James d. Gwartney

budget: Estimated income and itemized planned expenditures for a time period. 
budget deficit: The amount by which total government spending exceeds total government
revenue during a specific time period, usually one year. 
budget surplus: The amount by which total government spending falls below total
government revenue during a specific time period, usually one year. 
capital formation: The production of buildings, machinery, tools, and other equipment that
will enhance future productivity. The term can also be applied to efforts to upgrade the
knowledge and skill of workers (human capital) and thereby increase their ability to produce in

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the future. 
capital inflow: The flow of expenditures on domestic stocks, bonds, and other assets
undertaken by foreign investors. 
capital investment: Expenditures on the buildings, machinery, tools, and other equipment that
will enhance future productivitycapital market: The broad term for the various marketplaces where investments such as
stocks and bonds are bought and sold. 
capitalism: An economic, political, and social system in which property, business, and
industry are privately owned, directed toward making the greatest possible profits for
successful organizations and people. 
certificates of deposit (CD): A Savings certificate with a fixed maturity date and specified
fixed interest rate, which can be issued in any denomination aside from minimum investment
requirements. Such instruments restrict access to the funds until the maturity date of the
investment. Certificates of Deposit is the term used in the United States. Similar instruments
exist in most countries although the name may differ. In the EU these are known as “Fixed
Rate” or “Fixed Deposit” accounts. 
certification: Confirms the education, training, and other qualifications of an individual.
Unlike licensing, certification does not prohibit noncertified individuals from competing in the