Table of Contents
| Concept | Description |
|---|---|
| Aggregate Demand | – The total amount of goods and services consumers are willing to buy. – Example: all the products and services that people, businesses, and the government will buy |
| Aggregate Supply | – The total supply of all the goods and services available in an economy. – Example: all the products and services which are made available by suppliers |
| Business Cycle | – Refers to the changes in economic activity of a company over the long term. – Example: It may consist of growth, stagnation, and decline. |
| Central Bank | – A financial institution responsible for the monetary policy of a country. – Example: European Central Bank in Europe, Federal Reserve System in the USA |
| Consumer Price Index | – An economic measure of inflation in the domestic economy, determined by tracking the prices of a specific set of goods and services purchased by the public. – Example: Used to determine the rate of inflation, current prices are compared to a base year. |
| Cyclical Unemployment | – Unemployment that is caused by a downturn in the business cycle. – Example: Corporate layoffs in a recession cause this type of unemployment. |
| Deflation | – A general decrease in the level of prices. – Example: It results in an increase in the real value of money. |
| Depression | – An economic term that refers to a prolonged period of economic decline with large numbers of unemployed, shrinking incomes, and general economic hardship. – Example: The United States had a “Great” one in 1929. |
| Discount Rate | – The interest rate charged by the Federal Reserve for loans to member banks. – Example: One of the ways the Federal Reserve controls the money supply, it might be around 5% right now. |
| Disposable Income | – The economic term that refers to one’s total income that is left following the payment of all required taxes. |
| Economic Growth | – The increase in the value of the goods and services produced by an economy. |
| Excise Tax | – A tax on production, transportation, sale, or consumption of a certain good or service. – Example: gas tax, cigarette tax |
| FDIC | – A federally sponsored corporation that insures deposits in national banks and certain other qualifying financial institutions up to a stated amount. |
| Federal Reserve System | – The central bank of the United States. – Example: Supervises commercial banks by monitoring accounts and controlling interest rates. |
| Final Goods | – Tangible items that are produced and eventually consumed by the buyer; used when calculating GDP. – Example: Cars, televisions, and clothing, NOT iron, wood, and cotton. |
| Fiscal Policy | – The government program of spending and taxation to promote desired economic goals for the nation. – Example: This is how the government tries to keep the economy stable. |
| Frictional Unemployment | – Unemployment caused by people changing jobs. – Example: This is not caused by changes in the business cycle but by people leaving one job to find another. |
| GDP per Capita | – One of the measures of national income and output for a given country’s economy. – It is defined as the total market value of all final goods and services produced within the country in a calendar year. – Example: Gross Domestic Product |
| Government Deficit | – Occurs when a government spends more money than it takes in. – Example: For the US, it is currently $8,944,609,455,758.69. Whoops, now it’s higher. |
| Gross Domestic Product | – The total value of all the goods and services produced within a country in a given year. – Example: One way to measure the economic growth or decline of a nation. |
| Income Tax | – A tax levied on net personal or business income. |
| Inflation | – A rise in the general level of prices. – Example: Reduces the value of a dollar, usually measured by the Consumer Price Index. |
| Interest Rate | – The percentage of a financial loan that is paid as a fee over a period of time. – Example: APR |
| Macroeconomics | – The study of an economy as a whole. – Example: Economics is divided into two fields – microeconomics and this. |
| Monetary Policy | – A plan of the government to regulate the money supply in the nation. – Example: In the United States, the Federal Reserve System controls this by adjusting interest rates. |
| National Debt | – The total amount of money a nation owes its creditors. – Example: For the United States, this is in the trillions of dollars. |
| Open Market | – A freely competitive market operating without government-imposed restrictions. |
| Open Market Transaction | – Most stock market transactions where an investor purchases stock shares. – In this situation, the purchase indicates that the investor believes that the stock will gain value. |
| Payroll Taxes | – Withholdings from employees’ wages paid to the federal, state, or local governments. – Example: Income, Social Security, Medicare, and Unemployment are examples. |
| Producer Price Index | – An economic indicator computed by the Bureau of Labor Statistics that measures the average change in prices received by US producers for their goods over a period of time. |
| Progressive Tax | – A tax where the percentage paid in tax increases as the level of income rises. – Example: Federal income tax is an example of this type of tax. |
| Proportional Tax | – A type of taxation that takes the same percentage of one’s income regardless of how much or how little one makes. |
| Recession | – A decline in a country’s GDP for two or more successive quarters. It is usually characterized by a significant decline in economic activity. – Example: 1979-1980 and the Energy Crisis, 2001-2003 and the dot-com bust. |
| Regressive Tax | – A type of taxation that takes a higher percentage of one’s salary as one’s income decreases. – Example: Sales taxes are an example of this kind of tax. |
| Regulation | – Legal restrictions set forth by a government to produce desired outcomes. – Example: Anti-monopoly laws are put in place to eliminate the risk of high prices and total control. |
| Reserve Requirement | – The percentage of their deposits that member banks must keep available in a Federal Reserve Bank. – Example: Right now around 10-15%. |
| Revenue | – The total amount of money that is brought into a company or government by its business activities or taxation policies. – Example: In the case of the federal government, this is money gained through taxes, fines, fees, etc. |
| Sales Tax | – A tax on goods and services, a percentage of the retail price. – Example: Some states have it, some states do not. |
| SPLOST | – This tax can be levied by any county for the purpose of funding the building and maintenance of parks, schools, roads, and other public facilities. – Example: The Special Purpose Local Option Sales Tax adds an additional 2% onto the existing state sales tax of 4%. |
| Stagflation | – A period of large price inflation combined with no output growth, increasing unemployment, and a recession. |
| Structural Unemployment | – Unemployment that is caused by changes in technology or reduced demand for certain products. – Example: An example of this would be typewriter repairmen who are out of work because of the popularity of computers. |
| Subsidy | – Financial assistance from the government to encourage the production of or the purchase of a good. – Example: A federal grant, a tax break, or a trade barrier. |
| Tariff | – A tax on imported goods and is usually designed to protect domestic production of similar goods. |
| Transfer Payment | – A payment made by the government to someone who does not produce a good or service in return. – Example: Examples would be a Social Security Disability check or an unemployment check. |
| Unemployment | – The lack of jobs for willing workers. – Example: Joblessness. |
| Unemployment Rate | – The percentage of the civilian workforce who are available for a job but do not have one. – Example: This is one of the ways the health of an economy is measured. |
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