Glossary Terms:

How Much Does it Cost Now?

Glossary terms from:
http://www.econedlink.org/e865


Bank

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

Cash

Money in the form of paper currency or coins (as distinct from checks, money orders or credit).

Consumer Price Index (CPI)

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.

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.

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.

Goods

Tangible objects that satisfy economic wants.

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).

Marginal Cost

The increase in a producer's total cost when it increases its output by one unit.

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.

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.

Purchasing Power

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

Relative Price

The price of one good in relation to the price of another good; a measure of opportunity costs and therefore the price that affects economic decision making.

Salary

A regular payment, often at monthly or biweekly intervals, made by an employer to an employee, especially in the case of professional or white-collar employees. Salaries are paid for services rendered and are not based on hours worked.

Save

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

Services

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

Wage

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

Workers

People employed to do work, producing goods and services.