Only 42% of the 11,500 students taking the National Assessment of Educational Progress in Economics performed at Proficient or better (p. 5).

The report includes some of the questions presented on domestic fiscal and international economic policy (percentages are the percentage of students responding with that answer, underlined answers are correct):

1.) Suppose that the federal government initially has a balanced budget. Which of the following changes in government tax revenues and expenditures over time will definitely lead to an increase in the national debt? Tax Revenues Expenditures Increase No change 12% Increase Decrease 23% Decrease Increase 60% No change Decrease 5% Note: They didn't offer "No Change" in tax revenues and an "Increase" in expenditures as a correct option. 2.) In the United States, which of the following forms of taxation currently represents the largest source of tax revenue for the federal government? Property Tax 19% Sales Tax 31% Corporate Income Tax 13% Personal Income Tax 36% Note: More proof that students don't realize how invasive the payroll tax and IRS truly are.

3.) 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? The variety of goods available 8% The prices of imported goods 51% The quality of goods available 31% The amount of imported goods 10% Note: A promising sign, students realize the economic benefits of freedom and choice. 4.) 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. 32% Country X imports more consumer goods. 40% Country X places higher taxes on businesses. 23% Country X pays larger salaries to government officials. 4% Note: I would have called it "Education and Technical Training". I can almost understand the rationale of the 40% who were incorrect. We do measure economic growth through production of goods and services, the GDP. So, if you're confusing exports and imports then the second response would make sense. The most frightening response has to be the third. Higher taxes and economic growth just don't go together and the fact that 23% of 12th graders think they do is great cause for concern.

Update: More over at OpinionJournal.