Economic Terms
The business cycle is the pattern of economic expansion and contraction that occurs over time. It is characterized by four stages: expansion, peak, contraction, and trough.
The consumer price index is the most commonly quoted rate of inflation. CPI is calculated by taking the price of basket of goods and services and is compared to the price it was the year prior to come up with the percent change, or the rate of inflation.
The Federal Funds Rate is an interest rate set by the Federal Open Market Committee (FOMC) to indirectly manage interest rates, inflation, and unemployment. This target rate is the interest rate at which banks borrow and lend their excess reserves to one another overnight.
The Federal Reserve, or the Fed, is the central banking system of the United States. Its key responsibilities are setting monetary policy, providing financial services and promoting stability. Its dual mandate is stabilizing prices and maximizing employment.
Fiscal policy is the use of government spending and tax policies to influence economic conditions.
Gross Domestic Product is the market value of all finished goods and services produced within a nation over a specified period. Nominal GDP is the current USD value of those finished goods and services, while Real GDP adjusts for inflation.
Inflation is the increase in the price of goods and services over time. Inflation is not measured on the price of a single good, but on the overall price level of goods and services in the economy.
Interest rates are the percentage of the principal amount a lender charges a borrower.
Monetary policy is a set of tools that a nation's central bank has to promote sustainable economic growth by controlling the overall supply of money that is available within the economy
The money supply is the total amount of money circulating throughout the economy. M2 is the most commonly quoted money supply, comprising cash, checking account deposits, savings account deposits, certificates of deposit, other short-term saving vehicles, and retirement account balances under $100,000.
A recession is a period of economic downturn in which economic activity declines.
Stagflation occurs when an economy is experiencing high inflation, high unemployment, and a stagnated demand for goods and services.
Supply and demand is a foundational theory in economics that shows the effects of and is affected by the price of a resource.
The unemployment rate (U-3) is the rate of unemployment measuring the number of individuals who are jobless and actively seeking employment, divided by the total number of people in the labor force.

Sign up for our email newsletter

* indicates required