MA.912.FL.2.3

Benchmark Instructional Guide

Connecting Benchmarks/Horizontal Alignment

• MA.912.FL.1 
• MA.912.DP.1.2

Terms from the K-12 Glossary

• Data

Vertical Alignment

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• MA.7.AR.3

 

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Purpose and Instructional Strategies

• Instruction includes using students’ understanding of decimals and percentages as they learn the definitions and interpret displays of various financial indices and rates. 
• Instruction includes the understanding that financial indices and rates are often estimates and may have measurement error or be based upon incomplete data. When calculating and interpreting these, students may need to consider significant digits. 
  • For example, when calculating the unemployment rate, the relevant quotient may produce a repeating decimal which would be rounded (or truncated) to reasonable number of significant digits (MTR.6.1). 
• The Consumer Price Index (CPI) is also referred to as the cost-of-living index. The CPI serves as an indicator of the changes in the total cost of specific products of services based on inflation. The CPI is a measure that represents the change in the price of a market basket of consumer goods, which might include food, clothing, housing and other consumer expenses. The measurement of the CPI has limitations due to sampling error and price data errors. 
  • To determine the CPI, the cost of products during a current period is divided by the cost of products in a prior time period (base year), then multiplied by 100. 
  • For example, the table below shows the cost of a market basket of goods for calculation of the CPI. A typical household buys 2 loaves of bread, 3 gallons of milk and 4 boxes of cereal per week in the years 2017, 2018 and 2019.
    
    
    
    To calculate the CPI for each of the years with 2018 as the base year, first calculate the cost of each weekly basket then calculate the CPI. 

• For the purposes of this course, market baskets used for CPI calculations are based on a few items. 
• The Gross Domestic Product (GDP) is the total market value of goods and services that are produced in a country during a specified timeframe. The GDP can be calculated in three ways: income, production and expenditures. Calculating the GDP using the expenditure method is the most commonly used method that includes adding the three users of goods and services: households, government and businesses.
  
  $G$$D$$P$ = Consumption + Investment + Government Spending + Net Exports 

$G$$D$$P$ = $C$ + $I$ + $G$ + $N$_$x$ 

$C$ = private consumption expenditures by households 

$I$ = investment by business 

$G$ = government spending 

$N$_$x$ = the net exports (total exports minus total imports) 

• Stock Indices are used to help investors determine current stock prices compared to past prices as the investors determine and calculate market performance. Stock Index is a benchmark to help gauge the movement of the market based on a batch of stocks. The most common method of calculation is to find the average of the stocks this can be direct or indirect to account for the weighting of the stocks. 
  • For example, the Dow Jones Industrial Average is the index that includes 30 of the largest stocks in the market. The index calculation is the sum of the stock prices of the 30 companies divided by the divisor. The divisor can vary when the stock splits or if there are companies that are added or taken out of the index. 
• Unemployment rate is a percentage of the total labor force that is unemployed, yet they are still actively looking for employment and are willing to work. To calculate the unemployment rate, divide the number of unemployed by the total number of people in the labor force then multiply by 100. 
• Trade Deficit occurs when a country’s imports exceed its exports. This also refers to when a country needs more that it can create, which in turn is a deficit. To calculate the trade deficit, subtract a country’s exports from the total value of its imports.

Common Misconceptions or Errors

• Students may need support in calculations with percentages and changing large values from decimals to percentages. 
• Students may need instruction on understanding the meaning of the values once calculated, and what the margin of error is as a factor in the impact on the solution. 
• The vocabulary may be new to students and understanding of calculations and understanding the reliability of the results. 
• Students may need support in following the CPI steps to solve related to the base year for calculation.

Instructional Tasks

• The table below shows the cost of a market basket of goods for calculation of the CPI. In one household, they buy 3 rolls of paper towels, 2 gallons of milk and 4 boxes of cereal per week in years 2018, 2019 and 2020. 
  
  
  
  • Part A. Calculate the CPI in 2020 with 2018 as the base year. 
  • Part B. Explain a possible reason for the increase from year 2019 to year 2020 that would explain the inflation in price of some products.

Instructional Items

• If the number of unemployed people for a country is 5.2 million and the total number in the labor force is 123.2 million, determine the unemployment rate as a percent.

*The strategies, tasks and items included in the B1G-M are examples and should not be considered comprehensive.

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