balance of trade
The part of a nation's balance of payments regarding the import and export of merchandise goods. If exports exceed imports, the trade balance is in a surplus; if imports exceed exports, the trade balance is in a deficit.
confidence in currency
When a medium of exchange is widely accepted, available and holds its value over time.
credit availability
The value of funds available for loans. Readily available credit allows entrepreneurs to invest in capital and innovations.
demographics
Characteristics of a population. Economists and sociologists use demographics to study patterns of a group within a population that has similar traits. For example, if country X has an increase in the number of women in the labor force, more labor hours are available to produce goods and services. This may boost country X's productive capacity and consequently its GDP. Another example is income distribution. Some economists argue that countries with a more equal income distribution tend to grow faster than those with large disparities in income. When studying demographics, it is important to consider whether demographics are a cause or result of economic growth.
externality
A type of market failure that occurs when an economic transaction generates a cost that is not paid by the buyer or seller, but by someone outside the transaction, or society as a whole. Examples include pollution and traffic congestion. There are also positive externalities, such as a technological advance discovered by one business, which other business can then use.
fiscal policy
Government policy regarding taxation and spending. Fiscal policy is made by Congress and the Administration.
globalization
The generalized expansion of international economic activity which includes increased international trade, growth of international investment (foreign investment) and international migration, and increased creation of technology among countries. Globalization is the increasing world-wide integration of markets for goods, services, labor, and capital.
Gross Domestic Product (GDP)
Total value of goods and services produced in a country.
inflation
A rise, over time, in the average level of prices.
infrastructure
The physical base on which productive activity takes place. Infrastructure includes schools, roads, energy plants, street lights and sewer systems.
intellectual property rights
The right of an individual or a group to patent, copyright or in some other manner to claim ideas, creations, inventions or discoveries as one's own. Such protection provides an environment for entrepreneurs to safely market their products and services.
monetary policy
Central Bank actions to influence the availability and cost of money and credit, as a means of helping to promote economic growth and price stability. Tools of monetary policy include open market operations, the discount rate and reserve requirements.
price stability
An economy with relatively consistent values of goods and services from year to year, all things being equal. When price levels are rapidly fluctuating, businesses and consumers don't receive clear signals about the buying power of the currency or the relative value of products available to purchase.
property rights
Provide the rules of ownership and trade so consumers and businesses know what they can and can't do in the marketplace.
public good
A good that generates a social benefit that everyone can enjoy and that no one can be deprived of. Examples include national defense and clean air.
real GDP
GDP (gross domestic product) adjusted for inflation. Real GDP provides the value of GDP in constant dollars, which is used as an indicator of the volume of the nation's output.
regulation
The limitations and guidelines that governments place on industry and individuals.
savings and consumption rates
The amount of an individual's income that one saves vs. the amount that one spends on goods and services.
taxes
The means by which governments raise revenue. Different methods of taxation affect the market in varying degrees. For example, a progressive income tax has a different effect on the economy than a gas or capital gains tax.
trade policy
Indicates a country's level of freedom in trading with other countries. Tariffs may be added to goods and services to collect government revenue or to encourage purchases of one product over another (typically a domestically produced one over an imported one).