Economics and finance vocabulary (B2 Vocabulary)

Inflation is a general rise in prices, volatility is sudden price change, inflationary means pushing prices up, and GDP measures total national output.

Talking about prices and conditions

• Not "The bank raised rates to fight the prices." — say "The bank raised rates to combat inflation.". Name the concept itself: combat inflation, not "fight the prices".
• Try it: Ira: Share prices jumped up and down wildly all quarter. Hiroshi: Yes, the market showed unusual ___ this quarter. Choose the word for the blank. (volatility / inflation / deflation) Answer: volatility — Volatility means sudden, unpredictable price changes, while "inflation" is a general rise in prices and "deflation" a general fall.

Word	Pronunciation	Example
inflation	/ɪnˈfleɪʃən/	The central bank raised interest rates to combat inflation.
volatility	/ˌvɑləˈtɪləti/	Investors stayed cautious because of the recent market volatility.
inflationary	/ɪnˈfleɪʃəˌnɛri/	Higher fuel costs are adding inflationary pressure across the economy.
GDP	/ˌdʒi di ˈpi/	The country's GDP grew by two percent last year.

Business and finance collocations

Finance uses set phrases: profit margins, raise capital, public spending. A recession is a long fall in economic activity.

• Not "The company hopes to get capital by selling shares." — say "The company hopes to raise capital by selling shares.". The set phrase is raise capital, not "get capital".
• Try it: Ira: The shop down the road makes T-shirts for $8 and sells them for $20. Diego: With gaps like that, it must have very wide ___. Choose the words for the blank. (profit margins / profit differences / profit spendings) Answer: profit margins — The standard term is profit margins; "profit differences" and "profit spendings" are not English finance terms.

Word	Pronunciation	Example
profit margins	/ˈprɑfɪt ˈmɑrdʒɪnz/	Cheaper materials helped the firm widen its profit margins this year.
raise capital	/reɪz ˈkæpɪtəl/	The startup plans to raise capital to hire more staff.
public spending	/ˈpʌblɪk ˈspɛndɪŋ/	The new budget increases public spending on transport and health.
recession	/rɪˈsɛʃən/	Many small shops closed during the long recession.

Money in business and investing

A company's revenue is its total income, shares are units of ownership, investors diversify to spread risk, and a mortgage is a home loan.

• Not "The cafe's profit was $5,000 before it paid any costs." — say "The cafe's revenue was $5,000 before it paid any costs.". Revenue is the money that comes in; profit is what is left after costs.
• Try it: Sofia: The bakery took in $3,000 last week and spent ,000 on flour and staff. Lars: So its ___ was $3,000, and $2,000 of that was profit. Choose the word for the blank. (revenue / debt / budget) Answer: revenue — Revenue is all the money that comes in; profit is what remains after costs.
• Try it: Choose the sentence that uses the standard economic phrases correctly. (The government cut public spending to combat inflation. / The government increased public expenses to fight the inflation. / The government raised its capital to combat the prices.) Answer: The government cut public spending to combat inflation. — Economic writing pairs public spending with combat inflation; the other sentences use non-standard phrases.

Word	Pronunciation	Example
revenue	/ˈrɛvəˌnu/	The festival's ticket revenue covered only half of its costs.
shares	/ʃɛrz/	When the company did well, the value of her shares doubled.
diversify	/dəˈvɜrsəˌfaɪ/	Careful investors diversify, so one bad year never wipes them out.
mortgage	/ˈmɔrɡɪdʒ/	They finally paid off their mortgage after twenty-five years.

What are the common mistakes?

Incorrect	Correct	Why
The bank raised rates to fight the prices.	The bank raised rates to combat inflation.	Name the concept itself: combat inflation, not "fight the prices".
The company hopes to get capital by selling shares.	The company hopes to raise capital by selling shares.	The set phrase is raise capital, not "get capital".
The cafe's profit was $5,000 before it paid any costs.	The cafe's revenue was $5,000 before it paid any costs.	Revenue is the money that comes in; profit is what is left after costs.