budget deficit  the shortage that results when government spending is greater than revenue
budget surplus  the excess that results when government spending is less than revenue
business cycle  the recurrent pattern of rising real GDP followed by falling real GDP
centrally planned economy  an economic system in which the government determines what goods and services are produced and the prices at which they are sold
economic efficiency  a situation where no one in society can be made better off without making someone else worse off
externalities  the costs or benefits of a transaction that are borne by someone not directly involved in the transaction
Federal Reserve  the central bank of the United States
fiscal policy  the policy directed toward government spending and taxation
free ride  the enjoyment of the benefits of a good by a producer or consumer without having to pay for them
market imperfection  a lack of efficiency that results from imperfect information in the market place
monetary policy  the policy directed toward the control of the money supply
monopoly  a market structure in which there is a single supplier of a product
private property right  the limitation of ownership to an individual
public choice  the use of economics to analyze the actions and inner workings of the public sector
public goods  goods whose consumption cannot be limited only to the person who purchased the good
rent seeking  the use of resources simply to transfer wealth from one group to another without increasing production or total wealth
technical efficiency  producing at a point on the PPC
transfer payment  the income transferred from one citizen, who is earning income, to another citizen