Economics, often regarded as the backbone of society, shapes the way we live, work, and interact with one another. From the intricate mechanisms of supply and demand to the complex workings of global financial markets, understanding key economics vocabulary is essential in navigating the ever-changing landscape of money, trade, and resources. In this article, we will explore a comprehensive list of economics vocabulary words, delving into their meanings and significance. From terms like “budget” and “investment” to “inflation” and “deficit,” we will unravel the intricacies of economic principles and shed light on the forces that drive our world. Join us on this enlightening journey as we delve into the realm of economics and expand our understanding of the forces that shape our economic systems.
List of basic economic terms and definitions
| Word | Meaning |
|---|---|
| Appreciate | To recognize the value or significance of something |
| Bankrupt | Unable to pay debts and liabilities |
| Bankruptcy | The state of being declared legally insolvent |
| Budget | A plan of income and expenses for a specific period |
| Capital | Financial assets or the city serving as a seat of government |
| Cash | Physical currency or money in hand |
| Competition | The act of striving against others for a prize or goal |
| Consumer | A person who purchases and uses goods or services |
| Consumer goods | Products intended for personal use or consumption |
| Cost | The amount of money required to purchase or produce something |
| Crash | A sudden and severe economic decline or failure |
| Credit | The ability to obtain goods or services before payment |
| Currency | The system of money in general use in a particular country |
| Debt | Money owed to another person or entity |
| Deficit | The amount by which expenses exceed income or funds |
| Deposit | A sum of money placed or kept in a bank account |
| Depression | A long-term economic downturn characterized by high unemployment |
| Economics | The study of how societies produce and distribute goods and services |
| Economy | The system of production, distribution, and consumption of goods and services |
| Finance | The management of money, banking, investments, and credit |
| Fiscal | Relating to government revenue, spending, and debt |
| Fund | An amount of money saved or allocated for a particular purpose |
| Global | Relating to the whole world or international scope |
| Inflation | A sustained increase in the general price level of goods and services |
| Interest | A fee paid for borrowing money or the return on investment |
| Invest | To allocate money or resources with the expectation of future benefits |
| Investment | The action or process of investing money or resources |
| Loan | A sum of money borrowed and expected to be repaid |
| Loss | The negative difference between revenue and expenses |
| Market | A place where goods or services are bought and sold |
| Profit | The financial gain obtained from a business or investment |
| Recession | A significant decline in economic activity |
| Savings | Money set aside for future use or emergencies |
| Spending | The act of using money to buy goods or services |
| Stock | A share representing ownership in a company |
| Stock market | A market where securities are bought and sold |
| Tax | A compulsory financial charge imposed by the government |
| Trade | The buying and selling of goods and services |
| Value | The worth or importance of something |
| Withdraw | To take out or remove money from a bank account |
Words related to economics A-Z
| Word | Meaning |
|---|---|
| absolute advantage | the ability to produce a good or service more efficiently than other producers |
| annual percentage rate | the annualized interest rate charged on loans or credit |
| authoritarian socialism | a system where the government has centralized control over the economy and society |
| bankruptcy | a legal status of being unable to repay debts |
| bear market | a market condition characterized by falling prices and pessimism among investors |
| bull market | a market condition characterized by rising prices and optimism among investors |
| business cycle | the fluctuations in economic activity consisting of expansion, peak, contraction, and trough |
| capital good | a physical asset used in the production of other goods and services |
| capital resource | a resource used to produce goods and services |
| capitalism | an economic system based on private ownership of the means of production and free market competition |
| command economy | an economic system in which the government controls the production and distribution of goods and services |
| common stock | a type of ownership in a corporation that gives shareholders voting rights and a share in profits |
| communism | a political and economic ideology advocating for a classless society where all property is publicly owned |
| comparative advantage | the ability of a country to produce a good or service at a lower opportunity cost than other countries |
| conglomerate combination | the merger or acquisition of companies operating in different industries |
| consumer | a person or organization that uses goods and services |
| contraction | a phase in the business cycle characterized by a decline in economic activity |
| corporations | legally recognized entities separate from their owners, with rights and liabilities of their own |
| credit rating | an evaluation of the creditworthiness of an individual or a corporation |
| customs duty | a tax imposed on goods when they are transported across international borders |
| cyclical unemployment | unemployment that occurs due to fluctuations in the business cycle |
| deflation | a decrease in the general price level of goods and services |
| demand side economics | an approach to economic policy that focuses on stimulating demand to achieve economic growth |
| democratic socialism | a political ideology advocating for a combination of democratic political systems and socialist economic principles |
| depression | a severe and prolonged economic downturn characterized by high unemployment and low production |
| differentiate | to distinguish or make a distinction between things |
| discount rate | the interest rate used to calculate the present value of future cash flows |
| diversification | the strategy of investing in a variety of assets to reduce risk |
| easy-money policy | a monetary policy that aims to stimulate economic growth by increasing the money supply and lowering interest rates |
| economics | the study of how societies allocate scarce resources to produce, distribute, and consume goods and services |
| embargo | a government-imposed restriction on trade with another country |
| excise tax | a tax imposed on specific goods or services, often related to their production or consumption |
| expansion | a phase in the business cycle characterized by an increase in economic activity |
| externality | a cost or benefit that affects a party who did not choose to incur that cost or benefit |
| factor of production | an input used in the production of goods or services, including land, labor, capital, and entrepreneurship |
| financial investment | the allocation of funds to assets or projects with the expectation of generating income or profit |
| fiscal policy | the use of government spending and taxation to influence the economy |
| fixed expense | a cost that does not change with the level of production or sales |
| flexible expense | a cost that varies with the level of production or sales |
| franchise | a legal and commercial relationship between the owner of a trademark or brand and an individual or group |
| free trade | the international trade without restrictions or barriers such as tariffs or quotas |
| frictional unemployment | unemployment that occurs due to temporary transitions or job search activities |
| Gross Domestic Product | the total value of all goods and services produced within a country’s borders in a specific time period |
| Gross National Product | the total value of all goods and services produced by the residents of a country, regardless of location |
| horizontal combination | the merger or acquisition of companies operating in the same industry |
| human resource | the people who make up the workforce of an organization or economy |
| hyperinflation | extremely high and typically accelerating inflation |
| import quota | a limit on the quantity or value of goods that can be imported into a country |
| incentive | a motivating factor that influences human behavior |
| inflation rate | the rate at which the general level of prices for goods and services is rising |
| interest | the cost of borrowing money or the return on investment |
| law of demand | the economic principle that states as |
| —————————— | —————————————- |
| law of supply | the economic principle that states as the price of a good or service increases, the quantity supplied also increases |
| leading indicators | economic factors that change before the overall economy begins to follow a particular pattern or trend |
| liquidity | the ease with which an asset or security can be converted into cash without affecting its market price |
| macroeconomics | the branch of economics that studies the behavior and performance of an economy as a whole |
| market economy | an economic system where decisions regarding production, investment, and distribution are based on supply and demand |
| maturity | the date at which a financial instrument or investment becomes due for payment or redemption |
| merger | the combining of two or more companies into a single company |
| microeconomics | the branch of economics that studies the behavior and decision-making of individual economic units such as households and firms |
| mixed economy | an economic system that combines elements of both a market economy and a command economy |
| monetary policy | the use of interest rates, money supply, and other monetary tools by a central bank to control the economy |
| monopolistic competition | a market structure characterized by many firms selling differentiated products |
| monopoly | a market structure where there is only one seller of a particular product or service |
| municipal bonds | bonds issued by state or local governments to finance public projects |
| NAFTA (North American Free Trade Agreement) | an agreement between Canada, Mexico, and the United States to eliminate trade barriers |
| natural resource | resources derived from nature, such as minerals, forests, water, and land |
| nonprice competition | competition between firms based on factors other than price, such as product quality or marketing |
| oligopoly | a market structure characterized by a small number of large firms dominating the market |
| partnerships | a legal form of business organization where two or more individuals share the ownership and profits |
| peak | the highest point in the business cycle, representing the end of an expansion before a contraction begins |
| perfect competition | a market structure characterized by a large number of small firms producing identical products |
| preferred stock | a type of ownership in a corporation that has a higher claim on assets and earnings than common stock |
| prime rate | the interest rate that commercial banks charge their most creditworthy customers |
| principal | the original sum of money invested or lent |
| producer | a person or organization that creates goods or services |
| progressive tax | a tax system in which the tax rate increases as the taxable amount increases |
| proportional tax | a tax system in which the tax rate remains constant as the taxable amount increases |
| protectionism | the economic policy of restraining trade by imposing tariffs, quotas, or other barriers on imported goods |
| public good | a good or service that is non-excludable and non-rivalrous, meaning it is available to all and the consumption by one does not diminish its availability to others |
| real investment | investment in physical assets such as machinery, equipment, and infrastructure |
| recession | a significant decline in economic activity, usually characterized by a contraction in GDP |
| regressive tax | a tax system in which the tax rate decreases as the taxable amount increases |
| resource | a source or supply from which a benefit is produced |
| savings rate | the proportion of disposable income that individuals save rather than spend |
| seasonal unemployment | unemployment that occurs due to seasonal variations in demand for certain industries or occupations |
| sole proprietorship | a business owned and operated by a single individual |
| stock | a share of ownership in a corporation |
| structural unemployment | unemployment that occurs due to a mismatch between the skills of workers and the requirements of available jobs |
| subsidiary | a company that is owned or controlled by another company, called the parent company |
| supply side economics | an economic theory that emphasizes the importance of increasing the supply of goods and services to stimulate economic growth |
| tax rate | the percentage at which an individual or corporation is taxed |
| tight-money policy | a monetary policy that aims to reduce inflation by reducing the money supply and increasing interest rates |
| time deposit | a deposit held in a financial institution for a fixed period with a specified interest rate |
| trade barrier | a government-imposed restriction that limits international trade |
| traditional economy | an economic system in which customs, traditions, and rituals determine the production and distribution of goods and services |
| unemployment rate | the percentage of the labor force that is unemployed and actively seeking employment |
| vertical combination | the merger or acquisition of companies operating at different stages of the production process |