When you discuss the wider economy, a few terms come up constantly, and each has its own set phrase. Rising prices are called inflation, and central banks act to combat inflation. Rapid, unpredictable price swings in a market are volatility. Learning the whole word family (inflate, inflation, inflationary) lets you switch forms without guessing.
Talking about prices and conditions
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.
Not ""The bank raised rates to fight the prices." (vague; not the standard collocation)" — say ""The bank raised rates to combat inflation." (the fixed economic phrase)". Economic writing pairs inflation with a small family of verbs, combat, curb, tackle, bring down. The real slip here is naming the concept loosely: it's inflation, not 'the prices'.
Try it: A report describes months of rapid, unpredictable swings in share prices. Which word fits: "The market showed unusual ___ this quarter"? (volatility / inflation / deflation) Answer: volatility — 'Volatility' means rapid, unpredictable price changes, which is exactly what the swings describe. 'Inflation' is a sustained rise in prices generally, not sudden up-and-down movement, and 'deflation' is falling prices, so neither captures the instability being reported.
Business and finance collocations
Finance vocabulary lives in set phrases, and using the wrong pairing sounds off even when the meaning is clear. A company's profit margins are the gap between cost and selling price. To obtain money for growth, a company will raise capital, not 'get' it. Government expenditure is public spending. And when the whole economy shrinks for months, it enters a recession, a recession is a sustained fall in economic activity, the formal term for what everyday speech calls a downturn.
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 by issuing new shares.
public spending /ˈpʌblɪk ˈspɛndɪŋ/ — The new budget increases public spending on transport and health.
Not ""The company hopes to get capital by selling shares." (wrong collocation)" — say ""The company hopes to raise capital by selling shares." (standard finance phrase)". The set phrase is raise capital, not 'get capital'. In finance the fixed collocation matters as much as the meaning.
Try it: "Rising costs squeezed the company's ___, so it earned less on each sale." Which phrase is correct? (profit margins / profit differences / profit spendings) Answer: profit margins — 'Profit margins' is the standard term for the gap between cost and selling price, so squeezing them means earning less per sale. 'Profit differences' is not an English financial term, and 'profit spendings' mixes up earning with spending, so both are wrong.
Try it: Choose the sentence that uses the standard economic collocations correctly. (The government increased 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 increased public spending to combat inflation. — 'Public spending' and 'combat inflation' are both standard collocations, so this sentence reads naturally in economic writing. The second swaps in 'public expenses' and 'the inflation', which are not the fixed forms, and the third says 'combat the prices' instead of naming the concept, 'inflation'.