So it was not that great of a surprise to me to learn that high school students have a fairly firm grasp on the economic fundamentals. The first ever National Assessment of Educational Progress focused on economics found 79% of 12th graders had a basic understanding or better of our market economy.
Most could answer questions like: “How will an increase in real interest rates affect the amount of money that people will borrow?” They understood the trade offs between staying in a job and leaving it to get a better education. And 60% could identify what happens to the federal budget when tax revenues fall and spending rises.
Given these results, I am certain high school students would have gotten the right answer to the following question: What happens when, after giving a loan to people who have poor credit or no documented income history, you then try to raise their interest rate by 40%? Of course, you get the subprime meltdown.
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