Glossary Terms:

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

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.

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.

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.

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).

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.

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

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

The quantity and quality of human effort available to produce goods and services.

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.

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.

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

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

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

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

Use money now to buy goods and services.

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

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

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

People employed to do work, producing goods and services.