ECONOMIC VOCABULARY: Words & Phrases You Should Know

Summary

In this master class on economic vocabulary, Jennifer from JForrest English guides learners through key economic concepts such as inflation, recession, GDP, tariffs, and market dynamics. The lesson covers essential terms related to supply and demand, trade, business, employment, and government policies. Jennifer explains complex terms in simple language, offering real-world examples like housing prices and trade deficits. By the end, learners will understand the language used in economic discussions and be better equipped to engage in conversations about current events or exams.

Takeaways

• 😀 Economic vocabulary is essential for understanding current events, discussing issues, and preparing for language exams.
• 😀 Supply and demand determines prices by balancing product availability and consumer desire, affecting markets like real estate.
• 😀 Inflation means rising prices that reduce the value of money, making goods more expensive over time.
• 😀 Deflation, the opposite of inflation, involves falling prices due to weak demand, often signaling economic struggles.
• 😀 A recession is an economic decline marked by job losses, slower growth, and overall market contraction.
• 😀 A free market economy operates with minimal government control, promoting competition but also risking monopolies.
• 😀 Tariffs are taxes on imported goods used to protect local businesses, which can impact international trade relationships.
• 😀 The stock market, characterized by daily fluctuations, is affected by bull (rising) and bear (falling) markets.
• 😀 Consumer spending is a critical economic indicator, affected by factors like inflation and fiscal policies.
• 😀 Unemployment rate measures joblessness and indicates the health of the job market, which can be influenced by layoffs and hiring freezes.
• 😀 Fiscal and monetary policies are tools used by governments and central banks to manage the economy, affecting taxation, spending, and interest rates.

Q & A

What is supply and demand, and how does it affect prices?

Supply and demand is the balance between the availability of products (supply) and consumer desire for them (demand). It directly affects prices because if demand is high and supply is low, prices tend to rise, as seen in the housing market, where soaring demand for houses drives up prices.

What is inflation and how does it impact the value of money?

Inflation refers to the rise in prices, which reduces the purchasing power of money. For example, $100 today may not buy as much in three years because overall prices are higher. Inflation erodes the value of money over time.

What is the difference between inflation and deflation?

Inflation is the rise in prices over time, leading to a decrease in the value of money. Deflation, on the other hand, is the reduction in prices, often caused by weak demand. While inflation can be harmful if uncontrolled, deflation usually indicates economic struggles.

What is a recession and how does it affect the economy?

A recession is a period of economic decline marked by job losses and slower economic growth. It can lead to a hiring freeze and layoffs, suggesting that companies are scaling back due to reduced economic activity.

What is the concept of a boom and bust cycle?

A boom is a period of rapid economic growth, while a bust is a sudden economic downturn. Tech companies, for example, thrived during a boom but many are now failing during the bust, demonstrating how quickly the economic environment can shift.

What are tariffs and how do they impact international trade?

Tariffs are taxes imposed on imported goods, often intended to protect local businesses from foreign competition. They can lead to higher prices for consumers and affect trade relationships between countries.

What is the difference between imports and exports?

Imports refer to goods brought into a country, while exports are goods sold abroad. For example, the US imports oil but exports agricultural products like corn. The balance between imports and exports affects a country's trade deficit or surplus.

What is a bubble in economic terms?

An economic bubble occurs when asset prices rise far beyond their actual value. The real estate bubble in the US burst in 2008, resulting in a sharp decline in housing prices and a major financial crisis.

How does a market crash differ from a bull and bear market?

A market crash is a sudden and sharp drop in stock prices, often due to economic instability. A bull market is characterized by a steady increase in stock prices over time, signaling a strong economy, while a bear market represents a decline in stock prices over time, often linked to economic downturns.

What is the unemployment rate, and how does it affect the job market?

The unemployment rate is the percentage of people who are jobless but actively seeking work. A higher unemployment rate suggests a weak job market, where competition for jobs is high, often leading to more difficulty for new graduates or workers seeking employment.