Glossary Terms:

Closing the Gap

Glossary terms from:
http://www.econedlink.org/e602


Benefit

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

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.

Capital Resources

Resources made and used to produce and distribute goods and services; examples include tools, machinery and buildings.

Economic Growth

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

Exchange Rate

The price of one nation's currency in terms of another nation's currency.

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.

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).

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.

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.

Price Level

The weighted average of the prices of all goods and services in an economy; used to calculate inflation.

Product

A good or service that can be used to satisfy a want.

Productivity

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

Purchases

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

Purchasing Power

The amount of goods and services that a monetary unit of income can buy.

Resources

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

Rule of 72

A mathematical rule for determining the number of years it will take for an investment to double in value. The number of years is determined by dividing 72 by the annual rate of return. Thus, an investment expected to earn interest at a rate of 8 percent will double an investor's funds in 72/8, or nine years. Dividing 72 by the number of years in which an investor wishes to double his or her return will yield the necessary rate.

Services

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

Standard of Living

The level of subsistence of a nation, social class or individual with reference to the adequacy of necessities and comforts of daily life.

Trade

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

Workers

People employed to do work, producing goods and services.