Glossary Terms:

One of many choices or courses of action that might be taken in a given situation.

A financial institution that provides various products and services to its customers, including checking and savings accounts, loans and currency exchange.

The percentage of a bank's deposits that it keeps on hand, i.e., does not lend out.

The industry involved with conducting financial transactions. Also, conducting business with a bank, e.g., maintaining a checking or savings account or obtaining a loan.

To receive and use something belonging to somebody else, with the intention of returning or repaying it--often with interest in the case of borrowed money.

Any activity or organization that produces or exchanges goods or services for a profit.

Fluctuations in the overall rate of national economic activity with alternating periods of expansion and contraction; these vary in duration and degrees of severity; usually measured by real gross domestic product (GDP).

Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools and equipment. In the context of credit transactions, capital is one of the Three Cs of Credit. It is an indicator of how creditworthy a prospective borrower is likely to be as determined by the borrower's current financial assets and net worth.

People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.

Spending by households on goods and services. The process of buying and using goods and services.

The opportunity to borrow money or to receive goods or services in return for a promise to pay later.

Money owed to someone else. Also the state or condition of owing money. Can be individual, corporate or government debt.

A conclusion reached after considering alternatives and their results.

The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.

Money put into a financial account. Also, to place money in a financial account.

The interest rate the Federal Reserve charges commercial banks for loans.

An increase in real output as measured by real GDP or per capita real GDP.

The study of how people, firms and societies choose to allocate scarce resources with alternative uses.

Stock, both common and preferred. Also, the value of mortgaged property after accounting for charges against it or money owed.

The central bank of the United States. Its main function is controlling the money supply through monetary policy. The Federal Reserve System divides the country into 12 districts, each with its own Federal Reserve bank. Each district bank is directed by its nine-person board of directors. The Board of Governors, which is made up of seven members appointed by the President and confirmed by the Senate to 14-year terms, directs the nation's monetary policy and the overall activities of the Federal Reserve. The Federal Open Market Committee is the official policy-making body; it is made up of the members of the Board of Governors and five of the district bank presidents.

The natural rate of employment; generally considered to be about 93-95 percent of the labor force, allowing for frictional unemployment of 5-7 percent.

Something a person or organization plans to achieve in the future; an aim or desired result.

Accommodation in houses, apartments, etc.

A rise in the general or average price level of all the goods and services produced in an economy. Can be caused by pressure from the demand side of the market (demand-pull inflation) or pressure from the supply side of the market (cost-push inflation).

Money paid regularly, at a particular rate, for the use of borrowed money.

The price paid for using someone else's money, expressed as a percentage of the amount borrowed.

The purchase of capital goods (including machinery, technology or new buildings) that are used to produce goods and services. In personal finance, the amount of money invested in stocks, bonds, mutual funds and other investment instruments.

A piece of work usually done on order at an agreed-upon rate. Also a paid position of regular employment.

The quantity and quality of human effort available to produce goods and services.

The labor supply and labor demand curves. The intersection of the labor supply and labor demand curves determines the equilibrium wage and the quantity of hours people work at this equilibrium wage.

To grant someone the use of something, on condition that the object borrowed or its equivalent will be returned (often with interest, in the case of money).

The ease with which savings or investments can be turned into cash.

Places, institutions or technological arrangements where or by means of which goods or services are exchanged. Also, the set of all sale and purchase transactions that affect the price of some good or service.

Changes in the supply of money and the availability of credit initiated by a nation's central bank to promote price stability, full employment and reasonable rates of economic growth.

Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.

Narrowly defined by economists as currency in the hands of the public plus checking-type deposits; also called M1. Other definitions of the money supply (M2, M3) include various savings deposits, money market deposits and money market mutual fund balances.

The buying and selling of government bonds by the Federal Reserve to control bank reserves and the money supply.

The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.

The weighted average of the prices of all goods and services in an economy; used to calculate inflation.

The absence of inflation or deflation; a broad social goal and criterion for measuring the performance of an economic system.

An original amount of money invested or lent.

A good or service that can be used to satisfy a want.

In a credit arrangement, the total amount spent during the billing cycle.

A decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months).

Economic regulation is the prescription of price and output for a specific industry, often a natural monopoly. Social regulation is the prescription of health, safety, performance, environmental, output and job standards across several industries.

The fraction of banks' deposits that they are required by law to keep on hand or with the Federal Reserve.

The basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.

To keep money for future use; to divert money from current spending to a savings account or another form of investment.

Activities performed by people, firms or government agencies to satisfy economic wants.

The amount of a good or service that producers are willing and able to offer for sale at each possible price during a given period of time.

The situation that results when the quantity supplied of a product exceeds the quantity demanded. Generally happens because the price of the product is above the market equilibrium price.

The number of people without jobs who are actively seeking work.

The number of unemployed people, expressed as a percentage of the labor force.