Glossary Terms:

The 411 on College Education

Glossary terms from:


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


Something of monetary value owned by an individual or an organization.


A certificate of indebtedness issued by a government or a publicly held corporation, promising to repay borrowed money to the lender at a fixed rate of interest and at a specified time.


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.


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.


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.

Cost/Benefit Analysis

A process of examining the advantages (benefits) and disadvantages (costs) of each available alternative in arriving at a decision.


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


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.

Decision Making

Reaching a conclusion after considering alternatives and their results.


Payments for goods and services.


Tangible objects that satisfy economic wants.

Human Capital

The health, education, experience, training, skills and values of people. Also known as human resources.


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 process of putting money someplace with the intention of making a financial gain. Investment possibilities include stocks, bonds, mutual funds, real estate, and other financial instruments or ventures.


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.


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


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.

Net Worth

The current value of a person's assets minus liabilities.


A job or profession; also a category of work, sometimes identified by the degree of skill required.

Opportunity Cost

The second-best alternative (or the value of that alternative) that must be given up when scarce resources are used for one purpose instead of another.


The fee paid for insurance protection.


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.

Price Level

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


The amount of output (goods and services) produced per unit of input (productive resources) used.


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


Earnings from an investment, usually expressed as an annual percentage.


The chance of losing money.


A regular payment, often at monthly or biweekly intervals, made by an employer to an employee, especially in the case of professional or white-collar employees. Salaries are paid for services rendered and are not based on hours worked.


An exchange of goods or services for money.


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


Disposable income (income after taxes) minus consumption spending.


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


An ownership share or shares of ownership in a corporation.


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

Unemployment Rate

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


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


Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.


People employed to do work, producing goods and services.