Glossary Terms:

One of many choices or courses of action that might be taken in a given situation.

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.

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

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.

A reduction in the value of capital goods over time due to their use in production.

The allocation or dividing up of the goods and services a society produces.

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.

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

Economic units that demand productive resources from households and supply goods and services to households and government agencies.

The natural rate of employment; generally considered to be about 93-95 percent of the labor force, allowing for frictional unemployment of 5-7 percent.

Tangible objects that satisfy economic wants.

Goods and services provided by government and paid for by taxing and borrowing. Federal government expenditures include national defense and a system of justice. State and local government expenditures include police, roads and public education.

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.

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.

Economic variables such as the prime interest rate, labor cost per unit of output, inventories to sales ratio and unemployment duration that tend to change after real output changes.

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.

Exports minus imports.

The state of being poor, variously defined. Sometimes defined relatively--by reference, for example, to the average household income in a nation or region. Sometimes defined absolutely--by reference, for example, to the income needed to provide for adequate food, housing and clothing in a nation or region.

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.

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

Natural resources, human resources, capital resources and entrepreneurship used to make goods and services.

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

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.

The money a business receives from customers who buy its goods and services. Not to be confused with profit.

Payments for labor resources; unlike wages, not explicitly based on the number of hours worked. See also Wages.

An exchange of goods or services for money.

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

The level of subsistence of a nation, social class or individual with reference to the adequacy of necessities and comforts of daily life.

An ownership share or shares of ownership in a corporation.

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.

Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.

People employed to do work, producing goods and services.