Glossary Terms:

The Credit Card Mystery

Glossary terms from:
http://www.econedlink.org/e847


Annual Percentage Rate (APR)

The percentage of the principal of a loan to be paid as interest in one year. Differs from an add-on rate in that an APR is calculated on the declining balance of the loan. The Truth in Lending Act requires lenders to disclose APRs to prospective borrowers.

Benefit

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

Business

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

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.

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.

Economics

The study of how people, firms and societies choose to allocate scarce resources with alternative uses.

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.

Fraud

Wrongful or criminal deception intended to manipulate a person for the purpose of gain, usually financial.

Identity Theft

Unauthorized, illegal use of a person's legal and financial identification (for example, his or her Social Security number or PIN).

Incentive

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

Income

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

Interest

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

Mortgage

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

Purchases

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

Risk

The chance of losing money.

Services

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

Shortage

The situation that results when the quantity demanded for a product exceeds the quantity supplied. Generally happens because the price of the product is below the market equilibrium price.

Spend

Use money now to buy goods and services.

Trade

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

Utility

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