Glossary Terms:

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

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.

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

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

A sustained decrease in the average price level of all the goods and services produced in the economy.

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 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.

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

Accommodation in houses, apartments, etc.

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

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).

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

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.

A piece of work usually done on order at an agreed-upon rate. Also a paid position of regular employment.

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.

The ease with which savings or investments can be turned into cash.

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.

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.

A special type of loan for the purchase of a house or other real estate.

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.

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

An original amount of money invested or lent.

People and firms that use resources to make goods and services.

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.

Natural resources, human resources, capital resources and entrepreneurship used to make goods and services.

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

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

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

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

Disposable income (income after taxes) minus consumption spending.

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

Use money now to buy goods and services.

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.

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

The number of unemployed people, expressed as a percentage of the labor force.

Payments for labor services that are directly tied to time worked, or to the number of units of output produced.

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

People employed to do work, producing goods and services.