Definitions of Economic Terms

Don't know your inflation from your stagflation? Check out our glossary of easy-to-understand definitions of economic and financial markets.
Simple profit equation written by hand with a black marker
The 3 Types of Profit Margins and What They Tell You
Illustration showing three types of financial capital: equity, debt, and specialty capital.
What Is Financial Capital?
A clothes shopper expresses shock at the sticker price.
How Inflation Is Measured and Managed
Illustration of a man at the counter of a bank holding a wallet full of money. Headline is “What to Know About Interest Rates” and text is “An interest rate is the percentage of principal charged by the lender for the use of its money. The interest rate will tell you what you pay each month, as opposed to the APR, which tells you the total cost over the life of the loan”
Interest Rates and How They Work
Six major welfare programs: temporary assistance for those in need, supplemental nutrition assistance programs, medicaid, earned income tax credit, supplemental security income, housing assistance.
What Is a Welfare Program?
couple reviewing bills at a laptop
What Is Universal Basic Income?
Financial Derivatives: Definition, Types, Risks
Image shows a picture of a large financial building. Text reads: "What the federal reserve does: manages inflation, supervises the banking system, maintains the stability of the financial system, provides banking services"
What Is the Federal Reserve?
This illustration answers What Is Laissez-faire economic theory, including "Definition: Laissez-faire economics restrict government intervention in the economy," "Laissez-faire = French for," and "In order to work, Laissez-faire policies need: Capitalism, Free market economy, and "Rational market theory."
What's Wrong With Laissez-Faire Economics?
Elastic demand definition
What Is Elastic Demand?
Four scenarios: a man typing on his laptop sitting on a fire escape. A man at a bazaar purchasing food. A woman at the grocery store. A woman getting her hair cut. There is a world map drifting by in the background.
How to Compare the Cost of Living Around the World
President Richard Nixon points at a reporter during a press conference.
What Is Stagflation?
What Is the New York Stock Exchange, and How Does It Work?
Two Foolproof Ways to Increase Profit
The Great Crash
The Worst Day in Wall Street's History
Stock trader
5 Types of Volatility
A couple looks over their FNMA loan documents.
What Is Fannie Mae?
What Really Makes the World Go Round
Financial advisor meeting in a bank office.
What Is Standard & Poor's (S&P)?
Traders work on the floor of the New York Stock Exchange
How the SEC Is Preventing Another Depression
Image shows a woman lecturing to a group of people in front of a world map. Text reads: "What does 'Per Capita' mean? Translating to 'by the head,' the term is commonly used in statistics, economics, and business to report an average per person. Tells you how a country, state, or city affects its residents. When calculating per capita divides a statistical measurement for an organization by its population. Example: GDP per capita is a country's economic output per person"
What Is Per Capita?
couple reviewing financials
Are We in a Bear Market Now?
Two people talk with each other.
What Is Ceteris Paribus?
two women
What Real GDP per Capita Reveals About Your Lifestyle
Image shows three scenarios: a woman talking to her financial advisor, a man at a bank, and a woman looking online. Text reads: "How to buy municipal bonds: talk to your financial advisor, visit your local bank, reach out to the municipality directly"
Four Looming Threats in Municipal Bonds
woman pumping gas
Pigouvian Taxes: Definition, Examples, Pros and Cons
The fundamental aspects of common stock
What Is Common Stock?
bull statue in the city
What Is a Bull Market?
Image shows two people working on a peach farm with a red barn in the distance. Text reads: "The four factors of production. Factor 1: Labor, Factor 2: Land, Factor 3: Capital, Factor 4: Entrepreneurship."
4 Factors of Production
Man and woman comparing two brands of a product in the grocery store
How a Demand Curve Reflects Consumer Desires
What causes hyperinflation? It starts when a country's gov't begins printing money to pay for its spending. Instead of tightening the money supply to stop inflation, the government keeps printing more. Hyperinflation is when the prices of goods and services rise more than 50% in a month. As the gov't increases the money supply, prices rise as in regular inflation. With too much money sloshing around, prices skyrocket.
Could You Survive Hyperinflation?
Young woman using credit card during online shopping
Don't Miss the Holiday Sales on Green Monday
A mother plays with her son in their new home.
What Is Freddie Mac?
Woman in Front of Chinese Stock Market display
What Are Emerging Markets?
Deflation Threatens You More Than Inflation
Apple iPhone 5C
3 Types of Market Cap
What is a central bank? An independent national authority. Conducts monetary policy, regulates banks, and provides financial services like economic research. Goals include stabilizing the nation's currency, keeping unemployment low, and preventing inflation. Most are governed by a board made up of its member banks
Meet the People Who Control the World's Money
Mother and daughter looking at Cyber Monday deals on a tablet computer
What You Need to Know About Cyber Monday
llustration of dollar bill signs entering a bank vault to symbollize open market operations
How the Fed Controls the Money Supply
This illustration shows the effective measurements of economic growth, including real gross domestic product (GDP), the World Bank uses gross national income to measure growth, and most countries measure economic growth each quarter.
What Is Economic Growth?
College students sitting at tiered desks in a lecture hall.
What Is Human Capital?
Family walking off escalator at shopping mall
What Is an Economic Recovery?
a senior jobseeker
Why Your Pension Fund May Gone When You Need It
couple reviewing bills
Is Now the Most Miserable Time Since the Great Depression?
Woman Reading Label On Clothing While Out Shopping
What Are Exports?
A little girl eating from a bowl at a table surrounded by three bears
What Is a Goldilocks Economy?
Where's the Best Standard of Living? Depends Who You Ask
New York Fed Reserve
What Is the Federal Reserve Discount Rate?
A plane flying over a shipping yard with stacks of shipping containers
Why Most Countries Hate Trade Deficits
Image shows how securities affect the economy: Securities make it easier for those with money to find those who need investment capital. Securities make markets more efficient. Securities are readily traded. Securities are investments traded on a secondary market. There are three types: Equities, Bonds, Derivatives
How Securities Affect the U.S. Economy and Why It Matters to You
Labor force
Are You Officially in the Labor Force?
what to know about production possibilities curves. The points show how much of each goods will be produced when resources shift for more production of one good, and less of the other. It demonstrates the concept of opportunity cost. It doesn’t indicate how much of each good should be produced, but the production sacrifice needed to make more of the other good.
What Is the Production Possibilities Curve in Economics?
Pros and Cons of Most-Favored-Nation Status. Pros include access to a larger market, lowered cost of exports, products become more competitive, more opportunities for growth. Cons include: no protection against cheaper goods produced by foreign countries, local agricultural industry still can’t compete with subsidized U.S. and E.U. markets
How Most Favored Nation Status Lowers Your Shopping Bill
What Is Aggregate Demand?
What Are Tranches?
what are capital goods? tools, buildings, machinery, equipment, vehicles
What Are Capital Goods?
European in restaurant
How the OECD Can Help You
a couple that understands financial markets
Make Financial Markets Work for You
Young freelancing couple looks at computer in home office
Investing in Junk Bonds
Image shows a man buying food at a mcdonalds. Text reads: "What is purchasing power parity? A theoretical exchange rate that allows you to buy the same amount of goods and services in every country; Government agencies use it to compare the output of countries that use different exchange rates; Example: If you want to live cheap, and you can move to any country in the world, compare prices of a Big Mac"
What Is Purchase Power Parity?
More in U.S. & World Economies:
US Economy World Economy Economic Theory