TEACHING: Why Johnny Can't Budget

What is inflation? What causes a budget deficit? Many adults know the answers all too well, but most high school students have no idea. So says a survey released last week by the New York-based Joint Council on Economic Education, which found that only one out of three high school students in its 41-state poll could define such basic concepts as profit and the law of supply and demand. The 8,205 eleventh- and twelfth-graders who took the 40-minute multiple-choice test correctly answered less than 40% of the 46 questions. Declared William Walstad, a co-author of the study: "Our schools are producing a nation of economic illiterates."

Though some of the questions dealt with difficult concepts or called for subjective judgments, the results showed that many high schools are failing to get even the basics across. Only 16 states insist that all students take an economics course to graduate.