Essential Vocabulary  Essential Vocabulary 

Economics and Personal Finance  Economics and Personal Finance 

   
Supply and Demand  Supply and Demand 
Sunk Cost  Sunk Cost 
Inflation  Inflation 
Invisible Hand  Invisible Hand 
Tragedy of the Commons  Tragedy of the Commons 
Opportunity Costs  Opportunity Costs 
Comparative Advantage  Comparative Advantage 
Cost-Benefit Analysis  Cost-Benefit Analysis 
Adam Smith  Adam Smith 
Banks  Banks 
Credit Unions  Credit Unions 
Capital  Capital 
Capital Gains  Capital Gains 
Commodity  Commodity 
Credit  Credit 
Debt  Debt 
Deficit  Deficit 
Equilibrium  Equilibrium 
Gross Domestic Product  Gross Domestic Product 
Interest  Interest 
Mutual Fund  Mutual Fund 
Profit  Profit 
Interest Rate  Interest Rate 
Recession  Recession 
Recovery  Recovery 
Savings  Savings 
Stock Market  Stock Market 
Stocks  Stocks 
Tariff  Tariff 
Treasury Bills  Treasury Bills 
Bond  Bond 
   
 
 
 
 
 
 
Essential Vocabulary  Essential Vocabulary 
Economics and Personal Finance  Economics and Personal Finance 
   
Supply and Demand: the amount of a commodity,  Supply and Demand: the amount of a commodity, 
product, or service available and the desire of buyers for it,  product, or service available and the desire of buyers for it, 
considered as factors regulating its price  considered as factors regulating its price 
   
Sunk Cost: a cost that an entity has incurred, and which  Sunk Cost: a cost that an entity has incurred, and which 
it can no longer recover by any means.  it can no longer recover by any means. 
   
Inflation: a general increase in prices and fall in the  Inflation: a general increase in prices and fall in the 
purchasing value of money. purchasing value of money.
   
Invisible Hand: metaphor for how, in a free market  Invisible Hand: metaphor for how, in a free market 
economy, self-interested individuals operate through a  economy, self-interested individuals operate through a 
system of mutual interdependence to promote the general  system of mutual interdependence to promote the general 
benefit of society at large  benefit of society at large 
   
Tragedy of the Commons: economic problem in  Tragedy of the Commons: economic problem in 
which every individual tries to reap the greatest benefit  which every individual tries to reap the greatest benefit 
from a given resource. As the demand for the resource  from a given resource. As the demand for the resource 
overwhelms the supply, every individual who consumes an  overwhelms the supply, every individual who consumes an 
additional unit directly harms others who can no longer  additional unit directly harms others who can no longer 
enjoy the benefits  enjoy the benefits 
   
Opportunity Costs: the loss of potential gain from  Opportunity Costs: the loss of potential gain from 
other alternatives when one alternative is chosen.  other alternatives when one alternative is chosen. 
   
Comparative Advantage: the ability of an  Comparative Advantage: the ability of an 
individual or group to carry out a particular economic  individual or group to carry out a particular economic 
activity (such as making a specific product) more efficiently  activity (such as making a specific product) more efficiently 
than another activity.  than another activity. 
   
Cost-Benefit Analysis: The benefits of a given  Cost-Benefit Analysis: The benefits of a given 
situation or business-related action are summed, and then  situation or business-related action are summed, and then 
the costs associated with taking that action are subtracted.  the costs associated with taking that action are subtracted. 
   
Adam Smith: Father of modern economics, wrote “The  Adam Smith: Father of modern economics, wrote “The 
Wealth of Nations” and the theory of the invisible hand  Wealth of Nations” and the theory of the invisible hand 
   
Banks: a financial establishment that invests money  Banks: a financial establishment that invests money 
deposited by customers, pays it out when required, makes  deposited by customers, pays it out when required, makes 
loans at interest, and exchanges currency.  loans at interest, and exchanges currency. 
   
Credit Unions: a nonprofit-making money cooperative  Credit Unions: a nonprofit-making money cooperative 
whose members can borrow from pooled deposits at low  whose members can borrow from pooled deposits at low 
interest rates.  interest rates. 
   
Capital: wealth in the form of money or other assets  Capital: wealth in the form of money or other assets 
owned by a person or organization for a particular purpose  owned by a person or organization for a particular purpose 
such as starting a company or investing.  such as starting a company or investing. 
   
Capital Gains: a profit from the sale of property or of  Capital Gains: a profit from the sale of property or of 
an investment.  an investment. 
   
   
Commodity: Anything that is bought and sold for  Commodity: Anything that is bought and sold for 
money – including produced goods and services, inputs  money – including produced goods and services, inputs 
(such as capital or raw materials), and even labour.   (such as capital or raw materials), and even labour.  
   
Credit: The ability to purchase something without  Credit: The ability to purchase something without 
immediately paying for it – through a credit card, a bank  immediately paying for it – through a credit card, a bank 
loan, a mortgage, or other forms of credit.  loan, a mortgage, or other forms of credit. 
   
Debt: something, typically money, that is owed or due.  Debt: something, typically money, that is owed or due. 
   
Deficit: When a government, business, or household  Deficit: When a government, business, or household 
spends more in a given period of time than they generate  spends more in a given period of time than they generate 
in income  in income 
   
Equilibrium: a situation in which supply and demand  Equilibrium: a situation in which supply and demand 
are matched and prices stable.  are matched and prices stable. 
   
Gross Domestic Product: the total value of goods  Gross Domestic Product: the total value of goods 
produced and services provided in a country during one  produced and services provided in a country during one 
year.  year. 
   
Interest: money paid regularly at a particular rate for the  Interest: money paid regularly at a particular rate for the 
use of money lent, or for delaying the repayment of a debt.  use of money lent, or for delaying the repayment of a debt. 
   
Mutual Fund: an investment program funded by  Mutual Fund: an investment program funded by 
shareholders that trades in diversified holdings and is  shareholders that trades in diversified holdings and is 
professionally managed  professionally managed 
   
Profit: a financial gain, the difference between the  Profit: a financial gain, the difference between the 
amount earned and the amount spent in buying, operating,  amount earned and the amount spent in buying, operating, 
or producing something.  or producing something. 
   
Interest Rate: Cost of borrowing money expressed as  Interest Rate: Cost of borrowing money expressed as 
a percentage  a percentage 
   
Recession: a period of temporary economic decline  Recession: a period of temporary economic decline 
during which trade and industrial activity are reduced,  during which trade and industrial activity are reduced, 
generally identified by a fall in GDP in two successive  generally identified by a fall in GDP in two successive 
quarters.  quarters. 
   
Savings: The portion of income which is not spent on  Savings: The portion of income which is not spent on 
consumption.   consumption.  
   
Stock Market: A place where shares of joint stock  Stock Market: A place where shares of joint stock 
corporations are bought and sold.   corporations are bought and sold.  
   
Stocks: the capital raised by a business or corporation  Stocks: the capital raised by a business or corporation 
through the issue and subscription of shares.  through the issue and subscription of shares. 
   
Tariff: tax imposed on the purchase of imports. It is  Tariff: tax imposed on the purchase of imports. It is 
usually imposed in order to stimulate more domestic  usually imposed in order to stimulate more domestic 
production of the product in question    production of the product in question   
   
Treasury Bills: a short-dated government security,  Treasury Bills: a short-dated government security, 
yielding no interest but issued at a discount on its  yielding no interest but issued at a discount on its 
redemption price. Matures in one year.  redemption price. Matures in one year. 
   
Bond: Bonds are loans made to large organizations.  Bond: Bonds are loans made to large organizations. 
These include corporations, cities, and governments.   These include corporations, cities, and governments.  
Essential Vocabulary  Essential Vocabulary 
Economics and Personal Finance  Economics and Personal Finance 
Word | Translation  Word | Translation 
Supply and Demand    Supply and Demand   
Sunk Cost    Sunk Cost   
Inflation  Inflation 
Invisible Hand  Invisible Hand 
Tragedy of the Commons  Tragedy of the Commons 
Opportunity Costs  Opportunity Costs 
Comparative Advantage  Comparative Advantage 
Cost-Benefit Analysis  Cost-Benefit Analysis 
Adam Smith  Adam Smith 
Banks  Banks 
Credit Unions  Credit Unions 
Capital  Capital 
Capital Gains  Capital Gains 
Commodity  Commodity 
Credit  Credit 
Debt  Debt 
Deficit  Deficit 
Equilibrium  Equilibrium 
Gross Domestic Product  Gross Domestic Product 
Interest  Interest 
Mutual Fund  Mutual Fund 
Profit  Profit 
Interest Rate  Interest Rate 
Recession  Recession 
Recovery  Recovery 
Savings  Savings 
Stock Market  Stock Market 
Stocks  Stocks 
Tariff  Tariff 
Treasury Bills  Treasury Bills 
Bond  Bond