Glossary Terms:

You Can BANK on This! (Part 4)

Glossary terms from:
http://www.econedlink.org/e591


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.

Bank

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

Benefit

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

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.

Characteristics of Money

Characteristics of money include it being durable (both physically and socially), divisible (money can be divided into increments appropriate for the cost of an item), transportable (literally meaning that money must be easy to move), and the ability to regulate the amount of money in a market by making it uncounterfeitable.

Check

A written order to a financial institution directing the financial institution to pay a stated amount of money, as instructed, from the customer's account.

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.

Credit Card

A small, specially coded plastic card issued by a bank, business, etc., authorizing the cardholder to purchase goods or services on credit.

Debt

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

Finance Charge

The total cost of credit, including interest and transaction fees.

Incentive

Any reward or benefit, such as money, advantage or good feeling, that motivates people to do something.

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.

Interest Rate

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

Minimum Payment

In a credit arrangement, the lowest amount that a borrower must pay toward the credit balance each month in order to avoid a penalty.

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.

Profit

Income received for entrepreneurial skills and risk taking, calculated by subtracting all of a firm's explicit and implicit costs from its total revenues.

Resources

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

Save

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

Savers

Persons who desire to conserve their monetary funds to the best of their ability.

Saving

Disposable income (income after taxes) minus consumption spending.

Services

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

Wants

Desires that can be satisfied by consuming or using a good or service. Economists do not differentiate between wants and needs.