Business | Study Guide

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Capitalism

An economic system where companies are privately-owned, versus being owned by the government, and that assumes companies are built with a purpose of creating economic value through innovation, driven by a profit-motive, and where prices are set by the market via the ebb and flow of supply and demand. And healthy capitalism also assumes that healthy competition exists

Disposable Income

The amount of money households have available for spending and saving after taxes are paid.

Equal Employment Opportunity Act of 1972

Prohibits discrimination on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, and marital or familial status.

Fiscal Policy

The means by which a government adjusts its tax rates and spending levels to influence a nation's economy.

Imports and Exports

Items shipped into and out of the country.

Interstate Trade or Commerce

Business conducted between states; commercial trade and movement of goods, money, or transportation from one state to another, regulated by the federal government.

Monetary Policy

The macroeconomic policy directed by the Federal Reserve, (also called the central bank), that stimulates or slows down the economy by lowering or raising interest rates, and by determining the amount of money supply in circulation.

Monopolistic Competition

A market where there are many suppliers, and barriers to entry are low, but suppliers try to differentiate their products and gain some price advantage.

Monopoly

A market where one company controls the supply of a good or service, where other options for consumers aren't readily available, and where the barriers to entry for other companies are highly restrictive.

Occupational Safety and Health Act of 1970

A government agency whose goal is to ensure that employers provide employees a place to work free from recognized hazards, like exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, or unsanitary conditions.

Oligopoly

A market where a small number of companies control the supply of a good or service, and where the barriers to entry for other companies are highly restrictive.

Private Sector

The portion of the economy that is run by businesses and individuals for-profit, and not owned by the government.

Public Sector

The portion of the economy that is controlled or owned by the government.

Pure Competition

A market where a large number of companies provide essentially the same product and sell it at a similar price or the same price, and barriers to entry for new entrants are low.

Tariff

A market where a large number of companies provide essentially the same product and sell it at a similar price or the same price, and barriers to entry for new entrants are low.

Amortization Schedule

A report showing loan principal and interest amounts owed, and due dates, for each payment.

Collateral

An asset a borrower pledges to a lender as security for repayment of a loan.

Down Payment

An upfront partial payment made at the time of purchase, representing a percentage of the total purchase price, to secure the transaction and reduce the amount financed by a loan.

Fixed Interest Rate

An interest rate that stays constant, or “fixed”, regardless of what happens to economic and/or financial conditions over the term of a loan.

Floating Interest Rate

An interest rate that adjusts periodically based on changing economic and/or financial conditions, also called a variable rate or adjustable rate.

Loan

A sum of money that is borrowed, with the expectation that it will be paid back with interest over a specified period of time.

Loan Amortization

The process of converting the total principal and interest owed over the life of a loan into equal, periodic payment amounts.

Mortgage

A loan used to purchase real estate where the underlying property is pledged as collateral for the loan.

Rent

The payment made by a tenant to an asset owner for the use of property, land, or other assets, for a specified period of time.

ACH (Automated Clearing House)

A network for processing electronic financial transactions in batches, enabling efficient and cost-effective direct deposits and payments. 

Blockchain

An unchangeable, decentralized, digital ledger distributed across a network of computers

Bounced Check

A check that cannot be processed due to insufficient funds in the bank account it's drawn from (the payor’s), leading to its rejection by the bank and a return to the issuer (payor).

Cash

Physical forms of money, such as banknotes and coins, that serve as a medium for exchanging goods and services.

Check

A form of payment that is dated and signed by the payor, directing the payor's bank to pay a specific amount of money to the payee the check is written.

Checking Account

A deposit account that allows for easy and frequent cash deposits and withdrawals.

Credit Card

An electronic method of payment allowing the card owner to purchase goods and services on credit.

Cryptography

The study or use of techniques to scramble or hide data, and validate messages and digital signatures, in order to secure digital information.

Debit Card

An electronic method of payment where the funds are deducted directly from the card owner's bank account. 

Digital Wallet

A software-based system that securely stores users' payment information and passwords for numerous payment methods and websites, enabling transactions to be made electronically through a computer or smartphone.

EFT (Electronic Funds Transfer)

An electronic transfer of money.

Financial Exchanges

Transactions where goods, services, or assets are traded between parties, usually involving money as a medium of exchange. 

Forgery

The act of creating, altering, or imitating objects, documents, or signatures, with the intent to deceive or defraud by passing off the forged item as genuine.

Payor

An individual or entity responsible for making a payment to another party

Payee

The individual or entity that receives a payment from another party.

Overdraft

Occurs when an account's balance goes below zero, due to transactions exceeding the available funds, resulting in a negative balance.

Wire Transfer

A method for sending funds directly and quickly between bank accounts, often used for immediate and large transactions.