Glossary Terms:

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

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

A written order to a financial institution directing the financial institution to pay a stated amount of money, as instructed, from the customer's account.

Decision made or course of action taken when faced with a set of alternatives.

A price index that measures the cost of a fixed basket of consumer goods and services and compares the cost of this basket in one time period with its cost in some base period. Changes in the CPI are used to measure inflation.

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

An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.

A sustained decrease in the average price level of all the goods and services produced in the economy.

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

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

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.

Income that stays the same from week to week or month to month. Usually refers to income from pensions or bonds.

Tangible objects that satisfy economic wants.

Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends.

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

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.

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.

People and firms that use resources to make goods and services.

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

A process of manufacturing, growing, designing, or otherwise using productive resources to create goods or services used to to satisfy a want.

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).

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

Use money now to buy goods and services.

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

Payments for labor services that are directly tied to time worked, or to the number of units of output produced.

Desires that can be satisfied by consuming or using a good or service. Economists do not differentiate between wants and needs.

People employed to do work, producing goods and services.