Econ Vocab Definitions

Asset

anything that has earning power or some other value to its owner

Barter

paying for goods and services with other goods or services

Capital

money or assets put toward economic use

Collateral

An asset pledged by a borrower that can be taken by a lender if the borrower fails to pay back a loan.

Commodity

a product that can typically be bought in bulk, usually a raw material (oil, gold, cotton).

Creditor

A lender, the person who is owed money / goods / services by a debtor.

Debtor

A borrower, the person who owes money / goods / services to a creditor.

Default

Failure to pay back or meet the conditions of a loan.

Factors of production

land / labor / capital.

Firm

company that seeks to make profit by selling goods or services (synonym for business)

Fiscal

relating to revenue, especially government revenue and taxes.

Income

money received (usually from a firm) for performing work.

Inflation

a general rise in prices across the economy.

Interest

the cost of borrowing, a way for lenders to protect themselves against the risk of lending.

Labor

workers, one of the factors of production.

Land

one of the factors of production, can be used directly (e.g. farming) or can earn income indirectly (e.g. renting it out).

Macroeconomics

study of the big picture, economics at the national and global level.

Microeconomics

study of the individual pieces that make up an economy, economics at the personal or business level.

Opportunity cost

what must be given up in order to make or get something.

Profit

a firm’s total revenue minus total costs (the money “left over” after all costs have been paid).

Revenue

income a firm receives from the sale of goods or services.

Scarcity

resources are limited, so people must decide how to allocate them.