Balance of Payments
The record of all transactions (in goods, services, physical and financial assets) between individuals, firms and governments of one country with those in all other countries in a given year, expressed in monetary terms.
Balance of Trade
The part of a nation's balance of payments accounts that deals only with its imports and exports of goods and services. The balance of trade is divided into the balance on goods (merchandise) and the balance on services. If the value of a country's exports of goods and services is greater than its imports, it has a balance of trade surplus. If the value of a country's imports of goods and services is greater than its exports, it has a balance of trade deficit.
Balance of Trade and Balance of Payments
Goods and services produced in one nation and sold in other nations.
Balance Sheet
An itemized statement listing the total assets and total liabilities of a given business to portray its net worth at a given moment in time.
Balanced Budget
A financial plan in which income is equal to expenses.
Bank Account
An arrangement by which a bank holds funds on behalf of a depositor; also, the balance of funds held under such an arrangement, credited to and subject to withdrawal by the depositor.
Bank Reserves
The percentage of a bank's deposits that it keeps on hand, i.e., does not lend out.
Bank Service Charges
Fees paid by bank customers for financial services--for example, check-cashing fees, fees for overdrafts form accounts, fees for using the ATMs of other banks and fees for using bank-issued credit cards.
Bank Statement
A monthly summary providing the status of a depositor's financial accounts (checking and/or savings).
The industry involved with conducting financial transactions. Also, conducting business with a bank, e.g., maintaining a checking or savings account or obtaining a loan.
Barriers to Entry
Factors that restrict entry into an industry and give cost advantages to existing firms. Examples would include the large size of existing firms, control over an essential resource or information, and legal rights such as patents and licenses.
Barriers to Trade
Restrictions on trade such as tariffs, quotas and regulations.
Trading a good or service directly for another good or service, without using money or credit.
Monetary or non-monetary gain received because of an action taken or a decision made.
Benefits of Trade
Benefits of Trade/Comparative Advantage
Trading a good or service for another good or service, or for money.
Blue Chip Stocks
Stocks in large, nationally known companies that have been profitable for a long time and are well-known and trusted.
Board of Governors
The Federal Reserve's governing and monetary policy-making body; consists of seven governors appointed by the President to staggered 14-year terms.
A certificate of indebtedness issued by a government or a publicly held corporation, promising to repay borrowed money to the lender at a fixed rate of interest and at a specified time.
To receive and use something belonging to somebody else, with the intention of returning or repaying it--often with interest in the case of borrowed money.
A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, covering a specific time period.
Budget Deficit
Refers to national budgets; occurs when government spending is greater than government income in a given year. A yearly deficit adds to the public debt.
Budget Deficits and Public Debt
In any given year, the government collects tax revenues and makes expenditures. If taxes collected exceed government expenditures in a given year, the government has a budget surplus. If taxes collected are exactly equal to expenditures in a given year, the government has a balanced budget. If taxes collected are less than the money spent in a given year, the government has a budget deficit. When a budget deficit occurs, the government borrows the money that it needs to finance its expenditures. For example, the U.S. government borrows by issuing Treasury bonds. Public debt refers to the total accumulation of all the annual government deficits and/or surpluses from years past. For example, imagine that at some point in time, the government has no outstanding debt. Then, in the next three years, it has a budget deficit of $100 in the first year, a budget surplus of $50 in the second year and a budget deficit of $80 in the third year. Total public debt would be $130, which is the sum of the yearly deficits and surpluses. Public debt is sometimes called government debt held by the public or just government debt.
Budget Surplus
Refers to national budgets; occurs when government income is greater than government spending in a given year.
Any activity or organization that produces or exchanges goods or services for a profit.
Business Costs and Revenues
Business Cycles
Ups and downs in economic activity over time, often described in terms of expansion, peak, contraction and trough. (See also Expansion, Peak, Contraction, Trough.)
Businesses and Households
Two sectors of the circular flow. Businesses hire resources from households; the payments for these resources represent household income. Households spend their income for goods and services produced by the businesses; household spending represents revenue for businesses.