Economics vocabulary
Terms
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- risk
- the chance of loss
- inflation
- an economic condition characterized by rising prices (increase in the average price of all goods and services)
- subsidize
- to aid or promote with money
- international trade
- trade between nations
- free trade
- unrestricted trade between countries
- producer
- the people or businesses that provide goods and services
- deflation
- a decrease in the average price of all goods and services
- money supply
- the value of all currency and checking account balances in a country
- standard of living
- way to measure how well the needs and wants of citizens are being met by a country's economic system
- debt
- money owed when you or a government buy something or credit or borrow money
- embargo
- a government policy that cuts off trade with certain countries
- national debt
- the amount of money that the government owes
- protectionism
- the policy of limiting trade with other countries to protect domestic industries
- fiscal policy
- the government program of increasing or decreasing taxes and government spending to control inflation and unemployment
- capitalism
- an economic system in which individuals, not the government control the production and distribution of goods and services; also called market system
- central bank
- a bank whose functions include controlling the nation's money supply; an institution that lends money to other banks and the place where the government does its banking business (Federal Reserve System in U.S.).
- deposit
- money put into a bank
- services
- work that is done for other people, such as by waiters, lawyers, and nurses
- reserve
- money that is kept in the bank and not loaned to customers a period of time when the demand for goods declines, unemployment rises, and the flow of money slows down
- Social Security
- a system of federal financial support for retired workers and workers unable to continue working because of a disability
- foreign exchange market
- the place where foreign exchange dealers in major cities around the world trade the money of different countries
- laissez faire
- a basic economic policy that calls for noninterference by the government in business matters
- income
- the money a person gets from salary or wages, profits, interest, investments, and other sources
- compound interest
- interest earned on the deposit and on all previously earned interest
- withdrawal
- taking money from a bank account
- scarcity
- not enough of a certain resource to satisfy people's needs and wants
- payroll tax
- tax on wages and salaries to finance Social Security and Medicare costs
- economic system
- the way that a country or culture produces and distributes goods and services
- capital
- human-made items, such as machines and tools, that are used to produce goods and services
- bank panic
- a situation in which many banks fail because they are not able to meet the demands of their depositors for cash
- want
- something that you would like to have but don't necessarily need
- credit
- money loaned, usually for a fee, that must be paid back
- savings and loan association (S&L)
- financial institutions that traditionally loaned money to people buying homes
- Medicare
- government program that provides health care for the aged (elderly)
- public sector
- the part of the economy produced by the government
- consumer
- someone who buys and uses goods and services
- unearned income
- money received from investments such as savings accounts and bonds
- fiscal year (FY)
- 12-month planning cycle in business and government (October 1 through September 30 for government)
- Federal Reserve System (Fed)
- the central bank of the United States
- automatic stabilizer
- program that automatically provides benefits to offset a change in people's incomes
- dollar
- the official unit of currency in the United States; based on the decimal system
- protective tariff
- a tax meant to raise the price of an imported good in order to protect a certain industry from foreign competition
- welfare
- income paid by the government to people who need it to live
- tax-exempt
- not required to pay taxes
- minimum deposit
- the least amount of money required to open a bank account
- import quota
- a law that sets a fixed limit on the amount of imports
- cost-push inflation
- the kind of inflation caused by the rising cost of resources such as labor or oil
- cash
- bills and coins
- entitlement program
- a program using eligibility requirements to provide health, nutritional, or income supplements to individuals
- savings rate
- the percent of income that people save
- coin
- an economic system in which the government controls the production and distribution of goods and services
- money
- anything a group of people accept in exchange for goods and services
- trade deficit
- a condition in which the value of a nation's imports is greater than the value of its imports
- loan
- a sum of money borrowed for a certain amount of time
- export - (noun)
- a good that is sent from one country to another; (verb)to send goods from one country to another
- budget resolution
- an agreement in Congress that shows total spending and revenues for a fiscal year and how much will be spent in various categories
- employee
- a person who works for another in return for pay
- demand-pull inflation
- the kind of inflation caused when consumer spending is greater than the amount of goods and services available
- Federal Open Market Committee (FOMC)
- the most powerful committee of the Fed, because it makes the decisions that affect the economy as a whole by manipulating the money supply
- natural resource
- a supply of something that is found naturally on earth
- expansion
- a period of time during which the amount of business (GDP) increases
- employer
- a person or company for whom other people work for pay
- currency
- any kind of money that is used as a medium of exchange
- transaction
- any business done with a the bank, such as a withdrawal or deposit
- economist
- a person who studies the economy
- interest
- the money a person pays to borrow money, or the money a bank pays depositors for using their money
- value
- the worth of something as measured in goods, services, or a medium of exchange
- commercial bank
- a country's ability to produce a product at a lower opportunity cost than other countries
- bank
- a business that keeps money for customers, makes loans, and provides other money-related services
- taxes
- money that a government collects from people and businesses
- minimum balance
- a fixed amount of money that remains in a customer's account to avoid paying bank fees
- excise tax
- a tax on certain items such as alcohol, tobacco, and gasoline
- mandatory spending
- federal spending required by law that continues without the need for annual approvals (appropriations) by Congress
- unemployment
- the total number of people out of work, but wanting to work
- denomination
- paper money of a particular value
- intergovernmental revenue
- funds one level of government receives from another level of government
- command system
- a bank that provides checking accounts and savings accounts, and makes loans for a variety of purposes
- prime rate
- the lowest rate of interest that banks offer their best business customers
- bond
- a certificate of a loan to a government or a business (A person who buys a bond is lending money to the government or corporation that sells the bond.)
- wages
- money paid to an employee for work done
- appropriation
- the law passed by Congress that funds (provides money) to government agencies to carry out their programs
- circulation
- money that is available for use
- investment
- the risking of money and time to get something in return (usually interest or other income)
- income tax
- a tax on a person's income
- budget surplus
- a financial situation in which spending is less than income or revenues
- savings
- money that is put away to be used later
- authorization
- the law passed by Congress that states the maximum amount of money Congress may appropriate for government programs
- property tax
- tax on land and property
- exchange rate
- the value of one nation's currency in comparison to another
- mixed system
- an economic system that includes both private ownership of property and government control (or regulation) of some services and industries
- promissory note
- a written promise to pay a sum of money
- free enterprise
- economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference
- economics
- the study of how people, businesses, and governments choose to use their limited (scarce) resources
- foreign aid
- aid that one country gives to another in the form of money, capital resources, and food
- medium of exchange
- anything that a group of people agree has a certain worth
- incentive
- something that encourages people to work harder or to produce more
- counterfeit
- to make a copy of something that people will think is genuine
- deficit
- situation in which government spends more than it collects in revenue
- open market operations
- purchase or sale of U.S. government bonds and Treasury bills
- tax return
- annual report filed with local, state, or federal government detailing income earned and taxes owed
- traditional system
- an economic system based on past ways of life and culture
- nonprofit
- a business not intending to make a profit
- mature
- able to be redeemed
- financial institution
- a bank, credit union, savings and loan, or other organization that offers services related to saving and borrowing money
- discount rate
- the rate of interest charged by the Federal Reserve Bank to borrowing banks
- profit
- the money a business makes after expenses are paid
- import - (noun)
- a good that is brought into one country from another; (verb) to bring goods into one country from another
- budget deficit
- a financial situation in which spending is greater than income or revenues
- bankrupt
- unable to pay debts
- credit union
- a kind of bank that is owned by members who belong to a certain company or group; usually a not-for-profit organization
- recession
- An extended decline in general business activity.
- balanced budget
- a budget in which the money going out is equal to or less than the money taken in
- depression
- a period of serious recession marked by high unemployment and a decline in business
- economic choices
- every society must decide WHAT to produce, HOW to produce, and FOR WHOM to produce
- unemployed
- being without a job but looking for one
- contraction
- a time period when GDP (amount of business) is decreasing
- clearinghouse
- a place where banks exchange checks and settle accounts
- principal
- a sum of money in an account, not including interest earned; in a loan, the original amount of money borrowed
- budget
- a plan of how much money a person, business, government, or organization is able to spend and how it will be spent
- Gross Domestic Product (GDP)
- the total dollar value of the final goods and services produced in a country each year
- Federal Deposit Insurance Corporation (FDIC)
- a government corporation that insures bank deposits up to $100,000
- surcharge
- an extra cost added to an original cost
- revenue
- money brought in by a business
- monetary policy
- the Federal Reserve System program of increasing or decreasing the money supply to control inflation and unemployment
- need
- something that you must have to survive
- market system
- an economic system in which individuals, not the government control the production and distribution of goods and services; also called capitalism
- economy
- the way in which human resources and natural resources are used to produce goods and services
- business cycle
- alternating time periods of expanding and contracting economic activity
- discretionary spending
- spending for federal programs that must receive annual approval (appropriations) by Congress
- social insurance program
- a program meant to prevent poverty; Social Security, workers' compensation, unemployment insurance, and Medicare are well-known examples
- private sector
- the part of the economy produced by individuals and businesses
- goods
- real items or things, such as cars, watches, and clothing
- surplus
- situation in which quantity supplied is greater than quantity demanded; situation in which government spends less than it collects in revenues
- tariff
- a tax on imports
- government revenue
- tax dollars received by the government