25 Economics Terms You Must Know

25 Economics Terms You Must Know 25 Key Economic Concepts ChaptersKey Economics TermsCreate Your Own Economics GlossaryAnyone that would like to develop their knowledge of economics, either for the purposes of improving their studies or out of general interest, should be very familiar with some of the most common economic concepts and terms.This is because:Knowing key economic terms, from supply and demand to econometrics and monetary policy, will help you understand more about the field;You will give yourself more credibility when speaking about economic matters; andLearning key terms can be a great way to study economics more broadly, and it can also help develop your skills of economic analysis.A decrease in the cost of the good will lead to an increase in demand.Financial marketsRefers to a market or marketplace where financial assets are bought and sold. A common example of a financial market is a stock exchange.Fiscal policyFiscal policy refers to a government’s spending and how it affects the economy, particularly if  spending leve ls change.Gross domestic product (GDP)GDP is often used as a measure of a nation’s economic performance and activity. It is usually calculated on a quarterly or annual basis.Growth rateThe growth rate is a measure of growth and how it increases over a period of time. It can be used to describe economic growth, gross domestic product, or items such as annualised growth rates for a company.Interest ratesAn interest rate is calculated by applying a percentage to the amount of the principal being borrowed. A common example of a principal is a loan or some other form of debt. The amount of interest charged is usually calculated by reference to an annual rate.Popular economic terms include terms such as interest rates. (Source: CC0 1.0, OpenClipart-Vectors, Pixabay)InflationIn its simplest terms, when there is inflation there is a rise in the prices charged for goods and services. Where an economy has inflation, the cost of living tends to rise.Keynesian economicsDeveloped by the econom ist John Maynard Keynes, Keynesian economics describes Keynes' economic theories and beliefs, which contained the conviction that  government involvement in the economy through spending and taxes could help increase demand and move an economy out of a depression.Law of demandThe law of demand examines how customers’ buying habits change when prices increase. Specifically, the theory posits that all other things being equal, when prices of a good increase, the demand for that good falls.Law of supplyThe law of supply states that all other things being equal, an increase in price levels results in an increase in the quantity of those goods that are supplied.MacroeconomicsMacroeconomics studies how the economy behaves in the aggregate, i.e. as a whole. Concepts examined in macroeconomics include:Inflation;The level of prices in the economy;Growth rate.Marginal utilityMarginal utility refers to the amount of satisfaction a consumer has by consuming a good or service. Marginal utility can be used by economists to gauge how much of a good or service a consumer should buy.MicroeconomicsThe opposite of macroeconomics is microeconomics. Microeconomics focuses on how individuals and companies act within an economy, and how their behaviour also influences an economy.MonetarismMonetarism is a school of thought that centres on the idea that the volume of money in an economy is a key factor in the amount of economic activity and growth. It is a theory that sits in contrast to Keynesian economics.Economics key terms often centre around the concept of money or wealth creation. (Source: CC BY 2.0, Images Money, Flickr)OligopolyA term used within the area of market share. In a monopoly, there is only one supplier in the market, and in a duopoly, there are only two. In an oligopoly, there are more than two suppliers in the market, and the actions of one supplier can influence the actions of the others.Opportunity costOpportunity cost is the cost of missing an opportunity in or der to take on a different opportunity. An example of opportunity cost can be seen in investors, who may have to forego investing in one company in order to invest in another.StagflationStagflation describes an economy that is experiencing slow economic growth, whilst also experiencing inflation and high levels of unemployment. Stagflation is far less common than inflation or deflation.The invisible handAn idea introduced by the philosopher Adam Smith, the invisible hand describes the benefits that society at large can enjoy as a result of the actions of self-interested individuals. The invisible hand was an argument used to advocate the benefits of a free market.Trade barriersTrade barriers relate to a government policy or regulation that limits or controls international trade. Examples include:Tariffs;Trade quotas; andEmbargosCreate Your Own Economics GlossaryThe difficulty in understanding economics is that there is so much terminology within the field. However, if you take some time to learn core economic concepts, such as those outlined above, then you’ll be able to:Speak with more confidence when discussing economic matters;Understand more about which theories and concepts belong to which area of economics, for example, macroeconomics or microeconomics; andUse these terms during your exams or in essays, which will show your teacher or lecturer that you’re comfortable using and highlighting such terminology.Although it can take some time to get to grips with economics concepts, the best tactic to improve your understanding of such key terms is to try and learn new terminology at a slow, but regular, pace.For example, you could aim to learn between one and three new terms every week. This would mean that, well before you get to the end of the academic year, you’ll be very comfortable with terms such as those above and what they mean, and you'll have taken the time to commit such terms to memory so that you can remember them for years to come.Of cours e, if you need or would like to learn such terminology quicker and in a more intensive fashion, then you can always hire an economics tutor to help you revise core economic terms and concepts. Aside from helping you learn such terms, an economics teacher or   tutor can:Give you exercises that consolidate your knowledge of economic terms;Provide you with learning techniques to help you during your revision;Identify areas or key terms that you're struggling with, whether that's concepts that fall within behavioural economics or terms such as stagflation; andComplement your school’s curriculum by working with you on the areas you’re having the  most difficulty with.Superprof, for example, has a wide range of economics tutors that you can choose from. Simply enter your postcode and Superprof will match you with online and local tutors in your area that would be happy to help you succeed in your studies.Learn more about economics: the science.Find out about Nobel Prizes in economics.