Running Head: ELEMENTARY ECONOMICS 1

Elementary Economics Paper

Elizabeth Schrecengost

University of North Carolina at Wilmington

Watson School of Education

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Introduction

Economics has been viewed as an advanced subject that is considered more appropriate

to begin teaching at the high school level; it has been a topic that causes many misconceptions,

mostly seen during the elementary years. Too often, economics is defined as involving topics

such as wealth, finance, recessions, and banking; this leads to the misconception that economics

is all about money and the stock market. However, there exists an urgent need to help the public

realize that economics is the science of everyday life and guides the daily decisions we make

(Placido, 2003). In this paper, we will discuss major topics that are found within the elementary

economics concept, such as: the definition of economics, businesses, money, etc. Additionally,

the reader will have a better understanding of the word economics and allow for any

misconceptions to be cleared.

What is economics?

Economics is the study of scarcity, the study of how people use resources, or the study

of decision making; it often involve topics like wealth, finance, recessions, and banking (What

is economics? Understanding the discipline). However, economics is so much more than just

these topics. It involves the choices we make every single day, from the moment we wake up to

the moment we go to sleep. Economics includes the experiences of every single person in the

world, more specifically their choices. For example, this morning people decided whether or not

to get up and go to work, what and where to eat, whether to go for a run or relax on the sofa.

Each and every one of those decisions affects the economy in one way or another, for this reason

people play a colossal role in the economic world.

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Economic Literacy

Students attain economic literacy if they can apply basic economic concepts years later,

in situation relevant to their lives and different from those encountered in the classroom

(Salemi, 2005). It is important for students to be able to understand their role in society and how

it helps the world around them. For example, if students learn about banks in school and how

they keep their money safe, and eventually open a bank account when they get older, they would

have attained a fraction of a larger part of economic literacy.

Business

The fundamental role of business has remained relatively constant: providing the goods

and services that people need or want (Allaire, 2014). Business allows people to consume and

enjoy a plethora of goods and services; without the presence of business in the economy society

would have to produce everything on their own. Business can include grocery stores, which

provide food; home improvement stores, which provide tools and materials for the home; retail

stores, which provide clothing, and many more business that are aimed towards a specific type of

consumer.

Businesses often rely on consumers to decide which goods and services to provide.

Consumers communicate information about the quantity and quality of the goods and services

that they desire through markets by deciding whether or not to buy certain products. Through

markets, a business determines the products and services that the consumers request.

Subsequently, they produce those goods and services and as a result the consumer experiences an

advanced standard of living. This better way of life is a result of the goods and services that are

produced by businesses everyday.

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Trade/Barter

A barter system is a method of exchange that was often used in early civilizations and

may be used in many countries today. The barter system was used before money was around;

bartering involves people exchanging services and gods for other services and goods in return.

The values of the items being exchanged are negotiated between parties and usually do not

involve money. Bartering can become popular during times of need (i.e. Great Depression, War,

natural disasters, etc.) due to the high need to obtain food and countless other services.

Money

Money is a symbol created by law and convention and sustained by exchange (Chan-

Brown, Douglass, Halling, Keller, & McNabb, 2016). Money was created to facilitate the

exchange in barter economics. Money holds its value over time and can be easily translated into

prices, and is widely accepted; it is manufactured and printed by the government. Citizens must

demonstrate that as long as everyone accepts a specific type of currency as the norm, it will

simply be. In other words, if it is accepted as money, it is money (Asmundson & Oner, 2012).

Spending Money

Money can be used in many different ways for many different purposes. Money is spent

almost daily for necessities such as food, clothes, shelter, etc.; however, it is also spent in great

quantities for luxuries such as TVs, latest phone, trendiest shoes, etc. Money is also spent for

purchasing services such as: lawn care, pest control, carpets cleaning, cooking, house cleaning,

etc. Essentially, the value society has placed on money obligates people to rely on spending for

certain goods and services.

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Saving Money

On the other hand, money can also be saved in different ways. Children may begin saving

their money using a piggy bank, and as they get older they can begin placing their money in a

savings account. Many banks provide information that explains how banks work and describes

their role in the financial community and local economy (Stewart, 1994). The topic of saving

money and the reasoning behind it (i.e. to make a larger purchase, to buy something one wants or

needs, etc.) can lead into a discussion about the benefits of saving money and the definitions of

wants and needs. Needs are things one cannot survive without (food, clothes shelter) and wants

are things we dont really need but might want (toys, movie tickets, etc.). Saving money may

allow consumers to purchase things that are needed and things that are wanted.

Borrowing Money

Borrowing is another action that can be done with money. Borrowing money can be as

simple as lending a few dollars to a family or friend, or as complex as taking out a loan from the

bank. Borrowing occurs when the person in need may want to purchase a good or service but

lacks the sufficient amount of money to complete the purchase. For this reason, they may go to a

financial institution and ask for a loan. Financial institutions include banks, which are places that

are most associated with money.

Financial institutions

Banks are institutions wherein people keep their money safe, whether it be safety deposit

boxes or checking/savings accounts. Additionally, banks pay the account holder for every dollar

they keep in a savings account, which is called interest. Banks pay people to keep their money in

savings account because they use that money to lend to others who may not have enough money

saved up to make larger purchases like homes and cars. Banks create money in the economy by
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making loans, for example when a bank gets $100, the bank can lend out $90 which then goes

back into the economy, purchasing goods or services and usually ends up deposited in another

bank (Obringer, 2017). This system allows money to grow and flow throughout the community;

essentially money is what connects consumers, producers, goods and services.

Conclusion

Economics affects people on a daily basis; it is imperative that they understand what it is,

what it involves, how it works and how it affects them. In a constantly changing society, students

must be aware of how the economy functions; money plays a major role in society and

understanding how to handle money and its purpose is crucial for students to be informed and

productive citizens. It is never too early to introduce the world of economics to students; in fact,

the earlier the students are exposed to economic topics the more likely they are to become

interested and informed. The time is now to implement increased economic education at the K-

12 level to increase the chances that students gain the knowledge and tools required to operate

within our market economy and avoid lives of poverty (Placido, 2013).
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Bibliography

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https://www.weforum.org/agenda/2014/01/role-business/

Anderson, K. (2014, December 15). Barter System History: The Past and Present. Retrieved

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Asmundson, I., & Oner, C. (2012). What is money? Finance & Development, 49(3), 52-53.

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Chan-Brown, K., Douglass, A., Halling, S., Keller, J., & McNabb, M. (2016). What is money? A

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Salemi, M. K. (2005). Teaching Economic Literacy: Why, What and How. International Review

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What is economics? Understanding the discipline. (n.d.). Retrieved October 9, 2017, from

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