Glossary Terms:

The Role of Government: The National Debt vs. The Deficit

Glossary terms from:
http://www.econedlink.org/e184


Budget

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

Budget Deficit

Refers to national budgets; occurs when government spending is greater than government income in a given year. A yearly deficit adds to the public debt.

Debt

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

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.

Insurance

A practice or arrangement whereby a company provides a guarantee of compensation for specified forms of loss, damage, injury or death. People obtain such guarantees by buying insurance policies, for which they pay premiums. The process allows for the spreading out of risk over a pool of insurance policyholders, with the expectation that only a few policholders will actually experience losses for which claims must be made. Types of insurance include automobile, health, renter's, homeowner's, disability and life.

Interest

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

Liability

Legal responsibility to pay for damages or losses one has caused.

Medicare

A federal health-care program that pays for certain medical and hospital costs for people aged 65 and older (and for some people who are under the age of 65 and disabled). Part of Social Security.

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.

National Debt

The total amount owed by the national government to those from whom it has borrowed to finance the accumulated difference between annual budget deficits and annual budget surpluses; also called public debt.

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.

Surplus

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.

Unemployment

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