Glossary Terms:

Something of monetary value owned by an individual or an organization.

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

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.

The Federal Reserve's governing and monetary policy-making body; consists of seven governors appointed by the President to staggered 14-year terms.

To receive and use something belonging to somebody else, with the intention of returning or repaying it--often with interest in the case of borrowed money.

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).

In the context of credit transactions, capacity is one of the Three Cs of Credit. It is an indicator of how creditworthy a prospective borrower is likely to be, as determined by the borrower's current and future earnings relative to current debt. High earnings and low debt, for example, indicate a strong capacity to make payments on the loan in question.

Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools and equipment. In the context of credit transactions, capital is one of the Three Cs of Credit. It is an indicator of how creditworthy a prospective borrower is likely to be as determined by the borrower's current financial assets and net worth.

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

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.

A three-member group that gathers information on the economy, reports on economic developments and recommends strategies to the President.

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.

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.

A bank's cash reserves beyond the required reserves, which can be loaned.

Trading a good or service for another good or service, or for money.

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.

Something a person or organization plans to achieve in the future; an aim or desired result.

Accommodation in houses, apartments, etc.

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

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.

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).

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.

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.

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.

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.

The absence of inflation or deflation; a broad social goal and criterion for measuring the performance of an economic system.

An original amount of money invested or lent.

A process of manufacturing, growing, designing, or otherwise using productive resources to create goods or services used to to satisfy a want.

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

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).

Economic regulation is the prescription of price and output for a specific industry, often a natural monopoly. Social regulation is the prescription of health, safety, performance, environmental, output and job standards across several industries.

The fraction of banks' deposits that they are required by law to keep on hand or with the Federal Reserve.

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 exchange of goods or services for money.

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

Use money now to buy goods and services.

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.

Compulsory payments to governments by households and businesses.

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

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

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