Economics 2006

NATIONAL ASSESSMENT OF EDUCATIONAL PROGRESS AT GRADE 12

U.S. Department of Education

NCES 2007-475
What is The Nation’s Report CardTM

?

The Nation’s Report CardTM informs the public about the academic 

achievement of elementary and secondary students in the United States. 

Report cards communicate the fi ndings of the National Assessment of 

Educational Progress (NAEP), a continuing and nationally representative 

measure of achievement in various subjects over time.

For over three decades, NAEP assessments have 

been conducted periodically in reading, mathematics, 

science, writing, U.S. history, civics, geography, and 

other subjects. By making objective information 

available on student performance at the national, 

state, and local levels, NAEP is an integral part 

of our nation’s evaluation of the condition and 

progress of education. Only information related to 

academic achievement and relevant variables is 

collected. The privacy of individual students is 

protected, and the identities of participating schools 

are not released.

NAEP is a congressionally authorized project of the 

National Center for Education Statistics (NCES) 

within the Institute of Education Sciences of the U.S. 

Department of Education. The Commissioner of 

Education Statistics is responsible for carrying out the 

NAEP project. The National Assessment Governing 

Board oversees and sets policy for NAEP.

Contents

AUGUST 2007

 1 Executive Summary

 2 The 12th-Grade Economics Assessment

 3 Reporting Economics Results

 4 First Ever Economics Results

 10 Market Economy

 16 National Economy

 22 International Economy

 28 Technical Notes
Results

In this - rst NAEP assessment of economics at grade 12, 

the overall average economics score, set at 150, fell 

within the Basic achievement level. Seventy-nine 

percent of students performed at the Basic level or 

higher, and 42 percent performed at the Pro	 cient level 

or higher, including 3 percent at the Advanced level. 

Results are based on a nationally representative sample 

of 11,500 twelfth-grade students from 590 public and 

nonpublic high schools.

Some Key Findings Include 

The average economics score of male students was 

higher than the average score of female students. 

White and Asian/Paci- c Islander students scored 

higher, on average, than other racial/ethnic groups.

Students from large city schools had lower average 

scores than students in other locations.

Students whose parents had higher levels of education 

exhibited higher performance in economics. 

Most students study some economics in high school.

WHAT STUDENTS KNOW ABOUT ECONOMICS

MARKET ECONOMY NATIONAL ECONOMY INTERNATIONAL ECONOMY

72% described a benefi t and a risk of 

leaving a full-time job to further 

one’s education

60% identifi ed factors that lead to

an increase in the national

debt

63% determined the impact of a 

decrease in oil production on 

oil-importing countries

52% identifi ed how commercial 

banks use money deposited into 

customers’ checking accounts

36% identifi ed the federal 

government’s primary source 

of revenue

51% determined a result of removing 

trade barriers between two 

countries

46% interpreted a supply and 

demand graph to determine the 

effect of establishing a price 

control

33% explained the effect of an 

increase in real interest rates 

on consumers’ borrowing

40% determined why industries can 

successfully lobby for tariff 

protection

36% used marginal analysis to 

determine how a business could 

maximize its profi ts 

11% analyzed how a change in the 

unemployment rate affects 

income, spending, and 

production 

32% identifi ed how investment in 

education can impact economic 

growth

Economics Content 

Students answered questions representing a wide 

range of content from three areas: market, national, 

and international economics. Market economy—

traditionally described as microeconomics—covers how 

individuals, businesses, and institutions make decisions 

about allocating resources in the marketplace. National 

economy—traditionally described as macroeconomics—

encompasses the sum of decisions made by individuals, 

businesses, and government. International economy 

concentrates on international trade—how individuals and 

businesses interact in foreign markets. The questions 

described below and presented in this report illustrate the 

knowledge and skills assessed in these three content areas. 

The full assessment includes questions that cover a range 

of topics and dif- culty levels within each content area.

Executive Summary

Knowledge of economics is important for individuals to function effectively as citizens in 

an increasingly connected world economy. Economic literacy includes understanding how 

economies and markets work, what the benefi ts and costs of economic interaction and 

interdependence are, and that people have to make choices because resources are limited. 

In recent decades, the focus on economics content in the school curriculum has increased.

ECONOMICS 2006 1
The 12th-Grade Economics Assessment

Economic literacy enables individuals to function effectively as citizens in an increasingly connected 

world economy. The focus on economics in the school curriculum has grown in recent decades. 

Today, economics content is being integrated into traditional mathematics, reading, and social 

studies lessons at the elementary and secondary levels, and some high school students may take a 

course specifi cally focused on economics. However, even if students have no formal economics 

instruction, they may be exposed to economics concepts at home, through the media, or as a part 

of their employment.

Assessment Framework

The NAEP assessment was based on a framework, 

developed by the National Assessment Governing 

Board, which describes the content areas, cognitive 

categories, and assessment contexts to be measured. 

The framework incorporates standards and 

benchmarks taken from the Voluntary National 

Content Standards in Economics.1

CONTENT AREAS

The economics assessment covers three content areas. 

The percentage of total time students spent answering 

questions in each area is shown in parentheses.

 Market economy—addresses how individuals and 

businesses make economic choices as buyers and 

sellers in the marketplace. (45 percent)

 National economy—examines the overall conditions 

in the U.S. economy. (40 percent) 

 International economy—explores how national 

economies interact with one another. (15 percent) 

COGNITIVE CATEGORIES

Within each of the content areas, questions are designed 

to assess economics in three cognitive categories. 

Students spent about one-third of the assessment time 

answering questions in each category.

 Knowing—asks students to identify and recall 

information and to recognize economic terms and 

concepts.

 Applying—requires students to describe or explain 

the relationship between information and economic 

concepts.

 Reasoning—measures students’ ability to use 

information and economic concepts accurately to 

solve problems, evaluate issues, and interpret 

situations. 

ASSESSMENT CONTEXTS

Because students may apply economics knowledge and 

skills inside and outside of school, the framework 

requires that questions be set in various contexts. About 

20 to 30 percent of the questions were set within each 

context. A small percentage of questions were classi- ed 

in multiple contexts, in other contexts, or as context-free.

 Individual and Household questions focus on topics 

related to personal - nance. 

 Business questions relate to entrepreneurs, workers, 

producers, and investors.

 Public questions concern government, policy, 

citizenship, and domestic and international 

organizations.

Additional background about the growth of 

economics education and more detailed information 

about the assessment framework for 2006 may be 

found on the Governing Board website at http://www.

nagb.org/frameworks/economics_06.pdf.

ASSESSMENT DESIGN

A nationally representative sample of 11,500 

twelfth-grade students in 590 public and nonpublic high schools participated in the fi rst 

NAEP economics assessment in 2006. Because 

of the breadth of content covered, each student 

took just a portion of the assessment, answering 

two 25-minute sections consisting of 17 to 

21 multiple-choice and constructed-response 

questions. Three sections of test questions 

have been publicly released and are available 

at http://nces.ed.gov/nationsreportcard/itmrls/.

1

 National Council on Economics Education, 1997.

2 THE NATION’S REPORT CARD
Reporting Economics Results

Economics was assessed by NAEP at grade 12 only for the fi rst time in 2006. Performance in 

economics is reported for all 12th-grade students and for groups of students (for example, by gender, 

race/ethnicity, school location, and level of parental education). Results are presented in two ways: as 

average scale scores and as percentages of students performing at or above NAEP achievement levels. 

When economics is assessed again in 2012, trends in performance will be reported.

Scale Scores

Scale scores measure what students know and are able 

to do. The economics results, overall and for each of the 

three content areas, are reported on a 0–300 scale. In 

addition to average scores, results are reported for 

speci- c percentile scores that describe lower-, middle-, 

and higher-performing groups. Because subscales 

are set separately for each content area, comparisons 

cannot be made from one subscale to another. 

Achievement Levels

Achievement levels describe what students should know 

and be able to do. Based on the recommendations of 

educators, subject matter experts, and other members 

of the public, the Governing Board identi- ed speci- c 

scores on the economics scale that represent minimum 

levels for Basic, Pro	 cient, and Advanced performance. 

As provided by law, NCES, upon review of 

congressionally mandated evaluations of NAEP, 

has determined that achievement levels are to be used 

on a trial basis and should be interpreted with 

caution. The NAEP achievement levels have been 

widely used by national and state of- cials.

Item Maps

As shown in the content area sections of this report, 

item maps are another way to interpret the scale scores 

and achievement-level results. The item maps list 

selected test questions that are located at various levels 

of dif- culty on the overall economics scale.

Interpreting Results

NAEP uses widely accepted statistical standards for 

discussing and presenting results. This report discusses 

only comparisons that are statistically signi- cant at 

the .05 level with appropriate adjustments for 

multiple comparisons. 

In addition to the overall results for the nation, 

performance is presented for different student groups. 

These results cannot be used to establish a cause-andeffect relationship between background characteristics 

and achievement. A complex mix of education and 

socioeconomic factors may be present and affect 

student performance.

Not all of the data for results discussed in the 

text are presented in corresponding graphics or 

tables, but they can be found on the NAEP website 

at http://nces.ed.gov/nationsreportcard/nde/. For 

additional information about the NAEP economics 

assessment, see the Technical Notes section of this 

report or visit http://nationsreportcard.gov.

NAEP ACHIEVEMENT LEVELS

Basic denotes partial mastery of the knowledge 

and skills that are fundamental for profi cient 

work at a given grade.

Profi cient represents solid academic performance. 

Students reaching this level have demonstrated 

competency over challenging subject matter.

Advanced signifi es superior performance.

ECONOMICS 2006 3
First Ever Economics Results

In 2006, in the fi rst ever national assessment of economics, 79 percent

of 12th-graders nationwide performed at or above the Basic achievement level. Forty-two percent performed at the Profi cient level or higher. 

On average, male students scored higher than female students, and 

White and Asian/Pacifi c Islander students scored higher than other 

racial/ethnic groups. Students from schools in large cities had lower 

average scores than students from schools in other locations. Students 

from families with higher levels of parental education scored higher, on 

average, than their peers from families with lower levels of parental 

education. Most 12th-graders reported some exposure to economics 

content during high school.

4 THE NATION’S REPORT CARD
Average score falls in the Basic range

50 152

50 148

Percentage

Gender of students

110 120 130 140 150 160 170 180 190 300

Scale score

0

Male

Female

Figure 3. Percentage of 12th-graders and average NAEP 

economics score in 2006, by gender

NOTE: Detail may not sum to totals because of rounding.

Overall 10th 25th 50th 75th 90th 

average score Percentile score 

0 

170 

160 

150 

140 

130 

120 

110 

100 

180 

190 

200 

210 

300 

Scale score 

191 

174 

153 

129 

104 

150

t n e i c i f o r P c i s a B 

Figure 1. Average 12th-grade NAEP economics score and 

percentile scores in 2006

Figure 4. Twelfth-grade NAEP economics achievement-level 

performance in 2006, by gender

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

4

20

40

60

80

100

Percent

0

Male Female

45

79

2

79

38

% at or above Proficient

% at Advanced

% at or above Basic

3

0

20

40

60

80

100

79

42

Percent

All students

% at or above Proficient

% at Advanced

% at or above Basic

Figure 2. Twelfth-grade NAEP economics achievement-level 

performance in 2006

Male students outperform female students

On average, male students scored 4 points higher in 

economics than female students (- gure 3). Although 

not shown here, a similar result was found for the 

market, national, and international economy subscales.

Greater percentages of male students than female 

students performed at or above the Pro	 cient level 

and at the Advanced level, as shown in - gure 4. 

The percentages of male and female students 

performing at or above the Basic level were 

essentially the same.

The overall average economics score fell within 

the Basic achievement level (- gure 1). Students at 

the 10th percentile scored at 104, which is below the 

Basic level. Students at the 75th and 90th percentiles 

scored within the Pro	 cient level, with scores of 174 

and 191, respectively. 

Seventy-nine percent of students performed at or 

above the Basic achievement level, as shown in 

- gure 2, and 42 percent reached the Pro	 cient level 

or higher. Three percent of 12th-graders demonstrated 

Advanced economics knowledge and skills.

ECONOMICS 2006 5
White and Asian/Pacifi c Islander students outscore peers

White and Asian/Paci- c Islander students scored higher in 

economics, on average, than Black, Hispanic, and American 

Indian/Alaska Native students (- gure 5). Hispanic students 

had higher average scores than Black students, and the 

average scores for both groups were not signi- cantly different 

from American Indian/Alaska Native students. Nationally, 

about two-thirds of high school seniors were White, while 

one-third belonged to minority groups. 

Achievement-level results (- gure 6) were similar to 

score results. The percentages of White and Asian/Paci- c 

Islander students performing at or above each achievement 

level were greater than the percentages for Black and 

Hispanic students. 

153

133

158

127

Percentage

of students 

Race/

ethnicity

110 120 130 140 150 160 170 180 300

Scale score

0

White

Black

Hispanic

Asian/Pacific Islander 

American Indian/

 Alaska Native 1

65

6

13

14

137

NOTE: Black includes African American, Hispanic includes Latino, and Pacifi c Islander includes 

Native Hawaiian. Race categories exclude Hispanic origin. Detail may not sum to totals because 

results are not shown for the “unclassifi ed” race/ethnicity category.

Figure 5. Percentage of 12th-graders and average NAEP 

economics score in 2006, by race/ethnicity

Figure 6. Twelfth-grade NAEP economics achievement-level 

performance in 2006, by race/ethnicity

4

20

40

60

80

100

87

51

Percent

#

57

16

#

64

21

4

44

80

2

72

0

White Black Hispanic Asian/Pacific 

Islander

American Indian/

Alaska Native

26

# Rounds to zero.

NOTE: Black includes African American, Hispanic includes Latino, and Pacifi c Islander includes 

Native Hawaiian. Race categories exclude Hispanic origin. 

% at or above Proficient

% at Advanced

% at or above Basic

Figure 7. Percentage of 12th-graders and average NAEP 

economics score in 2006, by school location

29 149 

14 

43 152 

142 

13 154 

Percentage 

of students 

110 120 130 140 150 160 170 

Scale score

0 

Large city 

Mid-size city 

Urban fringe/large

 town

Small town/rural

School 

location 

180 300 

NOTE: Detail may not sum to totals because of rounding.

Students attending large city schools (14 percent of 

12th-graders) had lower average scores than students in 

schools in other locations (- gure 7). There were no other 

signi- cant differences in the average scores of students 

from other school locations. Large cities are de- ned as 

urban centers with populations of 250,000 or more. More 

detailed descriptions of the school location categories are 

presented in the Technical Notes section. 

Students in large city schools score lower than students elsewhere

Figure 8. Twelfth-grade NAEP economics achievement-level 

performance in 2006, by school location

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

A similar pattern was seen in the achievement-level results 

(- gure 8). The percentages of students from large city 

schools performing at or above Basic and at or above 

Pro	 cient were lower than the percentages for students 

from other school locations, with one exception. The 

percentages of students at or above Pro	 cient from large 

city schools and small town/rural schools were not 

signi- cantly different.

20

40

60

80

100

70

33

Percent

4 1

80

44

0

Large

city

Mid-size

city

Urban fringe/

large town

Small town/

rural

3

4 2

40

80

3

46

82

% at or above Proficient

% at Advanced

% at or above Basic

6 THE NATION’S REPORT CARD
Higher levels of parental education are associated with higher scores

Students who reported higher levels of parental education 

scored higher on the economics assessment. The highest 

level of education for either parent indicated by the 

students was used for the results shown in - gure 9. 

Students who reported that at least one parent graduated 

from college (about one-half of the 12th-graders) scored 

higher, on average, than students whose parents had less 

education. Similarly, students who had at least one parent 

with some education after high school had higher average 

scores than those whose parents had no postsecondary 

education. Students with at least one parent who was a 

high school graduate scored higher, on average, than 

students whose parents did not - nish high school. The 

same score patterns held for the market, national, and 

international economy subscales (not shown) and for the 

percentages of students at or above Basic and at or above 

Pro	 cient (- gure 10).

Figure 9. Percentage of 12th-graders and average NAEP 

economics score in 2006, by highest level of 

parental education

49 160 

7 

23 150 

129 

18 138 

Percentage 

of students 

Parental 

education level 

0 110 120 130 140 150 160 170 180 300 

Did not finish high 

 school 

Graduated from high 

 school 

Some education after 

 high school 

Graduated from 

 college 

Scale score

NOTE: Detail may not sum to totals because results are not shown for students who reported 

that they did not know the highest education level for either of their parents. 

Figure 10. Twelfth-grade NAEP economics achievement-level 

performance in 2006, by highest level of parental 

education

# Rounds to zero.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

20

40

60

80

100

59

17

Percent

1

69

27

1

82

39

0

Did not 

finish 

high school

Graduated

from

high school

Some

education after

high school

Graduated

from 

college

#

5

54

87

1

% at or above Proficient

% at Advanced

% at or above Basic

ECONOMICS 2006 7
HIGH SCHOOL TRANSCRIPT STUDY OF ECONOMICS COURSETAKING 

For over 20 years, the High School Transcript Study (HSTS) has been periodically analyzing the coursetaking 

patterns of high school graduates based on the transcripts from a nationally representative sample. It has 

been conducted in conjunction with NAEP grade 12 assessments since 1990. A comparison of results from 

the fi rst HSTS study in 1982 and the most recent study in 2005 indicates that the percentage of high 

school graduates who have taken an economics course has increased from 49 percent to 66 percent. The 

classifi cation of courses for HSTS analyses is based on high school course catalogues, and only courses 

that are clearly related to economics are included. It is possible that additional students have been exposed 

to economics content in courses that do not specifi cally refer to economics in the course catalogue.

Most students study some economics in high school

percent said that they had not had any formal 

economics instruction. 

Similar coursetaking patterns were observed 

among various groups of students. For example, 

the percentages of students from different school 

locations taking various levels of economics 

coursework were not signi- cantly different, except that 

students from small town/rural schools were less likely 

to take advanced courses than students from large city 

and urban fringe/large town schools (- gure 11). 

Another exception (not shown here) was that 

a greater proportion of students with at least one 

parent who had graduated from college reported 

taking advanced economics than students whose 

parents had less education.

Students were asked whether they had taken any 

economics-related courses in high school. The course 

options were collapsed into - ve categories, and the 

results were summarized by describing the “highest” 

or most rigorous level course a student had taken 

(- gure 11). 

Most 12th-graders reported some exposure to 

economics content in school. Sixteen percent of students 

reported taking an advanced economics course 

(Advanced Placement, International Baccalaureate, or 

honors course), and an additional 49 percent took 

general economics. Twenty-three percent indicated that 

they had taken a business course, a personal - nance 

course, or a course that combined economics content 

with another subject, often government. Thirteen 

19

53

8 11 10

18

9 13

49

11

17

47

11 12 14 12

51

13 12 12

49

16

11 12 13 20

40

60

80

100

Percent

0

Large city Mid-size city Urban fringe/

large town

Small town/

rural

All students

Advanced economics

General economics

Business/personal 

finance course

Combined course

No economics 

coursework

Figure 11. Percentage of 12th-graders in 2006, by highest level of economics coursework for all students and for school locations

NOTE: Data from the student questionnaire were collapsed into the coursework categories presented in this fi gure. Detail may not sum to totals because of rounding.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics Assessment.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, High School Transcript Study (HSTS), 1982 and 2005.

8 THE NATION’S REPORT CARD
Economics Achievement Levels

The economics achievement levels represent what 12th-graders should know and be able to do at each 

level. The following are excerpts from achievement-level descriptions for economics with the corresponding 

cut scores noted in parentheses. The full descriptions may be found at http://www.nagb.org/frameworks/

economics_06.pdf. 

ECONOMIC CONCEPTS AND RELATIONSHIPS

The full achievement-level descriptions cite the following topics:

Market economy—scarcity, opportunity cost, incentives, marginal 

decision-making, markets, prices, demand, supply, competition, 

economic institutions, income determination, entrepreneurship, 

investment, and government actions

National economy—economic systems, money, interest rates, 

economic growth, gross domestic product, unemployment, infl ation, 

fi scal policy, and monetary policy

International economy—comparative advantage, the benefi ts and 

costs of trade, and exchange rates

Basic (123): Students performing at the Basic level of 

achievement should be able to identify and recognize a 

limited set of economic concepts and relationships that are 

important for partial understanding of the market 

economy, national economy, and international economy. 

An example of the level of understanding that students 

should be able to demonstrate at the Basic level is the 

ability to recognize the inverse relationship between the 

market price of a product and the amount buyers are 

willing and able to purchase.

Students should be able to use a limited set of these 

economic concepts and relationships in simple 

applications. For example, when given data or 

information about an economic event or situation, they 

should be able to identify a likely economic outcome. 

Students should be able to interpret data or information 

presented in simple charts, graphs, or tables, such 

as those showing changes in economic data over time. 

Profi cient (160): Students performing at the Pro	 cient 

level of achievement should be able to identify and 

recognize a broader set of economic concepts and 

relationships that are important for solid understanding of 

the market economy, national economy, and international 

economy. An example of the level of understanding that 

students should be able to demonstrate at the Pro	 cient

level is the ability to explain the role of shortages in 

causing market prices to change.

Students should be able to use a broader set of these 

economic concepts and relationships in more challenging 

applications that involve analyzing economic problems 

and decisions, and recommending policies and actions. 

Students should be able to interpret data or information 

presented in complex charts, graphs, or tables, such as 

those relating changes in one or more economic variables 

to changes in other economic variables, and to analyze 

economic data and information to describe events and 

trends. 

Advanced (208): Students performing at the Advanced

level of achievement should be able to identify and 

recognize an extensive set of economic concepts and 

relationships that are important for thorough understanding of the market economy, national economy, and 

international economy. An example of the level of 

understanding that students should be able to demonstrate at the Advanced level is the ability to identify factors 

that increase or decrease the demand for a product and to 

explain the effects of these changes on price and quantity. 

Students should be able to use these economic concepts 

and relationships in complex applications that involve 

analysis and evaluation of economic data and 

information to explain events and their causes, and 

policies and their outcomes. Students should be able to 

use data or information presented in complex charts, 

graphs, or tables in their analysis and evaluation.

ECONOMICS 2006 9
Market Economy

The market economy content area includes much of what is traditionally 

described as microeconomics. It focuses on how individuals, businesses, 

and institutions make decisions about allocating limited resources 

in the marketplace where goods and services are bought and sold. 

Key concepts include

 how buyers and sellers interact to create markets, 

 how markets allocate resources, and

 what economic role the government has in a market economy.

10 THE NATION’S REPORT CARD
Range of Market Economy Questions

The item map below, which shows a range of market 

economy questions, helps to explain what it means 

to perform at various levels on the assessment. The 

0–300 economics scale and the scores that de- ne the 

lower boundaries of each achievement level are along 

the left side. The right side lists selected multiple-choice 

(in italic type) and constructed-response questions (in 

regular type) that fall at various levels of dif- culty on 

the scale.

Constructed-response questions for which students 

could earn partial or complete credit appear on the 

map multiple times, once for each level of credit. For 

example, a partial explanation of how a change in the 

cost to produce a product will inG uence its price 

appears at 134 on the scale, and a complete 

explanation appears at 213. 

The sample questions that follow illustrate knowledge 

and skills assessed related to market economy. 

However, they do not represent the entire range of 

content assessed in this area.

NOTE: The position of a question on the composite scale represents the average scale score attained by students who had a 65 percent probability of obtaining credit at a specifi c level of a constructedresponse question, or a 74 percent probability of correctly answering a four-option multiple-choice question. 

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics Assessment.

Scale 

score Question description

Advanced

300

261 Provide a complete explanation of how a change in the price of a product will affect the quantity of the product demanded

234 Provide a complete explanation of how compounded interest rates affect consumers 

232 Provide a public policy recommendation and a complete explanation of its likely effects based on economic reasoning

213 Provide a complete explanation of how a change in the cost to produce a product will infl uence its price

Profi cient

206 Identify an appropriate defi nition of the term “equilibrium price” 

195 Interpret a supply and demand graph to determine the effect of establishing a price control (shown on page 15)

193 Use marginal analysis to determine how a business could maximize its profi ts (shown on page 14)

183 Identify how commercial banks use money deposited into customers’ checking accounts (shown on page 13)

178 Provide a public policy recommendation and a partial explanation of its likely effects based on economic reasoning

176 List two factors to consider when weighing the marginal benefi ts and marginal costs of a fi nancial decision

166 Analyze the effect of a poor harvest on the supply of an agricultural product

Basic

152 Determine how a rise in individuals’ incomes would infl uence the demand for a product 

134 Provide a partial explanation of how a change in the cost to produce a product will infl uence its price

131 Describe one benefi t and one risk of leaving a full-time job to further one’s education (shown on page 12)

131 Provide a partial explanation of how a change in the price of a product will affect the quantity of the product demanded

123 Predict how consumers will respond to incentives provided by producers

118 List one factor to consider when weighing the marginal benefi ts and marginal costs of a fi nancial decision 

117 Provide a public policy recommendation based on economic reasoning

105 Provide a partial explanation of how compounded interest rates affect consumers 

82 Describe either one benefi t or one risk of leaving a full-time job to further one’s education (shown on page 12)

0

Grade 12 NAEP Item Map for Market Economy

208

160

123

ECONOMICS 2006 11

MARKET ECONOMY
Sample question 1

Luisa has decided to give up her full-time job to go

back to school. Identify one potential economic risk 

and one potential economic benefit that Luisa might 

have considered in making her decision.

Response rated as “Correct.”

Response rated as “Partially Correct.”

Sample Question About Investment in Human Capital

Sample question 1 measures students’ understanding of the risks and rewards of increased investment 

in human capital. The benchmark being assessed by this question focuses on how investments in 

physical and human capital can increase productivity, although such investments entail 

opportunity costs and economic risks. This question was classifi ed in the cognitive 

category of Applying economic information and concepts within an 

Individual/Household context.

Student responses for this short constructedresponse question were rated using the following 

three-level scoring guide:

Correct—Response provides both a potential risk

 and a potential bene- t for a person who might 

 be leaving the workplace to enter school full time.

Partially Correct—Response provides either a

 potential risk or a potential bene- t, but not both.

Incorrect—Response fails to provide either a potential

 risk or a potential bene- t.

The - rst student response on the right was rated as 

“Correct” because it provided both a potential risk and 

a potential bene- t. The second student response was

rated as “Partially Correct” because it provided only a 

potential risk. Seventy-two percent of the 12th-graders 

answered this question correctly, and an additional 

19 percent gave a partially correct response.

The table on the right shows the percentage of 

students within each achievement level whose 

answer to the question above was rated as 

“Correct.” For example, 73 percent of 12th-grade 

students at the Basic level provided a response 

rated as “Correct.”

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

39 73 87 98

Percentage rated as “Correct” for 12th-grade students 

at each achievement level in 2006

Correct

Partially 

Correct Incorrect Omitted

72 19 5 2

Percentage of 12th-grade students in each response 

category in 2006

NOTE: Detail may not sum to totals because a small percentage of responses that did not 

address the assessment task are not shown.

12 THE NATION’S REPORT CARD
Sample Question About Institutions

Sample question 2 measures students’ understanding of important 

institutions that facilitate a market economy. The benchmark being 

assessed by this question focuses on how banks and other fi nancial 

institutions channel funds from savers to borrowers and investors. This 

question was classifi ed in the cognitive category of Knowing economic 

information, terms, and concepts within a Business context.

Fifty-two percent of 12th-graders selected the correct answer (choice B),

which describes the bank’s - nancial role in transferring funds from 

savers to borrowers. The 35 percent of students who selected incorrect 

choice C reG ects a common student misconception about the way 

commercial banks operate. Choices A and D are incorrect because 

banks charge interest on money loaned in order to pay expenses 

and to provide owners a return on their investment. 

Sample question 2

What happens to most of the 

money deposited in checking 

accounts at a commercial bank?

A It is used to pay the bank’s 

expenses.

 It is loaned 

customers.

to other bank 

C It is kept in the bank’s vault 

until depositors withdraw the 

funds.

D It is paid to owners of the 

bank as return on their 

investment.

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 44 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice. SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

28 44 69 90

Percentage correct for 12th-grade students at each 

achievement level in 2006

Percentage of 12th-grade students in each response

category in 2006

Choice A Choice B Choice C Choice D Omitted

8 52 35 4 #

# Rounds to zero.

NOTE: Detail may not sum to totals because of rounding.

ECONOMICS 2006 13

MARKET ECONOMY
Sample Question About Decision Making

Sample question 3 measures students’ abilities to use economic 

data to make decisions. The benchmark being assessed by 

this question focuses on comparing the marginal benefi ts and 

marginal costs of potential production decisions in order to 

maximize profi ts. This question was classifi ed in the cognitive 

category of using economic Reasoning concepts within a 

Business context.

NXTX should hire additional workers as long as the revenue generated by the 

goods produced by each additional worker is greater than the cost of hiring 

that worker. Thirty-six percent of 12th-graders selected the correct answer 

(choice A). If NXTX increases the number of workers hired from 10 to 11, 

its generated revenues would increase by $250 ($1,250 – $1,000), and its 

costs would only increase by $100 a day, so its pro- ts would increase by 

$150 per day. However, if the - rm hires the 12th worker (choice B), 

revenues for the - rm would increase by $75 ($1,325 – $1,250), costs 

would increase by $100, and pro- ts would decline by $25. Choices C 

and D would also result in the - rm’s revenues increasing less than its 

costs, and pro- ts would decline. 

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

17 24 53 94

Percentage correct for 12th-grade students at each 

achievement level in 2006

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 24 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice.

Sample question 3

NXTX Incorporated currently has 10 

workers. It would like to expand and

hire more workers. Each additional 

worker will cost the company $100

per day. According to the information 

in the table above, how many workers 

in total should NXTX Incorporated 

employ to maximize its profits?

 11

B 12

C 13

D 14

NXTX INCORPORATED

Number of Total Revenue

Workers per Day

10 $1,000

11 $1,250

12 $1,325

13 $1,385

14 $1,400

Percentage of 12th-grade students in each response

category in 2006

Choice A Choice B Choice C Choice D Omitted

36 17 10 36 1

NOTE: Detail may not sum to totals because of rounding.

14 THE NATION’S REPORT CARD
Sample Question About Prices

Sample question 4 measures students’ ability to interpret a supply and demand graph to 

determine the effect of a price control upon a market. The benchmark being assessed by this 

question focuses on the effects of government-enforced price ceilings and price fl oors upon 

producers and consumers. This question was classifi ed in the cognitive category of 

Applying economic information and concepts within a Public context.

Forty-six percent of 12th-graders 

selected the correct answer (choice A). 

At a price of $6, consumers would be 

willing and able to buy 40 pounds of 

chocolate, but producers would be 

willing and able to supply 80 pounds, 

thus creating a surplus of 40 pounds of 

chocolate. Choice B is incorrect because more

chocolate would be demanded by consumers 

at $4 than at $6. Choice C is incorrect 

because producers could sell more chocolate 

at a higher price and make more pro- t if the 

price was $5 rather than $4. Choice D is 

incorrect because it describes an opposite effect (a 

market shortage) from the correct answer (a market 

surplus). 

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 36 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice. SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

27 36 61 86

Percentage correct for 12th-grade students at each 

achievement level in 2006

Sample question 4

Referring to the graph above, suppose 

that the government set the price of 

chocolate at $6 per pound. Which of the 

following statements best describes an 

effect of this price control? 

 There would be a surplus of 40 

pounds of chocolate.

B Less chocolate would be demanded 

at $4 than at $6. 

C Producers of chocolate would want 

the price set at $4.

D There would be a shortage of 20 

pounds of chocolate.

THE MARKET FOR CHOCOLATE

Demand

Supply

Price

$6

$5

$4

Quantity of Chocolate (in pounds)

20

40

60

80

100

Percentage of 12th-grade students in each response

category in 2006

Choice A Choice B Choice C Choice D Omitted

46 20 22 12 1

NOTE: Detail may not sum to totals because of rounding.

ECONOMICS 2006 15

MARKET ECONOMY
National Economy

The national economy content area includes much of what is traditionally 

described as macroeconomics. It focuses on the behavior of the economy 

as a whole—the sum of the economic decisions made by individuals, 

businesses, and government. Key concepts include

 the factors that cause changes in infl ation, unemployment, 

output, and growth;

 the role of money and interest rates in an economy; and

 the mechanics and appropriate uses of Federal Reserve 

monetary policies and government fi scal policies. 

16 THE NATION’S REPORT CARD
Range of National Economy Questions

map multiple times, once for each level of credit. For 

example, a partial explanation of the effect of an 

increase in real interest rates on consumers’ borrowing 

appears at 161 on the scale, and a complete 

explanation appears at 197. 

The sample questions that follow illustrate knowledge 

and skills assessed related to national economy. 

However, they do not represent the entire range of 

content assessed in this area.

The item map below, which shows a range of national 

economy questions, helps to explain what it means 

to perform at various levels on the assessment. The 

0–300 economics scale and the scores that de- ne the 

lower boundaries of each achievement level are along 

the left side. The right side lists selected multiplechoice (in italic type) and constructed-response 

questions (in regular type) that fall at various levels 

of dif- culty on the scale.

Constructed-response questions for which students 

could earn partial or complete credit appear on the 

Scale 

score Question description

Advanced

300

275 Provide a superior analysis of how a change in the unemployment rate affects income, spending, and production (shown on page 21)

260 Provide two factors explaining why one country’s per capita gross domestic product is greater than another country’s

258 Recognize components of the United States’ basic money supply

217 Identify a monetary policy tool of the Federal Reserve

211 Provide a satisfactory analysis of how a change in the unemployment rate affects income, spending, and production (shown on page 21)

Proficient

207 Identify the federal government’s primary source of revenue (shown on page 20)

201 Identify real per capita gross domestic product as the best measure for comparing nations’ material standards of living

200 Identify how changes in wages relative to changes in infl ation affect purchasing power

197 Provide a complete explanation of the effect of an increase in real interest rates on consumers’ borrowing (shown on page 19)

192 Recognize two fi scal policies a government can use to stimulate the economy in a recession

181 Provide one factor explaining why one country’s per capita gross domestic product is greater than another country’s

181 Identify a group of people who could be hurt by unexpected infl ation

166 Identify factors that lead to an increase in the national debt (shown on page 18)

161 Provide a partial explanation of the effect of an increase in real interest rates on consumers’ borrowing (shown on page 19)

Basic

155 Provide a minimal analysis of how a change in the unemployment rate affects income, spending, and production (shown on page 21)

154 Determine a probable result of investments in human capital on economic growth

143 Recognize the relationship between one’s credit history and the interest rate fi nancial institutions charge for loans

137 Recognize a likely result on businesses and workers when consumers increase their purchases

110 Recognize the main way local governments in the United States generate revenue

90 Recognize that interest represents the cost of a loan

0

208

160

123

Grade 12 NAEP Item Map for National Economy

NOTE: The position of a question on the composite scale represents the average scale score attained by students who had a 65 percent probability of obtaining credit at a specifi c level of a constructedresponse question, or a 74 percent probability of correctly answering a four-option multiple-choice question.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics Assessment.

ECONOMICS 2006 17

NATIONAL ECONOMY
The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 45 percent 

of 12th-grade students at the Basic level selected the 

correct answer choice.

Sample Question About Fiscal Policy

Sample question 5 measures students’ understanding of the federal government’s fi scal policy. 

The benchmark being assessed with this question focuses on the calculation of the national 

debt, which can be defi ned as the total amount of money the federal government owes. This 

question was classifi ed in the cognitive category of Applying economic information and concepts 

within a Public context. 

Sixty percent of 12th-graders selected the correct 

answer (choice C). When the federal government’s 

expenditures exceed its revenues during a speci- ed 

time, the government’s budget will be in de- cit 

and the national debt will increase. The changes 

described in choices A, B, and D are incorrect 

because they will lead to a budget surplus and 

a decrease in the national debt.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

33 45 85 100

Percentage correct for 12th-grade students at each 

achievement level in 2006

Sample question 5

Suppose that the federal government 

initially has a balanced budget. 

Which of the following changes in 

government tax revenues and 

expenditures over time will defi nitely 

lead to an increase in the national 

debt?

 Tax Revenues Expenditures

A Increase No change

B Increase Decrease

 Decrease Increase

 No change Decrease D

NOTE: Detail may not sum to totals because of rounding.

Choice A Choice B Choice C Choice D Omitted

12 23 60 5 1

Percentage of 12th-grade students in each response

category in 2006

18 THE NATION’S REPORT CARD
Sample Question About Interest Rates

Sample question 6 measures students’ understanding of how changes in real interest rates—that 

is, the current market interest rate minus the expected rate of infl ation—would affect the quantity 

of loans demanded. The benchmark being assessed by this question focuses on how higher or lower 

real interest rates provide different incentives to borrowers or savers. This question was classifi ed 

in the cognitive category of using economic Reasoning concepts within an 

Individual/Household context.

Student responses for this short constructed-response question were 

rated using the following three-level scoring guide:

Correct—Response indicates that an increase in real interest rates 

 would cause people to borrow less money because the cost of 

 the loan would be higher.

Partially Correct—Response indicates that higher real interest 

 rates would cause people to borrow less money, but does not 

 offer an appropriate explanation why.

Incorrect—Response fails to indicate that an increase in

interest rates would cause people to borrow less money.

The - rst student response on the right was rated as “Correct” 

because it indicated that the amount of borrowing would 

decrease and gave an appropriate explanation for why this 

would happen. The second student response was rated as 

“Partially Correct.” Although the response indicated that 

people would borrow less, the explanation for the decrease 

in the amount of borrowing states a fact that is true of any

loan and does not address the concept that higher loan 

prices cause a decrease in the quantity of loans demanded. Thirty-three percent of 12th-graders answered this 

question correctly, and an additional 24 percent gave a 

partially correct response.

The table on the right shows the percentage 

of students within each achievement level whose 

answer to the question above was rated as 

“Correct.” For example, 24 percent of 12th-grade 

students at the Basic level provided a response 

rated as “Correct.”

‡ Reporting standards not met. Sample size is insuffi cient to permit a reliable estimate.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

4 24 53 ‡

Percentage rated as “Correct” for 12th-grade students 

at each achievement level in 2006

NOTE: Detail may not sum to totals because a small percentage of responses that did not 

address the assessment task are not shown.

Correct

Partially 

Correct Incorrect Omitted

33 24 32 8

Percentage of 12th-grade students in each response 

category in 2006

Sample question 6

How will an increase in real interest 

rates affect the amount of money 

that people will borrow? Explain 

why this will occur.

Response rated as “Correct.”

Response rated as “Partially Correct.”

ECONOMICS 2006 19

NATIONAL ECONOMY
Sample Question About the Economic Role for Government

Sample question 7 measures students’ understanding of concepts related to the fi scal policies of 

the federal government. The benchmark being assessed with this question focuses on the 

federal government’s main sources of revenue and major spending programs. This question 

was classifi ed in the cognitive category of Knowing economic information, terms, and concepts 

within a Public context. 

Thirty-six percent of 12th-graders selected the correct 

answer (choice D). Of the choices provided, the 

federal government relies most heavily on personal 

income tax revenue followed by corporate income 

tax revenue (choice C). Many state and local 

governments rely more heavily on sales taxes 

(choice B) or property taxes (choice A). 

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 27 percent 

of 12th-grade students at the Basic level selected the 

correct answer choice. ‡ Reporting standards not met. Sample size is insuffi cient to permit a reliable estimate.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

24 27 48 ‡

Percentage correct for 12th-grade students at each 

achievement level in 2006

NOTE: Detail may not sum to totals because of rounding.

Choice A Choice B Choice C Choice D Omitted

19 31 13 36 1

Percentage of 12th-grade students in each response

category in 2006

Sample question 7

In the United States, which of 

the following forms of taxation 

currently represents the largest 

source of tax revenue for the 

federal government?

A Property tax

B Sales tax

C Corporate income tax

 Personal income tax

20 THE NATION’S REPORT CARD
The table on the right shows the percentage 

of students within each achievement level whose 

answer to the question above was rated as 

“Superior.” For example, 6 percent of 12th-grade 

students at the Basic level provided a response 

rated as “Superior.”

Sample Question About Gross Domestic Product

Sample question 8 measures students’ understanding of the relationships between changes in 

employment, income, spending, and production in the economy. The benchmark being assessed 

by this question focuses on factors that can cause changes in gross domestic product, infl ation, 

and employment. This question was classifi ed in the cognitive category of using economic 

Reasoning concepts within a Public context. 

Student responses for this extended constructed-response question 

were rated using the following four-level scoring guide:

Superior—Responses were those in which students answered all 

 three parts of the question correctly: (A) Spending would decrease 

 because income is falling; (B) Because spending is decreasing, 

 businesses will cut output; and (C) This relationship will lead 

 to a reduction in real gross domestic product.

Satisfactory—Responses were those in which students answered 

 two parts of the question correctly.

Minimal—Responses were those in which students answered 

 one part of the question correctly.

Incorrect—Responses were those in which students answered 

 none of the parts of the question correctly.

The sample student response on the right was rated as 

“Superior” because it supplied correct answers for all three 

parts of the question. Eleven percent of 12th-graders 

provided a “Superior” response. 

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

1 6 19 52

Percentage rated as “Superior” for 12th-grade students 

at each achievement level in 2006

Sample question 8

Given the conditions presented in the 

headline above, what is likely to happen 

to spending in the economy? Explain 

your answer.

What is the relationship between spending 

and output in this situation?

What is likely to happen to real gross 

domestic product as a result of the 

relationship between spending and output?

NOTE: Detail may not sum to totals because a small percentage of responses that did not 

address the assessment task are not shown.

Superior Satisfactory Minimal Incorrect Omitted

11 20 31 29 7

Percentage of 12th-grade students in each response

category in 2006

ECONOMICS 2006 21

NATIONAL ECONOMY
International Economy

The international economy content area focuses on international trade—

how individuals and businesses interact with foreign markets. Key 

concepts include

 the reasons for individuals and businesses to specialize and trade;

 the comparison of benefi ts and costs of specialization and trade

for consumers, producers, and governments; and

 the factors that infl uence exchange rates and the effects of 

exchange rates on individuals.

22 THE NATION’S REPORT CARD
Range of International Economy Questions

The item map below, which shows a range of 

international economy questions, helps to explain what 

it means to perform at various levels on the assessment. 

The 0–300 economics scale and the scores that de- ne the 

lower boundaries of each achievement level are along 

the left side. The right side lists selected multiple-choice 

(in italic type) and constructed-response questions (in 

regular type) that fall at various levels of dif- culty on 

the scale. No questions are shown that fall below the 

Basic level because there were no questions related to 

international economy with a dif- culty level below 123.

Constructed-response questions for which students 

could earn partial or complete credit appear on the 

map multiple times, once for each level of credit. For 

example, a partial explanation of how a change in 

exchange rates affects purchasing power appears at 178 

on the scale, and a complete explanation appears at 250. 

The sample questions that follow illustrate knowledge 

and skills assessed related to international economy. 

However, they do not represent the entire range of 

content assessed in this area.

Scale 

score Question description

Advanced

300

286 Provide a superior analysis of issues related to the imposition of a tariff

279 Analyze data to determine comparative advantage

253 Determine why industries can successfully lobby for tariff protection (shown on page 27)

250 Provide a complete explanation of how a change in exchange rates affects purchasing power

230 Identify how investment in education can impact economic growth (shown on page 26)

213 Determine how changes in exchange rates affect exports and imports of countries

Proficient

202 Determine a result of increased trade and specialization

193 Determine a result of removing trade barriers between two countries (shown on page 25)

188 Provide a satisfactory analysis of issues related to the imposition of a tariff

187 Determine how economic growth can help reduce the poverty level

178 Provide a partial explanation of how a change in exchange rates affects purchasing power

172 Recognize how a change in the price of a resource in one country affects production in another country

167 Determine the impact of a decrease in oil production on oil-importing countries (shown on page 24)

163 Select the correct defi nition of an exchange rate

Basic

158 Provide a partial analysis of issues related to the imposition of a tariff

151 Identify a result of limiting imports

136 Identify one benefi t of voluntary trade between people in different countries

133 Provide a minimal analysis of issues related to the imposition of a tariff

0

208

160

123

NOTE: The position of a question on the composite scale represents the average scale score attained by students who had a 65 percent probability of obtaining credit at a specifi c level of a constructedresponse question, or a 74 percent probability of correctly answering a four-option multiple-choice question.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics Assessment.

Grade 12 NAEP Item Map for International Economy

ECONOMICS 2006 23

INTERNATIONAL ECONOMY
Sample Question About Trade

Sample question 9 measures students’ understanding of how a change in the production of a 

natural resource affects economic growth in an interdependent global economy. The benchmark 

being assessed by this question focuses on how conditions and policies in one nation affect 

conditions and policies in other nations. This question was classifi ed in the cognitive 

category of Applying economic information and concepts within a Business context. 

Sixty-three percent of 12th-graders correctly 

concluded that a decrease in the worldwide 

production of oil would lead to a decrease in 

economic growth in oil-importing countries 

(choice B). In this situation, the cost of oil used 

in oil-importing countries would increase, leading 

to an increase in the cost of producing goods 

and services in these countries, and, ultimately, a 

decrease in economic growth. Choice A is incorrect 

because a decrease in oil production would lead to 

an increase in the price of oil and, therefore, a 

decrease in global consumption. Choices C and D 

are incorrect because both international spending on 

research into alternative energy sources and global 

exploration for new oil reserves would most likely 

increase.

Sample question 9

If there were a decrease in the worldwide 

production of oil, which of the following 

would most likely occur?

A Global consumption of oil would 

increase.

B Economic growth in oil-importing 

countries would decrease.

International spending on research 

into alternative energy sources would 

decrease.

D Global exploration for new oil reserves 

would decrease.

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 56 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice. ‡ Reporting standards not met. Sample size is insuffi cient to permit a reliable estimate.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

37 56 81 ‡

Percentage correct for 12th-grade students at each 

achievement level in 2006

NOTE: Detail may not sum to totals because of rounding.

Percentage of 12th-grade students in each response 

category in 2006

Choice A Choice B Choice C Choice D Omitted

24 63 6 6 1

C

24 THE NATION’S REPORT CARD
Sample Question About Voluntary Exchange

Sample question 10 measures students’ understanding of the relationship between barriers to 

trade and the prices of goods traded. The benchmark being assessed with this question focuses 

on the effects that import restrictions have on domestic consumers and domestic fi rms that 

export goods. This question was classifi ed in the cognitive category of using economic Reasoning

within an Individual/Household context.

Fifty-one percent of 12th-graders correctly identi- ed a decline 

in the prices of imported goods as the likely result of the scenario 

posed (choice B). This would occur because trade restrictions such 

as tariffs and quotas decrease the supply of imported goods and 

increase their cost to the consumer. Choices A, C, and D are 

incorrect because they each identify a factor that would increase

if trade restrictions were removed. Sample question 10

Two countries are currently trading 

with each other. The countries agree to 

remove all trade restrictions on products 

traded between them. Which of the 

following is most likely to decrease? 

A The variety of goods available

The prices of imported goods

C The quality of goo

D

ds available

The amount of imported goods

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 43 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice. ‡ Reporting standards not met. Sample size is insuffi cient to permit a reliable estimate.

SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

31 43 66 ‡

Percentage correct for 12th-grade students at each 

achievement level in 2006

NOTE: Detail may not sum to totals because of rounding.

Choice A Choice B Choice C Choice D Omitted

8 51 31 10 1

Percentage of 12th-grade students in each response 

category in 2006

ECONOMICS 2006 25

INTERNATIONAL ECONOMY
Sample Question About Investment, Productivity, and Growth

Sample question 11 measures students’ understanding of the relationships among investment 

in human capital, productivity, and growth when analyzing and comparing the economies 

of different countries. The benchmark being assessed with this question deals with reasons 

why economic growth rates vary across countries. This question was 

classifi ed in the cognitive category of Knowing economic 

information, terms, and concepts within a 

Context-free scenario. 

Thirty-two percent of 12th-graders correctly 

selected choice A, which describes one factor 

that leads to increased productivity and growth. 

Choices B and D are incorrect because they 

describe factors that are unrelated to economic 

growth. Choice C is incorrect because higher taxes 

on businesses could have a potential negative 

effect on economic growth. 

Sample question 11

Country X and Country Y have similar 

populations and natural resources. Which 

of the following best explains why Country 

X would have a higher rate of economic 

growth than Country Y?

Country X invests more in education.

B Country X imports more consumer 

goods.

C Country X places higher taxes on 

businesses.

D Country X pays larger salaries to 

government officials.

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 24 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice. SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

18 24 43 83

Percentage correct for 12th-grade students at each 

achievement level in 2006

NOTE: Detail may not sum to totals because of rounding.

Choice A Choice B Choice C Choice D Omitted

32 40 23 4 1

Percentage of 12th-grade students in each response 

category in 2006

26 THE NATION’S REPORT CARD
Sample question 12 measures students’ understanding of the 

factors that can infl uence governments’ decision making with 

regard to economic policies. The benchmark being assessed with 

this question focuses on why barriers to trade can be adopted 

through the political process. This question was classifi ed in the 

cognitive category of Applying economic information and 

concepts within a Public context.

Forty percent of 12th-graders correctly selected answer choice C, 

which describes a reason why some groups are sometimes successful 

in convincing government of- cials to pursue economic policies which 

impose costs on the general public that exceed the bene- ts. When 

consumers individually pay only a slightly higher price for a given 

product due to a tariff, the full impact of the tariff will not be 

recognized by them. A given domestic industry, however, will 

more easily recognize the bene- ts of the tariff to itself. Choices 

A and B are incorrect because they fail to show why certain 

groups who would bene- t from tariffs would have a strong 

incentive to support them, while the groups who would 

bear the costs of the tariffs would lack a strong incentive 

to oppose them. Choice D is incorrect because it describes 

the opposite rationale from the correct answer.

Sample question 12

Which of the following best explains 

why domestic industries are often 

successful in convincing Congress 

to place tariffs on certain imported 

products?

A The revenue generated from the 

tariffs is less than the revenue 

from taxes on products produced 

by the industry

B

.

The revenue generated from the 

tariffs is greater than the benefi ts 

of the tariffs to the industry.

The cost to any one consumer 

is small, and the benefi ts to the 

industry are large.

D The benefi t to any one consumer 

is large, and the cost to the 

industry is small.

The table on the right shows the percentage of 

students within each achievement level who answered 

the question above correctly. For example, 35 percent 

of 12th-grade students at the Basic level selected 

the correct answer choice. SOURCE: U.S. Department of Education, Institute of Education Sciences, National Center for 

Education Statistics, National Assessment of Educational Progress (NAEP), 2006 Economics 

Assessment.

Below Basic At Basic At Profi cient At Advanced

31 35 46 76

Percentage correct for 12th-grade students at each 

achievement level in 2006

Sample Question About Government Decision Making

# Rounds to zero.

NOTE: Detail may not sum to totals because of rounding.

Choice A Choice B Choice C Choice D Omitted

16 32 40 12 #

Percentage of 12th-grade students in each response 

category in 2006

ECONOMICS 2006 27

INTERNATIONAL ECONOMY
Technical Notes

Sampling and Weighting

The schools and students who participated in NAEP 

assessments were chosen to form a sample representative of the nation. This sample was selected using a 

strati- ed, three-stage design that involved sampling 

students from selected schools within selected 

geographic units from across the country, including 

public schools, private schools, Bureau of Indian 

Affairs schools, and Department of Defense schools. 

More information on sampling can be found at http://

nces.ed.gov/nationsreportcard/about/nathow.asp. 

Each school that participated in the assessment, and each 

student assessed, represented a portion of the population 

of interest. Results were weighted to make appropriate 

inferences between the student samples and the respective 

populations from which they were drawn. Sampling 

weights accounted for the disproportionate representation 

of the selected sample, for the oversampling of students 

who attended schools with high concentrations of 

minority students, and for the lower sampling rates of 

students who attended very small schools.

Participation, Exclusion, and 

Accommodation Rates 

The school participation rate for the grade 12 economics 

assessment was 79 percent (83 percent for public schools 

and 41 percent for private schools). The student participation rate for economics was 73 percent (72 percent for 

students in public schools and 87 percent for students in 

private schools). To ensure unbiased samples, NCES 

statistical standards require that nonresponse bias 

analyses be conducted for any school or student group 

with a participation rate that falls below 85 percent. The 

results showed that school substitution and nonresponse 

adjustments were effective in reducing the observable 

nonresponse bias for public and private schools and for 

public school students.

A NAEP/Governing Board reporting rule requires that 

public/private and regional student groups will not be 

reported if the initial school participation rate falls 

below 70 percent. This requirement for the grade 12 

economics assessment was not met for private schools, 

for any subcategory of private schools, or for schools in 

the western region; therefore, data for these groups are 

not provided in this report or on the NAEP website.

Of the students identi- ed to participate in the 

economics assessment, 3 percent were excluded because 

they could not be meaningfully tested, and 6 percent 

were assessed using accommodations such as a small 

group administration or extended time. 

Results by Type of School Location

NAEP results are reported for four mutually exclusive 

categories of school location based on standard 

de- nitions established by the federal Of- ce of 

Management and Budget using population and 

geographic information from the U.S. Census Bureau. 

De- nitions of terms used below may be found at http://

nces.ed.gov/ccd/common- les/glossary.asp.

Large city: A large city is a principal city of a Metropolitan Core Based Statistical Area (CBSA), with the 

city having a population of 250,000 or greater.

Mid-size city: A mid-size city is a principal city of a 

Metropolitan CBSA, with the city having a population 

of less than 250,000.

Urban fringe/large town: An urban fringe is a place or 

other area within a Metropolitan CBSA of a large or 

mid-size city that is de- ned as urban by the Census 

Bureau. A large town is a place with a population of 

25,000 or greater and located outside a Metropolitan 

CBSA or inside a Micropolitan CBSA.

Small town/rural: A small town is a place with a 

population of at least 2,500 but less than 25,000 that 

is located outside a Metropolitan CBSA or inside a 

Micropolitan CBSA. A rural area is a place or other 

area not within a Metropolitan CBSA or within a 

Micropolitan CBSA, or a place or area within a 

Metropolitan CBSA that is de- ned as rural by the 

Census Bureau. 

Interpreting Statistical Signifi cance

Comparisons between groups of students are based 

on statistical tests that consider both the size of the 

differences and the standard errors of the two statistics 

being compared. Standard errors are margins of error, 

and estimates based on smaller samples are likely to have 

larger margins of error. The size of the standard errors 

may also be inG uenced by other factors such as how 

representative the assessed students are of the entire 

population. When an estimate has a large standard error, 

a numerical difference that seems large may not be 

statistically signi- cant. Differences of the same 

magnitude may or may not be statistically signi- cant 

depending upon the size of the standard errors of the 

statistics. Standard errors for the NAEP scores and 

percentages presented in this report are available at 

http://nces.ed.gov/nationsreportcard/nde/.

28 THE NATION’S REPORT CARD
THIS PAGE INTENTIONALLY LEFT BLANK.
Margaret Spellings

Secretary

U.S. Department 

of Education

Grover J. Whitehurst

Director

Institute of 

Education Sciences

Mark Schneider

Commissioner

National Center for 

Education Statistics

Peggy G. Carr

Associate Commissioner

National Center for 

Education Statistics

www.ed.gov

U.S. DEPARTMENT OF EDUCATION

The National Assessment of Educational Progress (NAEP) is a congressionally authorized project sponsored by the 

U.S. Department of Education. The National Center for Education Statistics, a department within the Institute 

of Education Sciences, administers NAEP. The Commissioner of Education Statistics is responsible by law for 

carrying out the NAEP project.

“ T H E D E P A R T M E N T O F E D U C A T I O N ’ S M I S S I O N I S T O P R O M O T E S T U D E N T A C H I E V E M E N T 

A N D P R E P A R A T I O N F O R G L O B A L C O M P E T I T I V E N E S S B Y F O S T E R I N G E D U C A T I O N A L 

EXCELLENCE AND ENSURING EQUAL ACCESS.”

THE NATIONAL ASSESSMENT GOVERNING BOARD

In 1988, Congress created the National Assessment Governing Board to set policy for 

the National Assessment of Educational Progress, commonly known as The Nation's 

Report Card TM. The Board is an independent, bipartisan group whose members 

include governors, state legislators, local and state school officials, educators, business 

representatives, and members of the general public.

Darvin M. Winick, Chair 

President

Winick & Associates

Austin, Texas 

Amanda P. Avallone, Vice Chair 

Assistant Principal and 

Eighth-Grade Teacher

Summit Middle School 

Boulder, Colorado 

Francie Alexander 

Chief Academic Of	 cer, 

Scholastic, Inc. 

Senior Vice President, 

Scholastic Education 

New York, New York 

David J. Alukonis 

Chairman

Hudson School Board

Hudson, New Hampshire 

Barbara Byrd-Bennett 

Executive Superintendent-inResidence

Cleveland State University 

Cleveland, Ohio 

Gregory Cizek 

Professor of Educational 

Measurement

University of North Carolina

Chapel Hill, North Carolina

Shirley V. Dickson 

Educational Consultant 

Aliso Viejo, California 

Honorable David P. Driscoll 

Commissioner of Education 

Massachusetts Department of 

Education

Malden, Massachusetts 

John Q. Easton 

Executive Director

Consortium on Chicago School 

Research

University of Chicago

Chicago, Illinois

Alan J. Friedman 

Consultant

Museum Development and Science 

Communication

New York, New York 

David W. Gordon 

County Superintendent of Schools 

Sacramento County Of- ce of 

Education 

Sacramento, California 

Robin C. Hall 

Principal 

Beecher Hills Elementary School

Atlanta, Georgia 

Kathi M. King 

Twelfth-Grade Teacher

Messalonskee High School

Oakland, Maine

Honorable Keith King 

Former Member

Colorado House of Representatives 

Denver, Colorado

Kim Kozbial-Hess 

Fourth-Grade Teacher

Hawkins Elementary School

Toledo, Ohio

James S. Lanich 

President 

California Business for 

Education Excellence

Sacramento, California 

Honorable Cynthia L. Nava 

Senator 

New Mexico State Senate 

Las Cruces, New Mexico 

Andrew C. Porter 

Dean 

Graduate School of Education 

University of Pennsylvania 

Philadelphia, Pennsylvania 

Luis A. Ramos 

Community Relations Manager

PPL Susquehanna

Berwick, Pennsylvania 

Mary Frances Taymans, SND

Executive Director

Secondary Schools Department

National Catholic Educational 

Association 

Washington, D.C.

Oscar A. Troncoso

Administrator

Bill Sybert School

El Paso, Texas

Honorable Michael E. Ward 

Former North Carolina 

Superintendent of 

Public Instruction

Hattiesburg, Mississippi

Eileen L. Weiser 

Former Member, 

State Board of Education 

Michigan Department of 

Education

Lansing, Michigan

Grover J. Whitehurst 

(Ex offi cio)

Director

Institute of Education Sciences

U.S. Department of Education

Washington, D.C.

Charles E. Smith

Executive Director 

National Assessment Governing 

Board

Washington, D.C.

T H E N A T I O N ’ S 

REPORT CARD

Economics 

2006

August 2007

MORE INFORMATION

The report release site is 

http://nationsreportcard.gov.

The NCES web electronic 

catalog is http://nces.ed.gov/

pubsearch.

For ordering information, 

write to

U.S. Department of Education

ED Pubs

P.O. Box 1398

Jessup, MD 20794-1398

or call toll free 1-877-4ED-Pubs

or order online at http://www.

edpubs.org

S U G G E S T E D 

CITATION

Mead, N., and Sandene, B. (2007).

The Nation’s Report Card: 

Economics 2006

(NCES 2007–475). 

National Center for Education 

Statistics, Institute of Education 

Sciences, U.S. Department of 

Education, Washington, D.C.

CONTENT CONTACT

Emmanuel Sikali

202-502-7419

emmanuel.sikali@ed.gov