> Glossary

Fiscal Policy Definitions (8) Stock Market Definitions (27) Monetary Policy Definitions (15) Trade Policy Definitions (9) Real Estate Definitions (15)

Adjustable Rate Mortgage
A definition of adjustable rate mortgages, and how adjustable rate mortgages work.

Asset-backed Commercial Paper
Asset-backed Commercial Paper (ABCP) is short-term corporate debt that is backed by assets such as real estate, autos and other commercial assets.

Base Budget
A definition of the Base Budget, which is that portion needed to keep the department in readiness year after year.

Bear Market
The definition of a bear market in the stock market.

Beige Book
The Federal Reserve's description of the US economy.

Bilateral Trade Agreements
Definition of a bilateral trade agreements, which benefit both parties.

Budget Deficit
When a government spends more than it makes.

Bull Market
Definition of the bull market in a stock market.

Call Option
Definition of a call option, which gives the holder the option to buy a stock at a certain price.

Capital
A definition that shows how capital is a key component of supply.

CDO's (Collateralized Debt Obligations)
CDO's, or Collateralized Debt Obligations, are sophisticated financial tools that repackage individual loans into a product that can be sold on the secondary market.

Comparative Advantage
What makes a country more competitive.

Contractionary Monetary Policy
Definition of contractionary monetary policy and how the Federal Reserve uses it.

Conventional Mortgages
Definition of conventional mortgages, which include fixed rate and adjustable rate mortgages.

Core Inflation
Core inflation is the inflation measurement without volatile food and energy prices.

Current Account Deficit
What happens when the U.S. consumer buys more than U.S. companies sell.

Deregulation
Deregulation is when the government seeks to allow competition in highly regulated industries, usually some form of utility.

Derivatives
A definition of how financial derivatives, such as options and futures contracts, are used in to trade in the stock market.

Discount Rate
The Federal Reserve Discount Rate is the rate that the Fed charges banks to borrow from its discount window.

Discount Window
The Federal Reserve's discount window is how the Fed lends money overnight to banks.

Discretionary Spending
The part of the U.S. budget that is negotiated between Congress and the President each year.

Diversified Investment
The definition of a diversified investment, and its advantages.

Dumping
A definition of the trade violation known as dumping.

Economy of Scale
Reducing cost per unit due to large size.

Employment
How the U.S. Government defines employment.

Expansionary Monetary Policy
A definition of expansionary monetary policy and how the Federal Reserve uses it.

Fed Funds Rate
A definition of the most important interest rate in the world.

Fed Funds
Fed funds, or Federal Reserve funds, are loans that banks make to each other to meet reserve requirements at Federal Reserve Banks.

FIRREA
Explains what is FIRREA, or the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Fiscal Policy
A definition of fiscal policy and how it is different from monetary policy.

Fiscal Year
A definition of the U.S. Government's fiscal year, which runs from October 1 through September 30th of that same calendar year.

Fixed Rate Mortgage
Definition of fixed rate mortgages, how fixed rate mortgages work, and how they differ from other mortgages.

Futures Contracts
A definition of futures contracts, which includes commodities futures contracts and oil futures contracts.

GDP
Gross Domestic Product. How big the economy is.

Goldilocks Economy
Just like Goldilocks' porridge - an economy that is neither too hot nor too cold.

Gross National Product
Gross National Product is Gross Domestic Product plus overseas investments by U.S. residents minus U.S. investments by overseas residents.

Individual Investor
Definition of the individual investor.

Inflation
An easy-to-use definition of inflation.

Interest Rate
A definition of interest rate, including central bank interest rates.

Interest-only Loan
A definition of an interest-only loan, in which the borrower's monthly payment goes only towards the interest.

Inverted Yield Curve
A definition of the inverted yield curve, why it is happening, why it can often forecast a recession, and why that might not be true this time.

Irrational Exuberance
Why investors create a stock market bubble.

Labor
A definition that shows how labor is a key component of supply.

Lagging Indicator
A statistic that follows the economic trend.

Large Cap
A definition of large cap stocks, which represent the largest companies.

Leading Indicator
A statistic that precedes an economic trend.

LIBOR Rates
The LIBOR rate is that interest rate that banks charge each other.

Liquidity
Liquidity is the amount of capital available for investment.

Mandatory Spending
The part of the U.S. Budget that is mandated by entitlement programs.

Market Capitalization
An easy-to-use definition of a company's market capitalization, or market cap.

Mid Cap
A definition of mid cap stocks, which represent mid size companies.

Monetary Policy
A definition of monetary policy and how it is different from fiscal policy.

Monetary Report
The Federal Reserve's semi-annual report to Congress on the state of the U.S. economy.

Monopoly
Definition of monopoly and how monopolies used to threaten the U.S. economy by restricting free trade.

Mortgage
A mortgage is a specialized loan to make homeownership more accessible.

Mortgage-backed Securities
Defines how mortgages are packaged to be sold on the secondary market.

Most Favored Nation Status
Definition of Most Favored Nation trading status.

Multilateral Trade Agreements
The definition of a multilateral trade agreements, which benefit everyone.

Natural Unemployment Rate
Natural unemployment rate is a certain amount of unemployment due to job turnover, mismatch between jobs and skills, and minimum wage laws, for example.

New Home Sale
The first step in buying a new home.

New Home Start
When ground is broken on a new home.

OECD
An association of 30 developed countries.

Off-Budget
A definition of off-budget revenue, which is primarily "borrowed" from the Social Security Trust Fund.

OPEC
Organization of Petroleum Exporting Countries

Options
A defintion of options, including stock options, futures options and options trading.

Outperform the Market
Definition of outperform the market and how it relates to the stock market.

Pension Funds
A definition of pension funds and why they are important to the stock market.

Price Fixing
Definition of price fixing, and how price fixing affects the U.S. economy

Prime Interest Rate
The prime interest rate is what banks charge their best customers.

Private Equity - Private Equity Firms - Private Equity Funds
Private equity is private ownership, as opposed to stock ownership, of a corporation.

Profit Margin
A definition of profit margin and how it relates to profit.

Profit
Definition of profit and why it is important to the US economy.

Purchasing Power Parity
Understand purchasing power parity and you can compare the standard of living in one country with another.

Put Option
Definition of a put option, also known as a put, which is an option to sell a share of stock.

Real Estate
A broad term which includes residential, commercial, industrial and vacant land.

Recession
When a good economy turns bad.

Reserve Requirement
The Federal Reserve requires that banks keep a certain amount of cash on hand each night.

Savings and Loans
Savings and loans (S&L's) are special types of banks created to promote home ownership.

Secondary Mortgage Market
How mortgages are sold by the banks to investors.

Securities
Securities is a term used to loosely describe stocks, bonds and any other ownership investment.

Small Cap
A definition of small cap stocks, which represent smaller companies.

Stagflation
Stagflation is when the economy is stagnant while inflation is rising.

Stock Market Correction
The difference between a stock market correction and a stock market crash.

Stock Market Crash
What makes a stock market crash different from a stock market decline.

Stock Market
A broad definition of the stock market.

Stocks
How a stock is a share of ownership of a corporation.

Strategic Petroleum Reserves
A definition of the US governement's Strategic Petroleum Reserves aka US oil reserves.

Subprime Mortgages
A definition of subprime mortgages, which are granted to borrowers with less than perfect credit.

Tariff
Definition of tariffs and custom taxes which are levied on imported goods.

Trade Deficit
What happens when a country consumes more than it produces.

Trade Promotion Authority
The President's Trade Promotion Authority allows the President to negotiate trade agreements efficiently.

Trading Sideways
How to know when the stock market is trading sideways.

Unemployment
How the U.S. Government defines unemployment.

Unfunded Mandate
A definition of unfunded mandates and how they are declining throught UMRA.

Unilateral Trade Agreements
A definition of unilateral trade agreements, which benefit only one side.

Volatility
Definition of volatility, or risk, of a stock or the stock market.

Year-Over-Year
Comparing statistics year-over-year gives a better sense of the trend than month to month or week to week.