Glossary Terms:

A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, covering a specific time period.

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.

People who use goods and services to satisfy their personal needs and not for resale or in the production of other goods and services.

Spending by households on goods and services. The process of buying and using goods and services.

A legal entity owned by shareholders whose liability for the firm's losses is limited to the value of the stock they own.

An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.

Money owed to someone else. Also the state or condition of owing money. Can be individual, corporate or government debt.

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.

A factor, often a monetary policy or disadvantage, that discourages people from doing something.

An increase in real output as measured by real GDP or per capita real GDP.

Goods and services produced in one nation and sold in other nations.

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.

Tangible objects that satisfy economic wants.

Spending by all levels of government on goods and services; includes categories like military, schools and roads.

The market value of all final goods and services produced in a country in a calendar year.

Accommodation in houses, apartments, etc.

Goods and services bought from sellers in another nation.

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.

An itemized list of goods held by a person or business. Also a quantity of goods held in stock.

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.

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

The people in a nation who are aged 16 or over and are employed or actively looking for work.

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.

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.

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.

The amount of output (goods and services) produced per unit of input (productive resources) used.

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

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

Two ways of expressing monetary values. Nominal monetary values are measured in current prices; real monetary values are measured in constant prices, that is, in prices of a given or base period. Real monetary values are obtained by adjusting nominal monetary values with an appropriate index of prices.

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 chance of losing money.

Tax in the form of a percent of the cost of a good or service; paid to local and state governments when goods and services are purchased.

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

A federal system of old-age, survivors', disability and hospital care (Medicare) insurance which requires employers to withhold (or transfer) wages from employees' paychecks and deposit that money in designated accounts.

An ownership share or shares of ownership in a corporation.

A market in which the public trades stock that someone already owns; the buying and selling of stock.

A good or service that may be used in place of another good or service; examples include tap water for bottled water (or vice versa) and movies for concerts (or vice versa).

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

Compulsory payments to governments by households and businesses.

The giving up of one benefit or advantage in order to gain another regarded as more favorable.

Money collected by the government from one group and given to others. Examples include Social Security benefits, unemployment insurance payments and agricultural subsidies.

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

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

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.