Glossary Terms:

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

The part of a nation's balance of payments accounts that deals only with its imports and exports of goods and services. The balance of trade is divided into the balance on goods (merchandise) and the balance on services. If the value of a country's exports of goods and services is greater than its imports, it has a balance of trade surplus. If the value of a country's imports of goods and services is greater than its exports, it has a balance of trade deficit.

Monetary or non-monetary gain received because of an action taken or a decision made.

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.

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.

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

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

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

The allocation or dividing up of the goods and services a society produces.

Goods intended to last for a period of more than three years.

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

The study of how people, firms and societies choose to allocate scarce resources with alternative uses.

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

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.

Tangible objects that satisfy economic wants.

Spending by all levels of government on goods and services; includes categories like military, schools and roads.

The market value of all final goods and services produced in a country in a calendar year.

Goods and services bought from sellers in another nation.

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

Payments made by individuals and corporations to the federal government (and to some state and local governments) based on income received (both earned and unearned).

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).

An itemized list of goods held by a person or business. Also a quantity of goods held in stock.

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.

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

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.

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.

Exports minus imports.

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.

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.

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

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

GDP measured in dollars of constant purchasing power. The measure is obtained by adjusting nominal GDP (GDP measured in current prices) by an appropriate price index, usually the implicit price deflator. Often used as a measure of economic activity.

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).

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

An exchange of goods or services for money.

Disposable income (income after taxes) minus consumption spending.

Money set aside for a future use that is held in easily-accessed accounts, such as savings accounts and certificates of deposit (CDs).

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

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.

An ownership share or shares of ownership in a corporation.

Compulsory payments to governments by households and businesses.

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

Money collected by the government from one group and given to others. Examples include Social Security benefits, unemployment insurance payments and agricultural subsidies.

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

People employed to do work, producing goods and services.