Glossary

Goods and services bought from sellers in another nation.

Buying goods or services without comparison shopping or forethought about costs and benefits.

A factor, often a monetary reward or advantage, that encourages people to do something — as in "Tax provisions in the new forest management program give landowners an incentive to take good care of the trees on their property."

Restrictions on trade such as tariffs, quotas and regulations.

Money received for work performed or from investments; may include salaries, wages, interest, dividends, etc.

The quantity of a good or service that consumers are willing and able to buy at given prices during a period of time.

The unequal distribution of an economy's total income among families, individuals or other designated groups.

Payments made by individuals and corporations to the federal government (and to some state and local governments) based on income received (both earned and unearned).

An account in which an individual may set aside earned income in a tax-deferred savings plan for his or her retirement. There are two types of IRAs--traditional and Roth--each with its own qualifications and rules governing contributions and withdrawals.

A general increase in the price level.

The chance that the rate of inflation will exceed the rate of return on an investment.

A company’s first sale of stock to the public. When a company “goes public,” it sells blocks of stock shares to an investment firm that specializes in initial offerings of stocks and resells them to the public.

A new idea or method.

A financial intermediary, such as a pension fund or a mutual fund, that buys stock and other investments for clients.

A practice or arrangement whereby a company provides a guarantee of compensation for specified forms of loss, damage, injury, or death. People obtain such guarantees by buying insurance policies, for which they pay premiums. The process allows for the spreading out of risk over a pool of insurance policyholders, with the expectation that only a few policyholders will actually experience losses for which claims must be paid. Types of insurance include the following: Automobile: For losses incurred as a result of accidents, vandalism, and other causes of damage to cars. Health: For coverage of certain health-care costs. Renter’s: For losses (from theft, for example) of personal possessions in a rental unit. Homeowner’s: For damage to a person’s home or its contents, and to cover costs arising from injury to others on the homeowner’s property. Life: For compensation to dependents of a policyholder, to be paid when a policyholder dies. Disability: To provide income for a worker when she or he is ill or injured and unable to work.

Quick, rapid growth in a certain sector or area.

A situation in which decisions made by one person affect decisions made by other people, or events in one part of the world or sector of the economy affect other parts of the world or other sectors of the economy.

Money paid regularly, at a particular rate for the use of borrowed money. As an adjective: I’m no longer making any interest payments.

The price paid for using someone else’s money, expressed as a percentage of the amount borrowed.

The chance that interest rates may change (upward) while the saver is “locked in” to a (lower) rate for a time deposit (a CD, for example) or a bond.

A good that is used in the production of final goods and services.

Desires that can be satisfied by consuming a good or service. Economists do not differentiate between wants and needs.

An international organization established to supervise exchange-rate arrangements and to lend money to member countries having difficulties meeting their financial obligations to other countries.

Someone who creates or devises a new process, application, machine, or article of application.

An itemized list of goods held by a person or business. Also a quantity of goods held in stock — as in "You’ll find a large inventory of cell phones at Unwired Emporium."

Putting money someplace with the intention of making a financial gain. Investment possibilities include stocks, bonds, mutual funds, real estate, and other financial instruments or ventures.

The additional income earned from saving or investing money, often expressed as an annual percentage of the amount invested.

A figure of speech representing the idea that firms and individuals making decisions in their own self-interest will at the same time create economic order and promote society's interests; coined by Adam Smith.