decisions are made by millions of individuals -- the people.Decisionsare made by individuals separately and by individuals collectively throughi;W;;;."77-4.A.: ' :44ZralTAZXZXV: 4-4M7-7.1 ;: ':,,,,7 17:44alaW7,44futawmaraw.

;7,7747rrri-;.,.7,S;77tTiqe.7.7.-6-democratic processes.Taxation to take care of the educational system is anexample of a decision made collectively by the people of a district.Wise choice-making follows a principle to which economists refer as realcost, alternative (ost, or opportunity the students.This principle must be introducedActually, it's nothing more than common sense.the saying, "You can't have your cake and eat it too."You have heardSo have the students.The real cost of eating your cake, i.e., what you really have to give up, is thepleasure of keeping it.Or if you choose to keep it to admire, the real cost ofyour choice is enjoyment of eating it.The real cost of any use of limitedhuman or material resources or of income is the most desired other use of theresources or income that must be given up.The student who must decide how to spend hisINDIVIDUALdollars thinks about what he desires most.Per-haps he narrows his choices to records or clothes.If he spends his dollars on new clothes, its realcost is the most desired other use that he mightmake of the dollars, the pleasure of owning andlistening to a record -- a use which he mustsacrifice because he chose the clothes.Often the businessman has to make a decisionrelative to short or long term investment whichWageswill result in less immediate profit or moreBUSINESSMANeventual profit, respectively.The real cost ofthe investment of his capital, since it is alimited resource, is the most desired other useof it that must be given up.4r.T2:3\investment dollarstt.:W4P-4 Xf awtoraF.,.-anlact.res.

-7-GOVERNMENTThe real cost concept applies also to communities, states, and nations -- as well as to individuals.High salaries paid to engineers mayattract more students into engineering.To ournation, the real cost of the additional engineersis not their high salaries, but the scientists,teachers, mathematicians, or other professionalmen that these students might otherwise have beNationalFarm Foreign ImprovedParksDefense Subsidies Aidcome.In time of war priority for using transportation facilities is given topeople and good connected with the war effort.The real cost to the nation isthe trips and vacations which would have been taken by individuals if thispriority had not been set up.In neace time the people decide what priority to give to private needs inplace of public needs such as education.The real cost of spending money fornational defense is that resources will have to be used which would otherwise beused for such purposes as the manufacture of automobiles and refrigerators or inthe construction of highways.When individual needs cannot be met by private resources the people, throughdemocratic processes, may decide that government should provide services andfacilities to satisfy these needs.These needs may be classified as communityneeds because they are needed by many individuals in the community and becausethey contribute to the general welfare of the entire community.Education is agood example of a community need as it cannot be provided by individuals workingalone and it satisfies the need of the community for educated citizens.Individuals and nations, because they have limited resources, must make suchchoices.To be sure that the students choose wisely, you must make it your

-8-responsibility to apprise them of the importance of carefully weighing the alternatives.CONTINUE WITH ECONOMIC REASONINGIf your students are still with you, you are now ready to help them do someeconomic reasoning in connection with the subject you teach.But before you getinto a specific subject, consider two more suggestions that are presented belowas basic requirements for effective teaching of economic concepts.If these re-quirements are kept in mind, you will begin to present the same old subjectmatter in a new way and most important -- it will contain an "economic flavor."Use Lane Carefully.Such abstractions as democracy, capitalism, and wel-fare are open to misinterpretation.In economics, a good deal of confusion arisesbecause many everyday terms are used in a technical sense.Thus in common usage,production means growing or making something tangible, such as wheat or televisionsets.But to the economist, production means rendering satisfaction to others.All people who work are producers whether they sell, operate machinery, or provide a serviceall, of course, for a price.Two other terms that cause confusion are capital and investment,.To the lay-mn, capital usually means the funds awaiting investment or the stocks, bonds, andreal estate a person owns.But to the economist, capital also denotes the tools,machines, factories, and other goods used to produce commodities.It is evenused at times to include holdings of consumer goods such as automobiles and washing machines.Investment is popularly used to mean the purchase of stocks, bonds,and real estate or other property yielding an income.But to the economist, itgenerally means the expenditure of funds on new equipment and other goods used inproduction.It is part of the process of creating capitc./.Other economic terms that have several meanings are money, competition,depression, demand, and income.If you are a little hazy about the meaning ofVi

,,-9-these terms, simply do a little reviewing in a textbook on elementary economics.All the meanings will come back to you in a very short time.Follow a Definite Plan When Explaining an Economic Event.economic event is to answer the age old questions:To explain anWhat is it?Why is it?Whatof it?Suppose you try to explain a one per cent decrease in prices as shown by theconsumer price index.What is it?First, you try to identify with the students the type of pricedecrease that has occurred.crease rapid or gradual?Have all prices decreased or only a few?Did wages also decrease?Was the de-You do your best to determinethe distinguishing characteristics of the price decrease.hlal is it?Next, you and the class look for causes, by drawing on availableinformation for clues.If you observe that only the price of mast has decreased,you look for changes in conditions that may have influenced the supply and demandfor meat.sumersPerhaps the cattlemen have been raising more beef cattle than the con-are willing to purchase in the form of cuts for the dinner table -- at agiven price, of course.You follow this line of thinking because an analysis ofprevious experience has shown that an increase in supply or a decrease in demandor both, tends to decrease prices,Thus, you might look for causes such as theamount of government subsidy, changes in consumer demand, or the increased rainfall in the beef-producing sections of the nation resulting in a shorter growingperiod.If, however, you observe that prices of clothing, furniture, and most consumer goods are also decreasing, you suggest to the students that they look forchanges in conditions that affect the whole price structure:a decrease ingovernment spending or a decrease in the money supply, for example.You do sobecause previous economic analysis has shown that a decrease in total spending in

777J.7*.*-10-an economy without a comparable decrease in the supply of goods tends to affectthe total price structure.causal factors.These, of course, are but a few of the possibleMany alternatives must be examined to attempt to discover whythe event occurred.What of it?of the event.You finally explore with the class the possible implicetionsAlthough you can never know definitely what will occur in thefuture, it is important to determine what is possible, an, what is probable; abare description of an economic event is seldom useful.tinue falling, to level off, or to increase?more sales and increased production?Are prices likely to con-Will the price decrease result inThe implications for future prides, pro-duction, and employment are what give the price decrease itsgreatest significance.You should try to determine the implications or potentialities of an event byreasoning out what could follow from it under various conditions.historical precedents.You look forDoes past experience with deflation suggest any clues?You also make assumptions for purposes of analysis that certain conditions may ormay not

DEVELOPED AT A 196t SUMMER WORKSHOP FOR BUSINESS EDUCATION . Business Education Department, Foothill College, Los Altos Hills Dr. Willard Thompson, Associate Professor of Business Administration, Sacramentc. State College, Sacramento . into business education courses as well as such courses