Economics Glossary

Plain-language definitions of key economics terms. Every entry is written for clarity, not jargon, and connected to real data from the Federal Reserve and BLS.

B C D F G H I L M O P Q R S T U Y

B

Balance of Trade

What Is the Balance of Trade? The balance of trade is the difference between the total value of a country’s […]

Bond

What Is a Bond? A bond is a loan that an investor makes to a borrower, usually a government or […]

C

Compound Interest

What Is Compound Interest? Compound interest is the process of earning interest not just on your original amount of mone

Consumer Confidence

What Is Consumer Confidence? Consumer confidence is a measure of how optimistic or pessimistic everyday people feel abou

CPI (Consumer Price Index)

What Is the Consumer Price Index (CPI)? The Consumer Price Index, or CPI, is a measurement that tracks how much [&hellip

D

Deflation

What Is Deflation? Deflation is a general decrease in the prices of goods and services across an economy over time. [&he

Depression

What Is a Depression? A depression is a severe, long-lasting downturn in economic activity that is significantly worse t

Disinflation

What Is Disinflation? Disinflation is a slowdown in the rate at which prices are rising. It is not the same […]

F

Federal Funds Rate

What Is the Federal Funds Rate? The federal funds rate is the interest rate that banks charge each other for […]

Fiscal Policy

What Is Fiscal Policy? Fiscal policy refers to the decisions a government makes about how much to spend and how [&hellip

G

GDP

What Is GDP? GDP, or Gross Domestic Product, is the total value of all goods and services produced within a […]

H

Housing Starts

What Are Housing Starts? Housing starts measure the number of new residential construction projects that have broken gro

Hyperinflation

What Is Hyperinflation? Hyperinflation is an extreme and rapid rise in prices across an economy, typically defined as mo

I

Inflation

What Is Inflation? Inflation is the gradual increase in prices across an economy over time, which means each dollar you

Interest Rate

What Is an Interest Rate? An interest rate is the cost of borrowing money, expressed as a percentage of the […]

L

Labor Force Participation Rate

What Is the Labor Force Participation Rate? The labor force participation rate is the percentage of the working-age popu

M

M2 Money Supply

What Is M2 Money Supply? M2 Money Supply is a broad measure of all the money circulating in an economy, […]

Monetary Policy

What Is Monetary Policy? Monetary policy refers to the actions a central bank takes to manage the amount of money [&hell

O

Opportunity Cost

What Is Opportunity Cost? Opportunity cost is the value of the next best thing you give up whenever you make […]

P

Price Elasticity

What Is Price Elasticity? Price elasticity measures how much the quantity of a good or service that people buy changes [

Prime Rate

What Is the Prime Rate? The prime rate is a benchmark interest rate that banks use as a starting point […]

Purchasing Power

What Is Purchasing Power? Purchasing power refers to how much you can actually buy with a given amount of money. [&helli

Q

Quantitative Easing

What Is Quantitative Easing? Quantitative easing (often called “QE”) is a monetary policy tool where a central bank, lik

R

Real vs. Nominal

What Is the Difference Between Real and Nominal? In economics, nominal refers to a value measured in current dollars, wh

Recession

What Is a Recession? A recession is a significant decline in economic activity that typically lasts for at least several

S

Stagflation

What Is Stagflation? Stagflation is an economic condition where high inflation and high unemployment occur at the same t

T

Trade Deficit

What Is a Trade Deficit? A trade deficit occurs when a country imports more goods and services than it exports. [&hellip

Treasury

What Is a Treasury? A Treasury is a debt security issued by the United States federal government to borrow money [&helli

U

Unemployment Rate

What Is the Unemployment Rate? The unemployment rate measures the percentage of people in the labor force who do not [&h

Y

Yield Curve

What Is the Yield Curve? The yield curve is a line on a chart that shows the interest rates paid […]

All glossary entries are AI-assisted and human-reviewed. For educational and informational purposes only.