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139 terms

Economics vocabulary

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appropriation
the law passed by Congress that funds (provides money) to government agencies to carry out their programs
authorization
the law passed by Congress that states the maximum amount of money Congress may appropriate for government programs
automatic stabilizer
program that automatically provides benefits to offset a change in people's incomes
balanced budget
a budget in which the money going out is equal to or less than the money taken in
bank
a business that keeps money for customers, makes loans, and provides other money-related services
bank panic
a situation in which many banks fail because they are not able to meet the demands of their depositors for cash
bankrupt
unable to pay debts
bond
a certificate of a loan to a government or a business (A person who buys a bond is lending money to the government or corporation that sells the bond.)
budget
a plan of how much money a person, business, government, or organization is able to spend and how it will be spent
budget deficit
a financial situation in which spending is greater than income or revenues
budget resolution
an agreement in Congress that shows total spending and revenues for a fiscal year and how much will be spent in various categories
budget surplus
a financial situation in which spending is less than income or revenues
business cycle
alternating time periods of expanding and contracting economic activity
capital
human-made items, such as machines and tools, that are used to produce goods and services
capitalism
an economic system in which individuals, not the government control the production and distribution of goods and services; also called market system
central bank
a bank whose functions include controlling the nation's money supply; an institution that lends money to other banks and the place where the government does its banking business (Federal Reserve System in U.S.).
cash
bills and coins
circulation
money that is available for use
clearinghouse
a place where banks exchange checks and settle accounts
coin
an economic system in which the government controls the production and distribution of goods and services
command system
a bank that provides checking accounts and savings accounts, and makes loans for a variety of purposes
commercial bank
a country's ability to produce a product at a lower opportunity cost than other countries
comparative advantage
a situation in which producers or sellers of similar goods or service each try to get consumers to buy their products or use their services
competition
a situation in which producers or sellers of similar goods or service each try to get consumers to buy their products or use their services
compound interest
interest earned on the deposit and on all previously earned interest
consumer
someone who buys and uses goods and services
contraction
a time period when GDP (amount of business) is decreasing
cost-push inflation
the kind of inflation caused by the rising cost of resources such as labor or oil
counterfeit
to make a copy of something that people will think is genuine
credit
money loaned, usually for a fee, that must be paid back
credit union
a kind of bank that is owned by members who belong to a certain company or group; usually a not-for-profit organization
currency
any kind of money that is used as a medium of exchange
debt
money owed when you or a government buy something or credit or borrow money
deficit
situation in which government spends more than it collects in revenue
deflation
a decrease in the average price of all goods and services
demand-pull inflation
the kind of inflation caused when consumer spending is greater than the amount of goods and services available
denomination
paper money of a particular value
deposit
money put into a bank
depression
a period of serious recession marked by high unemployment and a decline in business
discount rate
the rate of interest charged by the Federal Reserve Bank to borrowing banks
discretionary spending
spending for federal programs that must receive annual approval (appropriations) by Congress
dollar
the official unit of currency in the United States; based on the decimal system
economic choices
every society must decide WHAT to produce, HOW to produce, and FOR WHOM to produce
economics
the study of how people, businesses, and governments choose to use their limited (scarce) resources
economic system
the way that a country or culture produces and distributes goods and services
economist
a person who studies the economy
economy
the way in which human resources and natural resources are used to produce goods and services
embargo
a government policy that cuts off trade with certain countries
employee
a person who works for another in return for pay
employer
a person or company for whom other people work for pay
entitlement program
a program using eligibility requirements to provide health, nutritional, or income supplements to individuals
exchange rate
the value of one nation's currency in comparison to another
excise tax
a tax on certain items such as alcohol, tobacco, and gasoline
expansion
a period of time during which the amount of business (GDP) increases
export - (noun)
a good that is sent from one country to another; (verb)to send goods from one country to another
Federal Deposit Insurance Corporation (FDIC)
a government corporation that insures bank deposits up to $100,000
Federal Open Market Committee (FOMC)
the most powerful committee of the Fed, because it makes the decisions that affect the economy as a whole by manipulating the money supply
Federal Reserve System (Fed)
the central bank of the United States
financial capital
money used to buy the tools and equipment used in production
financial institution
a bank, credit union, savings and loan, or other organization that offers services related to saving and borrowing money
fiscal policy
the government program of increasing or decreasing taxes and government spending to control inflation and unemployment
fiscal year (FY)
12-month planning cycle in business and government (October 1 through September 30 for government)
foreign aid
aid that one country gives to another in the form of money, capital resources, and food
foreign exchange market
the place where foreign exchange dealers in major cities around the world trade the money of different countries
free enterprise
economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference
free trade
unrestricted trade between countries
goods
real items or things, such as cars, watches, and clothing
government revenue
tax dollars received by the government
Gross Domestic Product (GDP)
the total dollar value of the final goods and services produced in a country each year
import - (noun)
a good that is brought into one country from another; (verb) to bring goods into one country from another
import quota
a law that sets a fixed limit on the amount of imports
incentive
something that encourages people to work harder or to produce more
income
the money a person gets from salary or wages, profits, interest, investments, and other sources
income tax
a tax on a person's income
inflation
an economic condition characterized by rising prices (increase in the average price of all goods and services)
interest
the money a person pays to borrow money, or the money a bank pays depositors for using their money
intergovernmental revenue
funds one level of government receives from another level of government
international trade
trade between nations
invest
to use money to earn interest or income, or in the hopes of making a profit; for example, to buy stocks or bonds
investment
the risking of money and time to get something in return (usually interest or other income)
laissez faire
a basic economic policy that calls for noninterference by the government in business matters
loan
a sum of money borrowed for a certain amount of time
mandatory spending
federal spending required by law that continues without the need for annual approvals (appropriations) by Congress
market system
an economic system in which individuals, not the government control the production and distribution of goods and services; also called capitalism
mature
able to be redeemed
Medicare
government program that provides health care for the aged (elderly)
medium of exchange
anything that a group of people agree has a certain worth
minimum balance
a fixed amount of money that remains in a customer's account to avoid paying bank fees
minimum deposit
the least amount of money required to open a bank account
mixed system
an economic system that includes both private ownership of property and government control (or regulation) of some services and industries
monetary policy
the Federal Reserve System program of increasing or decreasing the money supply to control inflation and unemployment
money
anything a group of people accept in exchange for goods and services
money supply
the value of all currency and checking account balances in a country
national debt
the amount of money that the government owes
natural resource
a supply of something that is found naturally on earth
need
something that you must have to survive
nonprofit
a business not intending to make a profit
open market operations
purchase or sale of U.S. government bonds and Treasury bills
payroll tax
tax on wages and salaries to finance Social Security and Medicare costs
prime rate
the lowest rate of interest that banks offer their best business customers
principal
a sum of money in an account, not including interest earned; in a loan, the original amount of money borrowed
private sector
the part of the economy produced by individuals and businesses
producer
the people or businesses that provide goods and services
profit
the money a business makes after expenses are paid
promissory note
a written promise to pay a sum of money
property tax
tax on land and property
protectionism
the policy of limiting trade with other countries to protect domestic industries
protective tariff
a tax meant to raise the price of an imported good in order to protect a certain industry from foreign competition
public sector
the part of the economy produced by the government
recession
An extended decline in general business activity.
reserve
money that is kept in the bank and not loaned to customers a period of time when the demand for goods declines, unemployment rises, and the flow of money slows down
revenue
money brought in by a business
risk
the chance of loss
savings
money that is put away to be used later
savings and loan association (S&L)
financial institutions that traditionally loaned money to people buying homes
savings rate
the percent of income that people save
scarcity
not enough of a certain resource to satisfy people's needs and wants
services
work that is done for other people, such as by waiters, lawyers, and nurses
social insurance program
a program meant to prevent poverty; Social Security, workers' compensation, unemployment insurance, and Medicare are well-known examples
Social Security
a system of federal financial support for retired workers and workers unable to continue working because of a disability
standard of living
way to measure how well the needs and wants of citizens are being met by a country's economic system
subsidize
to aid or promote with money
surcharge
an extra cost added to an original cost
surplus
situation in which quantity supplied is greater than quantity demanded; situation in which government spends less than it collects in revenues
tariff
a tax on imports
taxes
money that a government collects from people and businesses
tax-exempt
not required to pay taxes
tax return
annual report filed with local, state, or federal government detailing income earned and taxes owed
trade deficit
a condition in which the value of a nation's imports is greater than the value of its imports
traditional system
an economic system based on past ways of life and culture
transaction
any business done with a the bank, such as a withdrawal or deposit
unearned income
money received from investments such as savings accounts and bonds
unemployed
being without a job but looking for one
unemployment
the total number of people out of work, but wanting to work
value
the worth of something as measured in goods, services, or a medium of exchange
wages
money paid to an employee for work done
want
something that you would like to have but don't necessarily need
welfare
income paid by the government to people who need it to live
withdrawal
taking money from a bank account