General & Core Economic Terms

Term Meaning

Economy A system where goods and services are produced, sold, and bought.

Goods Physical items that can be bought or sold.

Services Activities done for others in exchange for payment.

Inputs used to produce goods and services (e.g., land, labor,

Resources
capital).

Needs Essential things people must have to live.

Wants Things people desire but are not essential.

Supply The amount of a product or service available.

Demand How much people want a product or service.

Scarcity A situation where resources are limited compared to wants.

Opportunity cost What is given up when choosing one thing over another.

Trade-off Giving up one thing to get another.

Production The process of making goods or services.

Consumption Using goods and services.

Distribution How goods and services are delivered to people.

Market A place or system where buying and selling happen.

Market price The price at which a product is bought and sold.

Utility The satisfaction or benefit from consuming a product.

Value The worth of a good or service.

Profit The money left after costs are subtracted from revenue.

Cost The amount spent to produce something.

Revenue The total income from selling goods or services.

Income Money earned by individuals or businesses.

Expenditure Money spent.

Capital Money or tools used to produce goods/services.

Labor Human effort used in production.

Land Natural resources used in production.

Entrepreneurship The ability to start and manage a business.

Economic system The way a society organizes production and distribution.

A model showing how money moves between households and

Circular flow
businesses.

Specialization Focusing on a specific task to become more efficient.

Term Meaning

Division of labor Breaking work into specific tasks for efficiency.

Economic Performance &

Indicators
Term Meaning

GDP Total value of all goods and services produced in a country.

Total value of all goods and services produced by a country's

GNP
people, including abroad.

Economic growth An increase in a country's production and income over time.

Recession A period when economic activity slows down.

Depression A long and severe recession.

Boom A period of fast economic growth.

Inflation A general increase in prices.

Deflation A general decrease in prices.

Stagflation High inflation and unemployment at the same time.

Hyperinflation Extremely rapid inflation.

Consumer Price Index; measures average changes in prices paid by

CPI
consumers.

Producer Price Index; measures average changes in prices received

PPI
by producers.

Real GDP GDP adjusted for inflation.

Nominal GDP GDP not adjusted for inflation.

Economic indicators Data that shows how an economy is performing.

Business cycle The ups and downs of economic activity over time.

Employment & Labor Terms

Term Meaning

Employment Having a job or work.

Unemployment Not having a job but actively looking for one.

Unemployment rate The percentage of people in the labor force who are unemployed.

Labor force All the people who are able and willing to work.

Working in a job below one’s skill level or part-time when full-time

Underemployment
is desired.

Wages Payment for work, usually hourly.

Salary A fixed regular payment for work, often monthly or annually.

Minimum wage The lowest amount an employer can legally pay a worker.
Term Meaning

Productivity The amount of goods/services produced per unit of input.

Human capital Skills and knowledge people have.

Job market The availability of jobs and workers in an economy.

Money, Banking & Finance

Term Meaning

Money Anything accepted for goods and services.

Currency Paper money and coins used in a country.

Interest rate The cost of borrowing money, expressed as a percentage.

Loan Money borrowed that must be paid back with interest.

Credit The ability to borrow money now and pay it later.

Debt Money that is owed.

Investment Putting money into something to earn more money.

Capital market A place where savings and investments are bought and sold.

Stock market A system where shares of companies are bought and sold.

Bonds A loan made to a company or government that pays interest.

Shares Units of ownership in a company.

Equity Ownership value in a business.

Liquidity How easily an asset can be turned into cash.

Inflation rate The rate at which prices are rising.

Monetary policy The central bank's actions to control the money supply.

Fiscal policy Government use of spending and taxes to influence the economy.

Central bank The national bank that controls money and interest rates.

Reserve requirement The amount of money banks must keep and not lend.

Money supply The total amount of money available in the economy.

Trade & Global Economics

Term Meaning

Trade Buying and selling goods and services.

International trade Trade between countries.

Import Goods brought into a country.

Export Goods sent out of a country.

Balance of trade The difference between a country's exports and imports.

Trade surplus When exports are greater than imports.

Term Meaning

Trade deficit When imports are greater than exports.

Tariff A tax on imports or exports.

Quota A limit on the quantity of goods that can be imported.

Embargo A ban on trade with a specific country.

Exchange rate The value of one currency in terms of another.

Free trade Trade without restrictions like tariffs.

Protectionism Government actions to protect domestic industries.

Globalization Increasing connections between economies worldwide.

WTO World Trade Organization; oversees international trade rules.

IMF International Monetary Fund; supports global financial stability.

World Bank Provides loans and aid to developing countries.

Government & Economic Policy

Term Meaning

Tax Money people or businesses pay to the government.

Subsidy Money given by the government to support a business or sector.

Budget A plan for government income and spending.

Budget surplus When income is more than spending.

Budget deficit When spending is more than income.

National debt The total amount a government owes.

Public spending Money the government spends on services like education or defense.

Public goods Goods everyone can use, like street lights or clean air.

Externalities Side effects of economic activity, like pollution.

Regulation Rules set by the government to control economic activity.

Deregulation Reducing or removing government rules.

Redistribution Shifting wealth from rich to poor through taxes or benefits.

Economic planning Government efforts to influence the economy's direction.

Supply-side policy Policies that aim to increase production.

Demand-side policy Policies that aim to increase demand for goods/services.