Economics Vocabulary: An A to Z List [with Audio]

In the field of economics, using the correct English terminology for your role is crucial.

It demonstrates your specialized knowledge and proves your dedication to your profession.

This skill enables you to collaborate with international clients or even pursue a career in an English-speaking nation!

This article will teach you 26 fundamental words vital for anyone working in or studying economics, or for those who simply want to discuss economic matters.

English Words for Economics

The definitions given here are simplified versions adapted from more complex explanations found on Wikipedia, Investopedia, and other online business dictionaries to aid comprehension. You can follow the links in the definitions to explore each term in greater detail.

1. Accounts

Accounts are the documented history of all financial activities, covering both payments received and expenses paid, for a business or a person.

Sheila needs to review her accounts to determine if she can purchase the new house.

2. Balance Sheet

A balance sheet is a report detailing a company's assets, liabilities, and shareholder equity at a particular moment. It provides a snapshot of what a company owns and owes, along with the money shareholders have invested.

After reviewing the balance sheet, Arjun concluded the company was not a good investment.

3. Capital Gains Tax (CGT)

Capital gains tax is the tax due on the profit earned from selling a capital asset, such as property or an investment.

Remember to account for the capital gains tax you will owe before you finalize the sale of the old farmhouse.

4. Deflation

Deflation is the opposite of inflation; it describes a decrease in the amount of money circulating in an economy.

The recent deflation, caused by government measures, led to lower prices, but wages also fell.

5. Earnings Per Share (EPS)

Earnings per share is a company's net profit divided by the number of its outstanding shares. EPS is a key indicator of a company's profitability.

Mark's team chose to work for the company due to its rising earnings per share.

6. Financial Year / Fiscal Year

A financial or fiscal year is a 12-month or 52-week period used for preparing financial statements. It may not align with the calendar year. In the U.S., this period is known as a fiscal year and is sometimes referred to as a tax year.

The upcoming fiscal year will start in October 2017 and conclude in September 2018.

7. Golden Rule

The Golden Rule in fiscal policy suggests that over an economic cycle, a government should take on debt to fund investments that will benefit future generations.

Given the poor state of the economy, the public believes the government has ignored the Golden Rule.

8. Half Year

The half-year convention is an accounting practice that assumes new assets are put into service halfway through the year, no matter when they were actually acquired.

We must apply the half-year convention to determine the company's yearly tax obligation.

9. Income Tax

Income tax is a government-imposed tax on the total earnings of individuals and corporations.

The wealthy oil company owner used loopholes in the tax code to avoid paying millions in income tax, all without breaking the law.

10. Joint Account

A joint account is a bank account held in the names of two or more people, where each person can deposit and withdraw funds.

Fed up with sharing a joint account with her ex-husband, Nina opened her own personal bank account well before the divorce was official.

11. Keynesian Economics

Keynesian economics encompasses the theories developed by British economist John Maynard Keynes during the Great Depression, which were detailed in his 1936 book “The General Theory of Employment, Interest, and Money.”

When studying the evolution of economics as a field, be sure to include Keynesian Economics in your research.

12. Liquid Asset

A liquid asset is cash or any other asset that can be rapidly converted into cash without a significant loss of value.

He explained that I must possess sufficient liquid assets to be eligible for a mortgage.

13. Macroeconomics and Microeconomics

Macroeconomics is the analysis of entire economies or economic systems, whereas microeconomics focuses on individual components, such as a single person or company.

To understand broad economic patterns, study macroeconomics. However, for managing a successful business, knowledge of microeconomics is crucial.

14. Net Asset Value (NAV)

The net asset value is calculated as the total value of an entity's assets minus the total value of its liabilities.

Checking a mutual fund's net asset value will help you assess the worth of your investment.

15. Oligopoly

An oligopoly is a market structure controlled by a small number of sellers, resulting in limited competition.

To succeed in an oligopoly, you must monitor competing firms closely and make strategic financial choices.

16. Pay As You Earn (PAYE)

PAYE is a tax collection method where taxes are subtracted directly from your salary before you receive it.

I initially believed the PAYE system would reduce my take-home pay, but it actually simplified my financial management.

17. Quota

A quota is a fixed allocation or limit. In economics, quotas typically refer to restrictions on imports or exports.

The recent change to the import quota is a significant advantage for local suppliers.

18. Real Interest Rate

A real interest rate is the current interest rate provided by a bank, after subtracting the inflation rate.

The bank's advertised interest rate is 5.5%, but with inflation at 2%, the real interest rate is only 3.5%.

19. Shareholder

A shareholder is an individual or entity that owns shares in a corporation.

James recently acquired shares, making him a shareholder in a large corporation.

20. Tax Haven

Simply put, a tax haven is a jurisdiction that imposes minimal or no taxes.

When Jimmy asked about offshore accounts, I suggested he look into tax havens.

21. Unit Trust

A unit trust is a financial entity that gathers money from numerous small investors and invests it collectively in stocks and shares, governed by a trust deed.

If you are new to investing, think about working with a unit trust.

22. Value-added Tax (VAT)

A value-added tax is a consumption tax applied to goods and services at each stage of production or distribution.

Before dining at an expensive restaurant, check their VAT rates to avoid a surprise on your final bill.

23. White Knight

A white knight is a friendly investor or company that rescues a corporation from a hostile takeover by another company.

Patrick Soon-Shiong was seen as a white knight for his investment in Tribune Publishing, preventing a takeover by Gannett Co.

24. X-Efficiency

X-efficiency is the achievement of production at the lowest possible cost. It measures how efficiently companies operate when they face little competitive pressure.

John's small company can't compete with larger firms. The employees are aware of this, leading to less effort and poor x-efficiency.

25. Yield

Yield is the annual return generated from an investment, typically shown as a percentage.

What is the minimum annual yield you anticipate from this investment?

26. Zombie Fund

A zombie fund is an informal term for a closed life insurance fund that is no longer accepting new policies but continues to manage existing ones for profit.

It's best to avoid Joe's life insurance company as it operates as a zombie fund.

Resources for Improving Your Economics Vocabulary

Here are some additional methods to enhance your English economics vocabulary:

• Enroll in an online course. Websites like Coursera, Open Culture, and Alison offer excellent choices.
• Look through our vocabulary guides on banking and accounting, or this compilation of business terms from The Guardian.
• Read economics and business publications like The Economist.
• Watch authentic English videos on a language learning platform like Lingflix to acquire vocabulary naturally and engagingly. With interactive captions and contextual definitions, you can learn terms as they are used in real situations and remember them effectively.

You can easily make learning economics a daily routine in just 15 minutes. Dedicate the first 10 minutes to quickly learning 3 to 5 new words or ideas, and use the last 5 minutes to review them by creating example sentences or relating them to practical contexts.

Whenever you acquire a new word or concept, make an effort to use it promptly in a discussion or practice it through role-playing by yourself or with a partner. Maintain this habit consistently for a month or two, and you will notice impressive progress that encourages you to advance your studies further.

Even if you are just starting in economics, there's no reason to be concerned. A solid grasp of the fundamentals is extremely valuable.

By committing a small amount of time to daily practice, your English vocabulary will expand more quickly than you might expect.

Most importantly, maintain confidence and trust in yourself and your capabilities!

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