Glossary Terms:

Focus on Economic Data: Consumer Price Index and Inflation, March, 2013

Glossary terms from:
http://www.econedlink.org/e1161


Brand

A trade name used to identify a product produced by a particular company, distinguishing it from similar products produced by competitors.

Budget

A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, covering a specific time period.

Business

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

Business Cycles

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).

Consumer Price Index (CPI)

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.

Consumers

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

Consumption

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

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.

Deflation

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

Exports

Goods and services produced in one nation and sold in other nations.

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.

Fiscal Policy

Changes in the expenditures or tax revenues of the federal government, undertaken to promote full employment, price stability and reasonable rates of economic growth.

Goal

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

Goods

Tangible objects that satisfy economic wants.

Imports

Goods and services bought from sellers in another nation.

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.

Labor

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

Labor Force

The people in a nation who are aged 16 or over and are employed or actively looking for work.

Monetary Policy

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.

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.

Money Supply

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.

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.

Producers

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

Product

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

Production

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

Productivity

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

Purchases

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

Purchasing Power

The amount of goods and services that a monetary unit of income can buy.

Recession

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).

Risk

The chance of losing money.

Services

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

Social Security

A federal system of old-age, survivors', disability and hospital care (Medicare) insurance which requires employers to withhold (or transfer) wages from employees' paychecks and deposit that money in designated accounts.

Spend

Use money now to buy goods and services.

Substitute

A good or service that may be used in place of another good or service; examples include tap water for bottled water (or vice versa) and movies for concerts (or vice versa).

Supply

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.

Trade

The exchange of goods and services for money or other goods and services.

Trade-off

The giving up of one benefit or advantage in order to gain another regarded as more favorable.

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.