Glossary
A
absolute advantage the ability to produce more of a given product using a given amount of resources (p. 443)
aggregate demand the amount of goods and services in the economy that will be purchased at all possible price levels (p. 307)
aggregate supply the total amount of goods and services in the economy available at all possible price levels (p. 307)
annual percentage rate (APR) a finance charge expressed as an annual rate (p. 514)
antitrust laws laws that encourage competition in the marketplace (p. 173)
appreciation an increase in the value of a currency (p. 459)
appropriations bill a bill that sets money aside for specific spending (p. 389)
arable suitable for producing crops (p. 480)
arbitration a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides (p. 234)
articles of partnership a partnership agreement (p. 191)
assets money and other valuables belonging to an individual or business (p. 192)
authoritarian requiring strict obedience to an authority, such as a dictator (p. 35)
automatic stabilizer a government program that changes automatically depending on GDP and a person's income (p. 399)
B
balanced budget budget in which revenues are equal to spending (pp. 376, 403)
balance of trade the relationship between a nation's imports and exports (p. 462)
bank an institution for receiving, keeping, and lending money (p. 250)
bank holding company a company that owns more than one bank (p. 421)
bank run widespread panic in which great numbers of people try to redeem their paper money (p. 252)
barrier to entry any factor that makes it difficult for a new firm to enter a market (p. 153)
barter the direct exchange of one set of goods or services for another (p. 243)
bear market a steady drop in the stock market over a period of time (p. 290)
black market a market in which goods are sold illegally (p. 142)
block grant federal funds given to states in lump sums (p. 350)
blue-collar worker someone who works in an industrial job, often in manufacturing, and who receives wages (p. 231)
Board of Governors the seven-member board that oversees the Federal Reserve System (p. 416)
bond a formal contract to repay borrowed money with interest at fixed intervals (pp. 197, 507)
brokerage firm a business that specializes in trading stocks (p. 287)
budget a plan for saving and spending (p. 502)
budget deficit a situation in which the government spends more than it takes in (p. 403)
budget surplus a situation in which the government takes in more than it spends (p. 403)
bull market a steady rise in the stock market over a period of time (p. 290)
business association nonprofit organization that promotes collective business interests for a city, state, or other geographical area, or for a group of similar businesses (p. 204)
business cycle a period of macroeconomic expansion followed by a period of contraction (pp. 57, 310)
business franchise a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area (p. 201)
business license authorization to start a business issued by the local government (p. 186)
business organization an establishment formed to carry on commercial enterprise (p. 185)
C
call option the option to buy shares of stock at a specified time in the future (p. 288)
capital any human-made resource that is used to create other goods or services (p. 4)
capital budget budget for major capital, or investment, expenditures (p. 375)
capital deepening process of increasing the amount of capital per worker (p. 320)
capital gain the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller (pp. 286, 508)
capital loss the difference between a lower selling price and a higher purchase price, resulting in a financial loss for the seller (p. 286)
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