Glossary Terms:

WHERE DID ALL THE MONEY GO? The Great Depression Mystery

Glossary terms from:
http://www.econedlink.org/e558


Advertising

Using advertisements (public notices, displays or presentations often based on celebrity endorsements, appeals to authority, bandwagon effects and attractive imagery) to promote the sale of goods or services.

Banking

The industry involved with conducting financial transactions. Also, conducting business with a bank, e.g., maintaining a checking or savings account or obtaining a loan.

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.

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.

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.

Credit

The opportunity to borrow money or to receive goods or services in return for a promise to pay later.

Debt

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

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.

Depression

A severe, prolonged economic contraction.

Economic Growth

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

Exports

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

Federal Budget

The taxing and spending plan of the national government.

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.

Full Employment

The natural rate of employment; generally considered to be about 93-95 percent of the labor force, allowing for frictional unemployment of 5-7 percent.

Goods

Tangible objects that satisfy economic wants.

Government Spending

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

Households

Individuals and family units that buy goods and services (as consumers) and sell or rent productive resources (as resource owners).

Housing

Accommodation in houses, apartments, etc.

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.

Innovation

A new idea or method.

Interdependence

A situation in which decisions made by one person affect decisions made by other people, or events in one part of the world or sector of the economy affect other parts of the world or other sectors of the economy.

Interest

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

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.

Land

"Gifts of nature" that can be used to produce goods and services; for example, oceans, air, mineral deposits, virgin forests and actual fields of land. When investments are made to improve fields of land or other natural resources, those resources become, in part, capital resources. Also known as natural resources.

Lender

One who lends; may be an individual or a business.

Market Economy

An economy that relies on a system of interdependent market prices to allocate goods, services, and productive resources and to coordinate the diverse plans of consumers and producers, all of them pursuing their own self-interest.

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.

Poverty

The state of being poor, variously defined. Sometimes defined relatively--by reference, for example, to the average household income in a nation or region. Sometimes defined absolutely--by reference, for example, to the income needed to provide for adequate food, housing and clothing in a nation or region.

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.

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.

Public Goods

Goods, often supplied by the government, for which use by one person does not reduce the quantity of the good available for others to use, and for which consumption cannot be limited to those who pay for the good.

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).

Save

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

Savings

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

Services

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

Spend

Use money now to buy goods and services.

Stock

An ownership share or shares of ownership in a corporation.

Stock Market

A market in which the public trades stock that someone already owns; the buying and selling of stock.

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.

Taxes

Compulsory payments to governments by households and businesses.

Trade

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

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.

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.