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The idea that taxes should be levied on a person according to how well that person can shoulder that burden.
The ability to produce more of a good or service than another producer using the same amount of resources as that producer.
A value that cannot be traded off against other things that are highly valued by individuals. Many moral or ethical laws are considered to be absolute goods by the supporters (or advocates) of such laws.
The amount that an economy actually produces, as measured by real GDP.
A graphical depiction of the amounts of real output (gross domestic product or GDP) that buyers collectively desire to purchase at each possible price level.
A graphical depiction of the amounts of real output (gross domestic product or GDP) that businesses will choose to produce at each possible price level.
A process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.
The different possibilities to choose from in a given situation.
The percentage cost of credit on an annual basis and the total cost of credit to the consumer. APR combines the interest paid over the life of the loan and all fees that are paid up front.
A series of fixed payments of the same amount paid at regular intervals (i.e., every week, month or pay period) over a specified period of time.
FV = (A/i)[(1+i)n - 1], where:
FV = Future value is the amount that's not known, but will be solved in the calculation. It's the amount wanted in the future.
A = Annuity; annuities are the initial and subsequent payments (which must be the same amount).
i = Interest rate has a great effect on future value. The interest rate in the formula must be written in decimal form, such as 0.03 instead of 3%.
n = This is the number of periods, where "n" is the number of equal deposits that will be made.
An increase in value. Currency appreciation is an increase in the value of one currency relative to another.
The simultaneous purchase and sale of a good in order to profit from a difference in price.
A resource with economic value that an individual, corporation or country owns with the expectation that it will provide future benefits.
A sale of property to the highest bidder.
A form of debit card used in a cash machine to access an account by using a code or personal identification number.
A standing policy that activates automatically without intervention, usually during a recession.
An online payment that is automatically deducted from the account balance on a recurring basis.
The difference between a country's total exports and total imports. Also known as "net exports."
Occurs when the federal government's expenditures on programs equal the amount of tax revenue collected.
A tool in which an account holder lists his or her initial balance in an account and then records all debits and credits in order to maintain an accurate record of account activity and an accurate balance.
Occurs when banks are unable to meet depositors' demands for their money.
Occurs when a bank run begins at one bank and spreads to others, causing people to lose confidence in banks.
The amount of deposits not loaned out by banks.
Occurs when many depositors rush to the bank to withdraw their money at the same time.
A statement given to account holders by a bank or credit union to keep them informed of all transactions they made during the statement period. These statements are sent on a regular basis or posted online.
Banks closed to the public because of financial difficulties.
A legal process for declaring that a person is unable to pay their debts. The process may involve a court-supervised process of selling the bankrupt person's belongings to pay part of the debts owed to creditors.
Businesses that accept deposits and make loans.
Trading goods and services for other goods and services without using money.
Things favorable to a decision-maker.
A map with regions divided into two classes.
A federal government agency that is the centralized component of the Federal Reserve System. These governors guide the policy actions of the Federal Reserve System.
A certificate of indebtedness issued by a government or corporation.
Taking money with a promise to repay the money in the future.
A method of protest where people show a business that they are angry by refusing to buy the goods or services it produces.
An itemized summary of probable income and expenses for a given period. A budget is a plan for managing income, spending and saving during a given period of time.
Government expenditures exceed revenues.
A research agency of the United States Department of Labor that compiles statistics on employment, unemployment and other economic data.
The fluctuating levels of economic activity in an economy over a period of time measured from the beginning of one recession to the beginning of the next.
A borrower's ability to repay debt.
A profit from the sale of financial investments.
Goods that have been produced and are used to produce other goods and services. They are used over and over again in the production process. Also called capital goods and physical capital.
An institution that oversees and regulates the banking system and quantity of money in the economy.
A savings alternative in which money is left on deposit for a stated period of time to earn a specific interest rate.
A borrower's reputation for paying bills and debts based on past behavior.
Important features money should have. Money should be portable, durable, divisible, generally acceptable and relatively scarce.
A printed form directing a bank to withdraw money from an account and pay it to another account.
Deposits in accounts against which checks can be written.
Businesses that provide services such as cashing all types of checks, including payroll, insurance, tax refund, settlement, and government and Social Security payments. These businesses may also provide other services, such as payday loans, money orders, and money wires.
An account held at a bank or credit union in which account owners deposit funds. Account owners have the privilege of writing checks on their accounts and are able to use ATM cards and debit cards to access funds.
A decision made between two or more possibilities or alternatives.
A map that uses shading, color, or symbols to convey a quantity or property for an area.
An institution where mutual claims and accounts are settled, as between banks.
An economy that does not interact with other economies.
Money, usually minted from some combination of metals.
Each participant in an exchange is willing to trade what he or she has in exchange for what the other participant is willing to trade.
Property required by a lender and offered by a borrower as a guarantee of payment on a loan. Also, a borrower's savings, investments or the value of the asset purchased that can be seized if the borrower fails to repay a debt.
Something of value that a bank is able to keep if a borrower fails to repay a loan.
A short-term, unsecured promissory note issued by an industrial or commercial firm, a financial company, or a foreign government. Typically, maturity is 90 to 180 days.
The ability to produce at a lower opportunity cost than another producer.
Productive inputs that are used jointly with other inputs in the production process.
Interest computed on the sum of the original principal and accrued interest.
The legislative body of the U.S. government, consisting of the Senate and the House of Representatives.
A measure of how consumers feel about the economy, considered an indicator of consumers' spending and saving decisions.
Goods and services that are used for current consumption.
A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
People who buy goods and services to satisfy their wants.
An exchange, promise or agreement between two parties that is enforceable by law. For example, a car buyer agrees to pay the amount financed at an agreed upon interest rate for the length of the contract.
A period when real GDP declines; a period of economic decline.
Actions taken by the Federal Reserve to decrease the growth of the money supply and the amount of credit available.
The consumer price index (CPI) excluding food and energy.
A company owned by shareholders.
The amount of income needed to achieve a given living standard.
Things unfavorable to a decision-maker.
The granting of money or something else of value in exchange for a promise of future repayment.
Cards that represent an agreement between a lenderthe institution issuing the cardand the cardholder. Credit cards may be used repeatedly to buy products or services or to borrow money on credit. Credit cards are issued by banks, savings and loan associations, retail stores, and other businesses.
A person's payment activity over a period of time.
A loan and bill payment history kept by a credit bureau and used by financial institutions and other potential creditors to determine the likelihood that a future debt will be repaid.
An organization that compiles credit information on individuals and businesses and makes it available to businesses for a fee.
Refers to the actions or behaviors in which people should engage when they use credit.
Refers to the protections put in place by law to help people obtain and maintain credit.
A number based on information in a credit report, which indicates a person's credit risk.
A nonprofit financial institution that is owned by its members.
A person, financial institution or other business that lends money.
Additions or deposits to an account. In a bank account register, credits are added to the balance.
A set of standards to consider when choosing among alternatives.
Things that are really important to think about when making a decision.
A condition where government enters the loanable funds market and thereby increases the interest rate beyond what is feasible for private sector borrowing.
Money, usually made from some type of paper-like material.
A statistical survey carried out by the U.S. Bureau of Labor Statistics.
Unemployment associated with recessions in the business cycle.
A plastic card similar to a credit card that allows money to be withdrawn or payments made directly from the holder's bank account.
Charges to or withdrawals from an account. In a bank account register, debits are subtracted from the balance.
Money owed in exchange for loans or for goods or services purchased with credit.
Deciding among choices (alternatives or options).
A table used to evaluate alternatives based on criteria for the purpose of making a decision.
Default is the failure to promptly pay interest or principal when due.
Postponed until a later time.
A general, sustained downward movement of prices for goods and services in an economy.
In general it refers to a percentage determined by dividing the number of loans that have delinquent payments by the number of total loans.
Failing to make timely payments under a loan or other credit agreement.
The quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period.
A financial institution such as a savings bank, commercial bank, savings and loan association, or credit union that is legally allowed to accept monetary deposits from consumers.
A decrease in value. Currency depreciation is a decrease in the value of one currency relative to another.
A severe and long-lasting economic downturn that is worse and deeper than a recession; a severe reduction in gross domestic product (GDP).
Factors that cause the demand curve to shift, such as changes in consumer income, consumer tastes and preferences, prices of related goods, number of buyers in the market, and consumer expectations.
Factors that cause the supply curve to shift, such as changes in input prices, taxes or subsidies, technology, producer expectations, and the number of sellers.
An electronic transaction in which money is deposited directly into a payee's bank account from a payer's bank account.
The interest rate charged by the Federal Reserve to banks for loans obtained through the Fed's discount window.
Someone who is not working and is not looking for work because of a belief that there are no jobs available to him or her.
The portion of personal income available for spending after taxes and basic essentials have been deducted.
Government spending authorized by Congress on an annual basis.
A decrease in the inflation rate or a slowdown in the upward movement of prices for goods and services in the economy.
The amount of a person's paycheck that is available to spend or save.
To consume more than income; essentially, the opposite of saving.
Investment in various financial instruments in order to reduce risk.
Easily divided into smaller amounts.
An approach to completing a complex task that breaks the project into a number of smaller, simpler tasks, which are assigned to individuals who generally perform only these duties.
A sum of money put toward the purchase price to reduce the amount of money borrowed.
The Federal Reserve's responsibility to use monetary policy to promote maximum employment and stable prices.
Something that is long lasting.
A refundable federal tax credit for low-income working people designed to reduce poverty and encourage labor force participation.
Money or income received in exchange for labor or services.
A more equal distribution of goods and services to citizens. Also known as economic equity.
A more equal distribution of goods and services to citizens. Also known as economic equality.
A sustained rise over time in a nation's production of goods and services.
Statistical data used to determine the health of the economy.
Simple depictions of complex ideas.
Desires that can be satisfied by consuming goods and services. Also known as wants.
A system of production and distribution of resources, goods, and services.
Level of education a student completes (high school, college, graduate).
Currency whose supply can be increased or decreased to meet the demands of the economy, and used by a central bank to provide financial stability and achieve economic goals.
The type of demand that exists when the percentage change in quantity demanded is greater than the percentage change in price; that is, consumers are very sensitive to a change in the price of a good or service.
The ratio of the percentage change in quantity demanded of a good or service to the percentage change in its price; a measure of the responsiveness of buyers to a change in the price of a good or service. Many factors influence demand elasticity, including the availability of close substitutes, whether the good is a necessity or a luxury, the definition of a market, the relative purchase size, and the time horizon.
Competent parties, consideration and mutual agreement are the elements of a contract that must be present to make the contract legal and enforceable. Competent parties are individuals involved in a contract who must be able to understand the conditions of the contract. Consideration refers to the fact that each party of a contract gives up something in exchange for what the other party is providing. Mutual agreement means that each party to the contract must be clear about the essential details, rights and obligations of the contract.
A government order that limits or prohibits trade with a particular country or group of countries.
People 16 years and older who have jobs.
The percentage of the labor force that is employed.
Individuals who are willing to take risks in order to develop new products and start new business. They recognize opportunities, enjoy working for themselves and accept challenges.
A characteristic of people who assume the risk of organizing productive resources to produce goods and services.
The price at which quantity supplied and quantity demanded are equal. The point at which the supply and demand curves intersect.
The wage at which the quantity of labor supplied and quantity of labor demanded are equal.
Amount of funds held by a depository institution in its account at a Federal Reserve Bank in excess of its required reserve balance and its contractual clearing balance.
Trading goods and services with people for other goods and services or for money.
The price of one country's currency in terms of another country's currency.
The property of a good or service whereby the seller can keep nonbuyers from obtaining the good or service.
Free from withholding of federal income tax. A person must meet certain income, tax liability and dependency criteria. This does not exempt a person from other kinds of tax withholding, such as the Social Security tax.
Amount that taxpayers can claim for themselves, their spouses and eligible dependents. There are two types of exemptions: personal and dependency. Each exemption reduces the income subject to tax. The exemption amount is a set amount that changes from year to year.
A period when real GDP increases; a period of economic growth.
Actions taken by the Federal Reserve to increase the growth of the money supply and the amount of credit available.
Money spent to buy goods and services.
The costs people incur for goods and services. Expenses are often categorized as fixed, variable, and periodic. Fixed expenses are those that occur each month in a regular amount, such as rent, car payments, and mortgage payments. Variable expenses are those that change from one time period to the next, such as food, clothing, gasoline, and entertainment. Periodic expenses are those that occur several times a year, such as car insurance and life insurance payments.
A cost that involves actually laying out money. A direct expense that a business incurs, such as rent, salaries, wages, or utility bills.
Goods or services that are produced domestically but sold abroad.
The natural resources, human resources and capital resources that are available to make goods and services. Also known as productive resources.
The FDIC is an agency of the U.S. government that insures deposits in banks and thrift institutions, supervises the risks associated with these insured funds, and limits the repercussions on the economy when a bank or thrift institution fails.
The interest rate at which a depository institution lends funds that are immediately available to another depository institution overnight.
The federal government levies a tax on personal income. The federal income tax provides for national programs such as defense, foreign affairs, law enforcement and interest on the national debt.
A tax or required contribution that most workers and employers pay. FICA is a payroll tax used to fund Social Security and Medicare.
The Federal Reserve's chief body for conducting monetary policy. The FOMC consists of the Board of Governors and five Federal Reserve bank presidents. Fed presidents rotate on and off of the committee at regular intervals.
The 1913 act of congress establishing the Federal Reserve System.
One of 12 regional banks providing services to commercial banks, serving as fiscal agents for the U.S. government, and conducting economic research on its region and the nation.
Twelve regions in the United States that are represented by a reserve bank.
The central bank system of the United States.
A loan provided by the government to postsecondary students and their parents to assist in paying for education.
An independent agency of the United States federal government that maintains fair and free competition, enforces federal antitrust laws, and educates the public about identity theft.
Money charged to review your application for credit or to service your credit account, such as maintenance fees or late fees. Banks often charge fees for servicing bank accounts, including overdraft fees and charges for using a non-bank ATM.
A substance or device used as money, having no intrinsic value (no value of its own), or representational value (not representing anything of value, such as gold).
To mail or transmit a taxpayer's information in specified format about income and tax liability. The return can be filed on paper, electronically or by telephone to an IRS service center.
Placing money in a savings account or in any number of financial assets, such as stocks, bonds or mutual funds, with the intention of making a financial gain.
Having knowledge of financial matters and applying that knowledge to one's life.
A person or organization serving as another's financial representative.
Spending and taxing policies of the federal government to influence the economy.
A tax system in which all levels of income are taxed at the same rate.
A system in which supply and demand determine exchange rates.
The Supplemental Nutrition Assistance Program (SNAP) allowing low-income individuals to buy nutritious food and health-care products.
The temporary suspension or reduction of monthly loan payments, usually up to one year.
To take possession of a mortgaged property as a result of the borrower's failure to make mortgage payments.
A banking system in which the amount of reserves that banks hold is less than the value of their customers' deposits.
The intervals between occurrences. In macroeconomics it is common for data to be released monthly, quarterly, semiannually, or annually.
Unemployment that results when people are new to the job market, including recent graduates, or are transitioning from one job to another.
The lowest possible unemployment rate in a growing economy with all factors of production used as efficiently as possible.
Although defined by the U.S. Bureau of Labor Statistics as employment of 35 hours or more in a week, the matter of "full-time employment" is generally determined by the employer.
Activities that can be carried out through the use of money. Activities include medium of exchange, unit of account and store of value.
The value of an asset or cash at a specified date in the future that is equal in value to a specified sum today.
FV=PV (1+i)n, where:
FV = Future value is the amount that's not known, but will be solved in the calculation. It's the amount wanted in the future.
PV = Present value is money currently held or the amount of money that will be earning interest.
i = Interest rate has a great effect on future value. The interest rate in this formula must be written in decimal form, such as 0.03 instead of 3%.
n = This is the number of periods (such as years) money is saved and interest is applied. If money were to be saved for 3, 5, 7 or 10 years, then 3, 5,7, or 10 would be "n" in the calculation.
A job, especially one taken after graduation, that is suited to the ability and potentiality of the one employed.
People will take an item as payment for their work or as payment for goods and services.
The ability to exchange dollars for gold at a fixed price.
Objects that satisfy people's wants.
The sum of accumulated budget deficits. Also known as national debt.
Purchases of goods and services by government.
Bonds, notes and other debt instruments sold by a government to finance its expenditures.
A sale of government securities in which competitive bidding determines their yield.
The total market value, expressed in dollars, of all final goods and services produced in an economy in a given year.
The amount people earn per pay period before any deductions or taxes are paid.
The knowledge and skills that people obtain through education, experience and training.
The quantity and quality of human effort directed toward producing goods and services. Also known as labor.
People who do mental and/or physical work to produce goods and services.
A very rapid rise in the overall price level; an extremely high rate of inflation.
An indirect cost that does not require an outlay of money; it is measured by the value, in dollar terms, of foregone benefits.
Goods or services that are produced abroad but sold domestically.
Perceived benefits that encourage certain behaviors.
Actions, awards and rewards that determine the choices people make.
The payment people receive for providing resources in the marketplace. When people work, they provide human resources (labor) and in exchange they receive income in the form of wages or salaries. People also earn income in the forms of rent, profit, and interest.
Payment people earn for the work they do.
Taxes on income, both earned (salaries, wages, tips, commissions) and unearned (interest, dividends). Income taxes can be levied on both individuals (personal income taxes) and businesses (business and corporate income taxes).
A condition that results when production of goods and services involves wasted resources or when it is possible to reallocate resources in a way that would generate greater consumer satisfaction.
The type of demand that exists when the percentage change in quantity demanded is less than the percentage change in price; that is, consumers are not very sensitive to a change in the price of a good or service.
A general, sustained upward movement of prices for goods and services in an economy.
The percentage increase in the average price level of goods and services over a period of time.
Basic structures, including buildings and facilities such as roads, bridges, and waste disposal systems.
Materials and resources used to produce goods and services.
The "rules of the game" that structure economic incentives.
The price of using someone else's money. When people place their money in a bank, the bank uses the money to make loans to others. In return, the bank pays interest to the account holder. Those who borrow from banks or other organizations pay interest for the use of the money borrowed.
Money paid to customers for keeping their money at the bank.
The percentage of the amount of a loan that is charged for a loan. Also, the percentage paid on a savings account.
The effect on consumer spending and investment spending caused by a change in the aggregate price level on the purchasing power of consumers' and firms' money holdings.
One who stands between two parties to facilitate a transaction; a mediator.
A man-made good that is used to produce another good or service, becoming part of that good or service.
The federal agency that collects income taxes in the United States.
Altering incentives so that individuals and firms incorporate the costs and benefits that have been shifted to third parties into their decision-making.
The purchase of physical capital goods (e.g., buildings, tools and equipment) that are used to produce goods and services.
The efforts people put forth to acquire human capital. These efforts include education, experience, and training.
An effect where an increase (or decrease) in a component of aggregate demand (i.e., consumption, investment, or government spending) produces an increase (or decrease) in national income that is greater than the initial increase (or decrease) in the component. This greater-than-proportional change in national income is the result of chain reactions that generate more (or less) activity than the original increase (or decrease).
The quantity and quality of human effort directed toward producing goods and services. Also known as human resources.
The total number of workers, including both the employed and the unemployed.
The exchange of labor by workers who want to sell labor and businesses that want to purchase labor.
The time between the recognition of an economic problem, the negotiation and implementation of a solution, and the realization of results in the economy.
As the price of a good or service rises, the quantity demanded of that good or service falls. Likewise, as the price of a good or service falls, the quantity demanded of that good or service rises.
As the price of a good or service rises, the quantity supplied of that good or service rises. Likewise, as the price of a good or service falls, the quantity supplied of that good or service falls.
Money owed; debt.
The legal right to take or sell property as security for a debt.
An asset that is easily convertible to cash with relatively little loss of value in the conversion process.
The quality that makes an asset easily convertible into cash with relatively little loss of value in the conversion process.
A sum of money provided temporarily on the condition that the amount borrowed be repaid, usually with interest.
Money made available to borrowers through the actions of savers.
A virtual market that consists of 1) borrowers, including money demanders, consumers and firms who want loans to buy goods and services or invest in capital or inventory; and 2) savers, such as money suppliers, households and firms who save money. It is the market in which the supply and demand for loanable funds determines the interest rate.
Goods or services you want to buy in a year or longer.
The study of the broad economy, such as how an economy grows and how growth is maintained.
Government spending required by current law.
The price at which buyers and sellers trade a good or service in the marketplace; where the quantity demanded equals the quantity supplied. Also known as the market-clearing price or the equilibrium price.
Programs in which eligibility depends on the level of one's current income or assets.
The value in an ordered set of values below and above which there is an equal number of values; the number that divides numerically ordered data into two equal halves; the middle number of a set of numbers.
The middle number of a set of numbers; the number that divides numerically ordered data into two equal halves.
A jointly administered federal and state health care program for low-income people.
A federal health care program that pays for certain medical and hospital costs for people aged 65 and older (and for some people who are under the age of 65 and disabled); part of Social Security.
A payroll tax that is part of FICA, collected from most employees and employers to fund the hospital insurance provided under the Medicare system. Used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.
Anything that is generally acceptable in exchange for goods and services.
The costs to a firm incurred as a result of changing prices. The term comes from the cost incurred for printing new menus when a restaurant raises prices.
The study of the markets that make up the broad economy.
The lowest wage that employers may legally pay for an hour of labor.
Central bank actions involving the use of interest rate or money supply tools to achieve such goals as maximum employment and stable prices.
Anything widely accepted in exchange for goods and services.
An increase in the money supply generated by the banking system through the lending of reserves.
An economic theory stating that, in the long run, changes in the money supply cause changes in variables, such as price and wages, but not in unemployment or real (or inflation-adjusted) variables, such as real GDP (gross domestic product) and real consumption.
The quantity of money available in an economy. The basic money supply in the United States consists of currency, coins and checking account (demand) deposits. Also known as money stock.
A market structure where many firms produce similar but not identical products.
A debt owed for loans for homes and real estate.
In order for a trade to be mutually beneficial among each party involved, the price of the good or service must fall between the opportunity costs of producers involved in the trade. Importers will pay no more for goods or services than what it costs to produce them, while exporters will sell goods or services for no less than what it costs to produce them.
The accumulation of budget deficits. Also known as government debt.
The rate of unemployment that does not contain cyclical unemployment.
Things that occur naturally in and on the earth that are used to produce goods and services.
A negative side effect that results when the production or consumption of a good or service affects the welfare of people who are not the parties directly involved in a market exchange.
An amount of money saved for a special occasion, such as retirement or buying a house.
A component of gross domestic product (GDP), net exports are the result of U.S. exports minus U.S. imports.
Gross pay minus deductions and taxes.
Monetary values, wages, or prices, measured in current prices.
The total market value of all final goods and services produced in an economy in a given year, expressed using the current year's price for goods and services. Also known as current-dollar GDP.
The inability to keep nonpayers (free riders) from obtaining benefits from a certain good or service.
An account in which no interest is paid on the principal, which is the amount of deposit or account balance. Also called zero-interest account.
An asset that is not easily convertible into cash with relatively little loss of value in the conversion process.
Any public school, including public colleges and schools not a part of the public school system, which operates with no intention of making a profit.
The property of a good or service whereby one person’s benefit from a certain good or service does not reduce the benefit available to others.
The buying and selling of government securities through primary dealers by the Federal Reserve in order to influence the money supply.
The value of the next-best alternative when a decision is made; it's what is given up.
The difference between potential output and actual output.
Points along the production possibilities frontier.
Goods and services that are produced.
The result of an account holder authorizing a withdrawal through a check, ATM withdrawal, debit card purchase or electronic payment when the account does not have enough money to cover the transaction.
The penalty associated with an overdraft.
Provided by financial institutions to generally approve and pay overdraft transactions when the account holder does not have enough funds to cover the transactions in return for a fee.
A controversial Keynesian economics theory, which proposes that if everyone tries to save more during a recession, then aggregate demand will fall. As a result, the theory argues everyone would grow poorer instead of richer due to the decreases in aggregate consumption, saving, earnings, and economic growth.
A license that gives the inventor of a new product the exclusive right to sell it for a specific period of time.
A small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. May also be called a paycheck advance or a payday advance.
Amounts subtracted from gross pay.
Negative incentives that make people worse off.
Per person. Determined by dividing the total quantity by the total population.
Gross domestic product (GDP) divided by the total population of a country.
The total income earned by individuals in a state, region or country during a year, divided by the population of the state, region or country.
A market in which there are many buyers and many sellers of an identical product.
The income that individuals receive from all sources including wages and salaries, dividends and interest, rents, profits, and transfer payments.
The ratio of personal saving to disposable personal income; the fraction of income, after taxes, that is saved.
An economic model indicating an inverse relationship between the rate of inflation and the rate of unemployment.
Goods that have been produced and are used to produce other goods and services. They are used over and over again in the production process. Also called capital goods and capital resources.
A tax used to correct for a negative externality.
The time between the recognition of an economic problem, the negotiation and implementation of a solution, and the realization of results in the economy.
Easy to carry.
A list or collection of financial assets that an individual or company holds.
The real output (GDP) an economy can produce when it fully employs its available resources.
The dollar amount the U.S. Census Bureau uses to determine a family's or person's poverty status.
An indication of our likes or dislikes; preferences help us make choices.
Choosing what makes one happy in the moment.
Present value is the current value of a future sum of money, given a specified rate of return.
PV=FV [1/(1+i)n, where:
PV = Present value is the amount that's not known but will be solved in the calculations. It's the amount needed today to achieve a determined future goal.
FV = Future value is the amount of money wanted in the future. It is the amount that will be reduced at a determined interest rate to calculate the present value.
i = Interest rate, which has a great effect on present value. The interest rate in this formula must be written in decimal form, such as 0.03 instead of 3%.
n = The number of interest payments during a specified time; the number of times interest is applied.
A government-mandated maximum price that can be charged for a good or service.
The practice of selling the same good or service at different prices to different customers.
A government-mandated minimum price that must be paid for a good or service.
A low and stable rate of inflation maintained over an extended period of time.
The original amount of money deposited or invested, excluding any interest or dividends. Also refers to the original amount of a loan without any interest.
A college owned and operated by an individual, religious institution, partnership, or a corporation other than the state, a subdivision of the state, or the Federal government and that is supported primarily with nonpublic funds.
A school owned and operated by an individual; religious institution; partnership; or a corporation other than the state, a subdivision of the state, or the federal government; and supported primarily with nonpublic funds.
A good that once used by one person cannot be used by someone else. They are considered rival in consumption and/or excludable. A person can be excluded from using a private good.
A college managed and governed by private organizations or corporations with the goal of earning profit.
People who make goods and services.
The combination of inputs to produce outputs.
A graphic representation of output combinations that can be produced given an economy's available resources and technology.
The maximum output an economy can produce with the current level of available resources.
The natural resources, human resources and capital resources used to make goods and services. Also known as factors of production.
The ratio of output per worker per unit of time.
The amount of revenue that remains after a business pays the costs of producing a good or service.
A tax in which high-income earners pay a larger fraction of their income in taxes than low-income earners do.
A college that receives monetary support from public funds.
A good that is non-rival and non-excludable. Use by one person does not prevent its consumption by others.
A school that receives monetary support from public funds.
The amount of goods and services that a unit of currency can buy.
A monetary policy in which a central bank makes large-scale asset purchases designed to bolster financial market conditions.
The amount of a good or service that consumers are willing and able to buy at a specific price.
The amount of a good or service that businesses are willing and able to sell at a specific price.
A theory that emphasizes the relationship between the money supply and the price level.
One part of a set of data divided into four equal parts.
Monetary values, wages, or prices, adjusted for inflation and measured in constant prices—that is, in prices of a given or base period. Real monetary values are obtained by adjusting nominal wages or prices with a price measure such as the CPI.
The total market value of all final goods and services produced in an economy in a given year calculated by using a base year's price for goods and services; nominal gross domestic product (GDP) adjusted for inflation.
The price of borrowed money, adjusted for inflation.
A period of declining real income and rising unemployment; significant decline in general economic activity extending over a period of time.
The cost of a good or service in terms of another good or service.
An item that is scarce in relation to people's desire for it.
The payment for natural resources.
A contract that allows consumers to get immediate delivery on new furniture, appliances or other items. There is no down payment or credit check required. If the consumer keeps the rental item for a minimum amount of time, there is no penalty charged for returning it. If the renter misses a payment, the contract requires that he or she return the item.
To retake possession of something when the buyer fails to make payments.
Funds that a depository institution is required to maintain in the form of vault cash, or—if vault cash is insufficient to meet the requirement—in the form of a balance maintained directly with a Reserve Bank or indirectly with a pass-through correspondent bank.
The percentage of a bank's deposits it is required by law to hold.
The sum of cash that banks hold in their vaults and the deposits they maintain with Federal Reserve banks.
A performance measure of the effectiveness of an investment. ROI is calculated as the net gain (gain from investment minus cost of investment) divided by the cost of investment.
Money received; income.
The income received by government from taxes and other nontax sources.
Positive incentives that make people better off.
The chance of loss.
The idea that there is a direct relationship between risk of the loss of principal and the expected rate of return. The higher the risk of loss of principal for an investment, the greater the potential reward. Conversely, the lower the risk of loss of principal for an investment, the lower the potential reward.
The property of a good or service whereby consumption by one party excludes other parties from obtaining the benefit.
A method to estimate the number of years it will take for a financial investment (or debt) to double its value (or cost). Divide 72 by the interest rate (percentage) to determine the approximate number of years it will take the investment (debt) to double its value (cost).
Concept that holds that government and its officers must exercise their power according to established regulations and legal principles.
Income earned for providing human resources (labor) in the market. Salaries are generally an annual amount paid monthly or bimonthly for a specified number of hours, usually 40 hours per week.
Keeping your money to spend in the future.
Not spending on current consumption or taxes. Saving involves giving up some current consumption for future consumption.
Keeping some income to buy things in the future.
The accumulation of money set aside for future spending.
An account with a bank or credit union in which people can deposit their money for future use and earn interest.
A good or service that you want to buy in the future.
A schedule listing tasks that, when completed, will allow a saver to reach a savings goal.
The condition that exists because there are not enough resources to produce everyone's wants.
The financial opportunity costs consumers pay when searching for a counterparty in a transaction.
Unemployment caused by changes in the weather or seasons.
Data adjusted mathematically to remove the dips and bumps that occur due to seasonal events, such as extra retail workers hired for the holidays. Seasonal adjustment removes the effects of events that follow a more or less regular pattern each year. These adjustments make it easier to observe the cyclical and other nonseasonal movements in a data series.
A loan that is backed with collateral; a loan for which the lender requires and the borrower offers property as a guarantee of repayment.
The SEC is an independent U.S. government agency established by Congress to police and regulate the securities industry.
The pursuit of personal gain.
Actions that can satisfy people's wants.
The figurative costs of replacing shoes more often because of increased trips to the bank. This would occur during times of inflation when there is a real cost associated with holding currency in non-interest-bearing checking accounts.
When the quantity demanded of a good or service exceeds the quantity supplied at a particular price.
A graphical depiction of the relationship between the aggregate price level and the quantity of aggregate output supplied.
Goods or services to be bought within a short time, such as a few weeks or months.
A way to reveal credible information to another party.
A type of protest where people refuse to buy the business's goods and services and block others from making purchases by taking all of the seats in a restaurant or blocking the entrance to a business.
The difference between the average earnings of those with a four-year college degree and those without.
A payroll tax that is part of FICA (Federal Insurance Contributions Act) and is collected from most employees and employers to fund Social Security, which provides old-age, survivors' and disability income.
The quantity of goods produced that takes private and social costs into account.
Limiting production to fewer goods and services than consumed, perhaps those whose production entails the lower opportunity cost.
Using some or all of your income to buy things you want now.
The condition of relatively high inflation and relatively high unemployment occurring simultaneously.
A measure of the goods and services available to each person in a country; a measure of economic well-being. Also known as per capita real GDP (gross domestic product).
A stain on one's reputation; a mark or token of disgrace.
Combinations of tax cuts, subsidies, and increases in government spending.
A share of ownership in a company. Stocks are often traded publicly.
The ability to retain worth.
Long-term joblessness caused by a mismatch in the skills held by those looking for work and the skills demanded by those seeking workers.
A student loan with no likelihood of being paid in full by the borrowers.
A loan in which the government pays the interest on the loan for a specific time.
A similar good. With substitutes, a change in the price of one and the demand for the other tend to move in the same direction.
Productive inputs that can be used in place of one another.
The quantity of a good or service that producers are willing and able to sell at all possible prices during a certain time period.
When the quantity supplied of a good or service exceeds the quantity demanded at a particular price.
A fixed amount or percentage permitted by taxation authorities that a taxpayer could subtract from his or her gross income to reduce taxable income.
Money owed to taxpayers when their total tax payments are greater than the total tax. Refunds are received from the government.
Fees charged on business and individual income, activities, property or products by governments. People are required to pay taxes.
An advance in overall knowledge in a specific area. Also known as technological advance.
A federal law that requires the disclosure of information about the cost of credit. Both the finance charges and annual percentage rate (APR) must be displayed prominently on forms and statements.
The exchange of goods or services for other goods or services or for money.
Giving up some of one thing in order to gain some of something else.
The overuse of a resource, such as water, land, or air, due to poorly defined property rights.
Payments by governments to people who do not supply goods, services or labor in exchange for the payments.
Money collected from some people and distributed to other people.
Government programs designed to improve economic equity.
Checks issued by a financial institution which function as cash but are protected against loss or theft.
Bonds, notes and other debt instruments sold by the United States Treasury to finance United States government operations.
Wanting a full-time job but having only a part-time job; being overqualified for a job and receiving less pay than would be earned at a job requiring a higher skill level.
A situation that occurs when scarce resources are not put to their highest-valued use in the production of goods and services.
A condition where people at least 16 years old are without jobs and actively seeking work.
A program providing cash benefits for a specified period of time to workers who lose a job through no fault of their own.
The percentage of the labor force that is willing and able to work, does not currently have a job, and is actively looking for employment.
The unexpected and unplanned results of a decision or action.
A common measurement used to compare the value of goods and services.
A loan not backed with collateral.
A summary of a person's earnings and tax withholdings for an entire year. Employers must provide a W-2 to employees by the end of January for the previous year's employment to report annual income and withholding on the employees' tax returns.
A form completed by the employee and used by the employer to determine the amount of income tax to withhold.
Income earned for providing human resources (labor) in the market. Wages are usually computed by multiplying an hourly pay rate by the number of hours worked.
Desires that can be satisfied by consuming goods and services.
The effect on consumer spending caused by a change in the aggregate price level on the purchasing power of the consumers' assets.
The maximum amount that a buyer will pay for a good or service.
The amount of money that an employer withholds from an employee's paycheck. This money is deposited for the government on behalf of the individual taxpayer. (It will be credited against the employee's tax liability when he or she files a tax return.) Employers withhold money for federal income taxes, Social Security taxes, and state and local income taxes in some states and localities.