Glossary Terms:

How is Our Economy Doing?

Glossary terms from:
http://www.econedlink.org/e353


Bank

A financial institution that provides various products and services to its customers, including checking and savings accounts, loans and currency exchange.

Board of Governors

The Federal Reserve's governing and monetary policy-making body; consists of seven governors appointed by the President to staggered 14-year terms.

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.

Business

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

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.

Demand

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

Durable Goods

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

Economic Growth

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

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.

Firms

Economic units that demand productive resources from households and supply goods and services to households and government agencies.

Goods

Tangible objects that satisfy economic wants.

Gross Domestic Product (GDP)

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

Housing

Accommodation in houses, apartments, etc.

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.

Interest Rate

The price paid for using someone else's money, expressed as a percentage of the amount borrowed.

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.

Labor Force

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

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.

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.

Return

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

Services

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

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.

Utility

An abstract measure of the satisfaction consumers derive from consuming goods and services.

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.