| A | B |
|---|
| Balance of trade | The difference between the value of a nation’s exports and its imports |
| Business sector | A segment of the economy that does not include government, private citizens, or nonprofit institutions |
| Capital | Assets of a business |
| Double counting | Including the same production more than once in determining GDP |
| Durable goods | Tangible items that should last a long time |
| Economy | The system in which people make and spend their incomes |
| Federal Reserve | The central banking organization of the United States that monitors and regulates the flow of credit and money |
| Goods | Tangible objects that can be manufactured or produced for resale |
| Gross domestic product | The final market value of the total output of all goods and services produced within a country’s geographic boundaries during a year’s time |
| Household sector | A segment of the economy that does not include government or business; those making purchases for personal consumption |
| Inflation | A rapid rise in prices that may occur when demand exceeds supply or when productivity declines and costs of labor go up |
| Intermediate products | Items that are part of other finished products |
| Nondurable goods | Tangible items that are consumed within a short time |
| Prime interest rate | The interest rate at which banks borrow from each other; banks offer this rate to their best credit customers |
| Products | Goods and services |
| Purchasing power | The financial ability to buy products and services; the value of a sum of money |
| Recession | A six-month contraction in GDP |
| Service(s) | Intangible activities that are performed by people in exchange for money; productive acts that satisfy economic wants |
| Trade deficit | An unfavorable balance of trade in which a nation’s imports are greater than its exports |
| Trade surplus | A favorable balance of trade in which a nation’s exports are greater than its imports |
| Transfer payments | Monies paid by the government for which no goods or services are received in exchange, such as Social Security payments, welfare benefits, veterans’ benefits, disaster aid, and other similar payments |
| Revenue | Income |
| Sole proprietorship | A business owned by one person who receives all the profits from the business and takes all the risks |
| Business risk | The possibility of loss (failure) or gain (success) inherent in conducting business |
| Competition | The rivalry between two or more businesses to attract scarce customer dollars |
| Contract | Agreement between two or more businesses or individuals stating that one party is to do something in return for something provided by the other party |
| Corporation | A form of business ownership that is owned by stockholders who have purchased units or shares of the company |
| Demand | The quantity of a good or service that buyers are ready to buy at a given price at a particular time |
| Risks | Chances of loss that carry with them the possibility of loss or no loss |
| Shareholder | Anyone who owns stock in a corporation; also known as a stockholder |
| Sole proprietorship | A business owned by one person who receives all the profits from the business and takes all the risks |
| Free enterprise | An economic system in which individuals and groups, rather than the government, own or control the means of production—the human and natural resources and capital goods used to produce goods and services; also known as private enterprise |
| Guarantee | A promise made to the consumer that a product’s purchase price will be refunded if the product is not satisfactory; often called a money-back guarantee |
| Warranty | A promise made by the seller to the consumer that the seller will repair or replace a product that does not perform as expected |
| Insurance | A contractual agreement in which one company (insurer) will pay for specified losses incurred by the other company (insured) in return for installment payments (premium) |
| Investment | The use of money to generate a profit or gain |
| Lease | A contract to use property that belongs to someone else for a specific period of time and for a specific amount of money |
| Partnership | A form of business ownership in which the business is owned by two or more persons |
