Search Council for Economic Education's full glossary for terms and definitions

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Bait and Switch

The action (generally illegal) of advertising goods that are an apparent bargain (the bait) with the intention of inducing customers to buy more expensive items (the switch), on the pretext that the advertised item is no longer available.

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 Payments Deficit

An imbalance in a nation's balance of payments where more currency is flowing out of the country than is flowing in. This unequal flow of currency is considered unfavorable and can lead to a loss of foreign currency reserves.

Balance of Payments Surplus

An imbalance in a nation's balance of payments in which more currency is flowing into the country than is flowing out. This unequal flow of currency is considered favorable and can lead to an increase in foreign currency reserves.

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 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

A financial institution that provides various products and services to its customers, including checking and savings accounts, loans and currency exchange.

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 from 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).

Banking

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.

Bankruptcy

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.

Barter

Trading a good or service directly for another good or service, without using money or credit.

Bear/bear market

Benefit

Monetary or non-monetary gain received because of an action taken or a decision made.

Benefits and Costs

Benefits and Costs Analysis

Benefits-Received Principle

The belief that people should be taxed according to the benefits they receive from the good or service the tax supports. The gasoline tax is an example.

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.

Bond

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.

Bond fund

Bond rating

Borrow

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.

Borrower

An individual who has received and used something belonging to somebody else, with the intention of returning or repaying it--often with interest in the case of borrowed money.

Brand

A trade name used to identify a product produced by a particular company, distinguishing it from similar products produced by competitors.

Broker

Budget

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 Surplus

Refers to national budgets; occurs when government income is greater than government spending in a given year.

Bull/bull market

Business

Any activity or organization that produces or exchanges goods or services for a profit.

Business Cycle

Business Cycles

Fluctuations in the overall rate of national economic activity with alternating periods of expansion and contraction; these vary in duration and degrees of severity; usually measured by real gross domestic product (GDP).

Business Plan

A description of an enterprise including its name, its goals and objectives, the product(s) sold and distributed, the work skills needed to produce those products, and the marketing strategies used to promote them.

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.

Buying on margin