Economics: comes from the Greek word Oikonomikos, which refers to household management. Economics deals with how we manage our resources, something we do every day.
Commodity: An article or good used in trade or commerce, esp. a product as distinguished from a service.
Goods and Services: Goods are tangible items: furniture, food, books, automobiles. Services are intangible: personal assistance, cleaning, nursing, advising.
Tangible: Any physical object which is real and perceptible. For example, a cup of coffee is readily perceived as such.
Intangible: An object or activity which is not readily perceptible or visualized. For example, a waitress pouring a cup of coffee may not readily be perceived as providing a viable service.
Exchange: Giving a good (commodity) or service (labor) to another and receiving a good (commodity) or service (labor) in return.
Direct Exchange: an exchange of one good/service directly for another. For example, a butcher exchanges a cut of beef for a textbook.
Indirect Exchange: an exchange where a third item is used in the process. For example, a butcher exchanges a cut of beef for an item. He then exchanges that item for a textbook. The item being used serves as a medium of exchange.
Medium of Exchange: something which is used in between, or in the middle of, the actual exchange of goods and services. A medium of exchange can be an effective facilitator of financial transactions.
Money: Any commodity which is used as a medium of exchange and a store of wealth. Diverse commodities such as seashells, iron nails, tobacco, timber, and livestock have all served as money, along with gold and silver.
Money Substitutes: Non-commodity items, such as wooden tokens, strings of beads, and paper currencies. Money substitutes, unlike commodity money, can easily be subdivided into smaller units, making them useful as further facilitators of economic transactions.
Inflation: An increase in the money supply.
Deflation: A decrease in the money supply.
Supply and Demand: The market prices of goods and services are largely determined by the Law of Supply and Demand. A high demand for something in short supply will cause it’s price to rise. A low demand for something in plentiful supply will cause it’s price to fall.
Price Increases: In addition to the Law of Supply and Demand, prices may also rise as a result of inflation. More money in circulation chasing relatively fewer goods and services will bring about an increase of prices and wages.
Price Decreases: In addition to the Law of Supply and Demand, prices may also fall as a result of deflation. Less money in circulation chasing relatively plentiful goods and services will bring about a decrease of prices and wages.
Importance of Economic Definitions: It is most vital to distinguish the difference between money and money substitutes, and to realize that inflation and price increases are not the same thing. Failure to understand the basics can make one vulnerable to government propaganda, the manipulation of consent, and looting of assets by the powers that be.
