Indiana Social Studies E.1.9
The Standard
Diagram and explain the circular flow of a market economy.
2026 Indiana Academic Standards: K-12 Social Studies · Students explain that because resources are limited, people must make choices, understanding the role that supply, demand, prices, and profits play in a market economy. Key elements of the course include study of scarcity and economic reasoning, supply and demand, market structures, the role of government, national economic performance, the role of financial institutions, economic stabilization, and trade.
Teacher's field guide
What This Standard Means
What Students Need to Do
- Students draw how households and businesses exchange resources, goods, services, and money through two markets. They explain why money moves in the opposite direction from work and goods.
What Mastery Looks Like
- A student can label the resource market and product market on a blank diagram. Their arrows show work moving toward businesses and wages toward households. They also show goods moving toward households and spending toward businesses.
Common Misconceptions
- Students may draw wages going from households to businesses. They may put goods in the resource market or draw money and goods moving in the same direction.
How to Assess It
- On an exit ticket, ask students to draw households and businesses connected by a resource market and a product market. Have them label arrows for work, wages, goods, and spending, then explain why work and wages move in opposite directions.
Lesson moves
Ways to Teach It
Give pairs four market and participant cards, then have them place labeled paper arrows for work, wages, goods, and spending.
Ask: A student earns $40 at a bakery and buys bread there. Where do the work, wages, bread, and spending go?
Give pairs a blank flow diagram and 60 seconds to place four arrow labels, then have partners check each arrow.
Use a grocery receipt and a sample cashier pay stub to trace groceries, labor, spending, and wages between shoppers and the store.
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