Focus on Economic Data: The Federal Reserve and Monetary Policy, April 28, 2010
Glossary terms from:
An itemized statement listing the total assets and total liabilities of a given business to portray its net worth at a given moment in time.
A financial institution that provides various products and services to its customers, including checking and savings accounts, loans and currency exchange.
The percentage of a bank's deposits that it keeps on hand, i.e., does not lend out.
The industry involved with conducting financial transactions. Also, conducting business with a bank, e.g., maintaining a checking or savings account or obtaining a loan.
Any activity or organization that produces or exchanges goods or services for a profit.
Fluctuations in the overall rate of national economic activity with alternating periods of expansion and contraction; these vary in duration and degrees of severity; usually measured by real gross domestic product (GDP).
Something of value (often a house or a car) pledged by a borrower as security for a loan. If the borrower fails to make payments on the loan, the collateral may be sold; proceeds from the sale may then be used to pay down the unpaid debt.
People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.
The opportunity to borrow money or to receive goods or services in return for a promise to pay later.
The money in circulation in any country.
Money owed to someone else. Also the state or condition of owing money. Can be individual, corporate or government debt.
A conclusion reached after considering alternatives and their results.
The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.
An increase in real output as measured by real GDP or per capita real GDP.
The study of how people, firms and societies choose to allocate scarce resources with alternative uses.
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.
Economic units that demand productive resources from households and supply goods and services to households and government agencies.
Changes in the expenditures or tax revenues of the federal government, undertaken to promote full employment, price stability and reasonable rates of economic growth.
Something a person or organization plans to achieve in the future; an aim or desired result.
Gross Domestic Product (GDP)
The market value of all final goods and services produced in a country in a calendar year.
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 price paid for using someone else's money, expressed as a percentage of the amount borrowed.
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 labor supply and labor demand curves. The intersection of the labor supply and labor demand curves determines the equilibrium wage and the quantity of hours people work at this equilibrium wage.
To grant someone the use of something, on condition that the object borrowed or its equivalent will be returned (often with interest, in the case of money).
One who lends; may be an individual or a business.
The ease with which savings or investments can be turned into cash.
Places, institutions or technological arrangements where or by means of which goods or services are exchanged. Also, the set of all sale and purchase transactions that affect the price of some good or service.
Changes in the supply of money and the availability of credit initiated by a nation's central bank to promote price stability, full employment and reasonable rates of economic growth.
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.
A pool of money used by a company to purchase a variety of stocks, bonds or money market instruments. Provides diversification and professional management for investors.
Open Market Operations
The buying and selling of government bonds by the Federal Reserve to control bank reserves and the money supply.
Certificates of various denominations generally recognized and accepted as a medium of exchange within a nation and elsewhere. Paper money is issued and backed by national governments or, in the case of the euro, by a group of governments.
A person's or an institution's collection of savings and investments.
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 absence of inflation or deflation; a broad social goal and criterion for measuring the performance of an economic system.
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.
In a credit arrangement, the total amount spent during the billing cycle.
Property such as land, houses and office buildings.
Real Gross Domestic Product (GDP)
GDP measured in dollars of constant purchasing power. The measure is obtained by adjusting nominal GDP (GDP measured in current prices) by an appropriate price index, usually the implicit price deflator. Often used as a measure of economic activity.
A decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months).
The basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.
Earnings from an investment, usually expressed as an annual percentage.
The chance of losing money.
An ownership share or shares of ownership in a corporation.
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.