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Words & Terms related to Economics

Enhance your vocabulary by Learning these Words Related to Economics

Words & Terms related to Economics


Economics is one area that dictates your understanding of the financial dealings in the world. Amassing a word-bank pertaining to economics will no doubt ensure that you understanding the world of finance, business and economics a lot better. Through this post, we illustrate a list 15 of commons words for the area:

  • Balance of payments: The total of all the money coming into a country from abroad less all of the money going out of the country during the same period.
  • Business Cycle: The cycles of boom and bust. The long-run pattern of economic growth and recession.
  • Capital: Material wealth used or available for use in the production of more wealth.
  • Deflation: A sustained reduction in the general price levels. Deflation is often accompanied by declines in output and employment and is distinct from 'disinflation', which refers to a reduction in the rate of inflation.
  • Depreciation: A fall in the value of an asset or a currency; the opposite of appreciation.
  • Economies of scale: Bigger is better. In many industries, as output increases, the AVERAGE cost of each unit produced falls. One reason is that overheads and other FIXED COSTS can be spread over more units of OUTPUT. However, getting bigger can also increase average costs because it is more difficult to manage a big operation, for instance?
  • Exchange rate: The price at which one currency can be converted into another.
  • Factors of production: The ingredients of economic activity: land, labour, capital and enterprise.
  • Foreign direct investment: Investing directly in production in another country, either by buying a company there or establishing new operations of an existing business.
  • GDP: Gross domestic product, a measure of economic activity in a country. It is calculated by adding the total value of a country's annual output of goods and services. GDP = private consumption + investment + public spending + the change in inventories + (exports - imports).
  • GNP: Short for gross national product, another measure of a country's economic performance. It is calculated by adding to GDP the income earned by residents from investments abroad, less the corresponding income sent home by foreigners who are living in the country.
  • Hedge funds: A fund, usually used by wealthy individuals and institutions, which is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, arbitrage, and derivatives.
  • Inflation: Persistent increase in the general level of prices. It can be seen as a devaluing of the worth of money.
  • Paid-Up Capital: That part of the issued capital of a company that has been paid up by the shareholders.
  • Venture capital: Money made available for investment in innovative enterprises or research, especially in high technology, in which both the risk of loss and the potential for profit may be considerable. Also called risk capital.
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