Foundation Vocabulary

Bond

a financial asset in the form of a written I.O.U

Budget Deficit

government spending exceeds tax revenue

Budget Surplus

tax revenue exceeds government spending

Capital stock

inventory of physical capital

Crowding Out

government deficit spending increases, interest rates increase, investment decreases

Cyclical Unemployment

caused by recession

Discount Rate

interest rate the Federal Reserve charges banks for loans

Discouraged Worker

someone who can’t find work, stops looking, and therefore is no longer unemployed

Disposable Income

total income minus taxes, income available to spend

Economic Growth

an increase in the maximum output

Economics

the study of how society satisfies unlimited wants with limited resources

Federal Funds Rate

interest rate banks charge other banks on overnight loans

Federal Reserve

central bank

Fiat Money

value derived from the word of the government and the fact it is accepted

Fiscal Policy

government spending and taxation used to stabilize the economy

Frictional Unemployment

related to time spent searching for a job

Gross Domestic Product

the total value of all final goods and services produced within a country in a year

Human Capital

education and training provided to increase productivity

Inflation

increase in overall price levels

Interest Rate

the cost of borrowing money or the rate of return on financial assets

Investment

business spending on physical capital

Macroeconomics

studying the economy as a whole

Microeconomics

studying individual aspects of the economy

Monetary Policy

the changing of the money supply by the Federal reserve in attempt to stabilize the economy

Net Exports

exports minus imports

Open Market Operations

the buying and selling of government bonds by the Federal Reserve

Opportunity Cost

the next best thing given up while making an economic decision

Physical Capital

tools, machines, and buildings used to produce other goods and services

Productivity

output per input

Recession

an economic downturn with an increase in unemployment

Stagflation

a combination of rising inflation and rising unemployment

Structural Unemployment

more job seekers than jobs available often due to outdated skills

Unemployment Rate

percentage of the labor force that is looking for work but unable to find it

Velocity Of Money

the number of times a dollar is spent in a year