Glossary Terms:

The 411 on College Education

Glossary terms from:
http://www.econedlink.org/e1103


Alternative

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

Asset

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

Bond

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.

Borrow

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.

Business

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

Capital

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.

Check

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.

Choice

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.

Costs

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

Debt

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

Decision

A conclusion reached after considering alternatives and their results.

Decision Making

Reaching a conclusion after considering alternatives and their results.

Expenses

Payments for goods and services.

Federal Reserve

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.

Goods

Tangible objects that satisfy economic wants.

Human Capital

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

Income

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

Inflation

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).

Interest

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

Investing

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.

Investment

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.

Labor

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

Money

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.

Occupation

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.

Premium

The fee paid for insurance protection.

Price

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.

Productivity

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

Return

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

Risk

The chance of losing money.

Salary

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.

Sale

An exchange of goods or services for money.

Save

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

Saving

Disposable income (income after taxes) minus consumption spending.

Services

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

Stock

An ownership share or shares of ownership in a corporation.

Unemployment

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.

Wage

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

Work

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.

Workers

People employed to do work, producing goods and services.