How well do Americans understand economics?

In another recent discussion someone mentioned that economics has been a required course for high school graduation since the 1960s. Where I went to high school there were no economics courses and no such requirement. I suspect that this is true elsewhere as well, since I don’t see much economic sophistication in discussions in public forums like this.

Many people seem to have rather vague and inaccurate ideas about what socialism is—and even capitalism, for that matter. For example, they don’t seem to understand that capitalism is inherently unstable; that the American system is a mixed economy as a result; the counter-cyclical role of government spending in macroeconomic policy; or the expansionary or contractionary implications of any particular policy.

They tend to see unemployment as a personal moral failing, rather than as a necessary component of monetary policy. They tend to have a static zero-sum view of economics, as if running an economy were like managing a household’s finances. I don’t see people using terms that display an understanding of the dynamic workings of the economy, such as “aggregate demand,” “multiplier effects,” or the “paradox of thrift.” Without such conceptual tools it is very difficult to make sense of what is going on, even if you are paying attention.

So, the question is, what can you reasonably assume that Americans understand about economics? And is this understanding sufficient to critically evaluate the economic policies of the politicians they vote for?