Common Terms

When reading economic news and reports, you will encounter some words you’re not familiar with. Below are a few common terms that you need to understand in order to read financial news and understand what’s going on in the economy.

Photo by Pixabay on Pexels.com
Common Terms

CENTRAL BANK – government entity that decides monetary policy

CONSUMER GOODS – products available for use or consumption by customers

DEFLATION – decrease of general prices in an economy

FEDERAL RESERVE – the United States’ central bank

GDP – total value of goods and services produced in a certain area

GOVERNMENT SPENDING – purchases of goods and services for the public, financed by taxes

INFLATION – increase of general prices in an economy

INTEREST RATE – costs associated with borrowing money as a percentage of the loan; in savings, interest is the amount paid on money deposited

MACROECONOMIC – focus on country and government decisions, affecting things overall

MICROECONOMIC – focus on individuals and business decisions, affecting things on a small scale

MONETARY POLICY – how much money is available for spending, controlled by central banks

RAW MATERIALS – basic materials that are used to create finished goods

RECESSION – general decline in economic activity, typically two quarters of GDP decline

TRADE – buying and selling of goods and services, can occur locally and globally

UNEMPLOYMENT – people who are jobless, looking for a job, and are available to work