Study · Academic vocabularyModule 07
Economics and Globalisation
Level B1–B2
Learning goals
- In this module, you will learn vocabulary used to describe economic activity, public policy, and international trade. You will practise recognising these terms in context and using their common forms and collocations.
Step 1 — Read and discover
Read the passage and notice how the bold words are used.
Understanding a changing economy
Economies change as people buy goods, businesses invest, and governments make policy decisions. Household consumption responds to prices, income, and the scarcity of some resources. Governments may use an incentive to encourage investment, while taxation affects both public revenue and private spending. When prices rise across many sectors, inflation reduces what households can buy with the same income. Families may respond by reducing their expenditure on non-essential items, while businesses review their costs and prices.
Governments collect revenue through taxes and other sources. They must decide how to allocate public money among services such as transport, education, and healthcare. In some cases, a government offers a subsidy to support an industry or make an essential product more affordable. However, subsidies can be expensive, so policymakers need to consider their wider effects.
International trade allows countries to exchange goods and services. A commodity, such as oil, wheat, or copper, is often bought and sold in large quantities. Its price may fluctuate because of changes in supply, demand, weather, or political events. If a country imports more than it exports, it may face a trade deficit. If exports are higher than imports, it has a trade surplus.
Companies may outsource some activities to providers in other countries, while others expand through long-term investment. These choices can create jobs and improve access to products, but they may also affect local labour markets. Governments sometimes use a tariff, a tax on imported goods, to protect domestic producers. Yet tariffs can also increase prices for consumers.
Economic policy often involves a trade-off: a decision may bring one benefit while creating a cost elsewhere. Rules and regulation can protect consumers and support fair competition, but poorly designed rules may create unnecessary burdens. The aim is to build an economy that supports prosperity while responding realistically to limited resources and changing global conditions.
Check your understanding
1. What can inflation do to household purchasing power?Try again
1. What can inflation do to household purchasing power?
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2. Why might a government offer a subsidy?Try again
2. Why might a government offer a subsidy?
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3. What is a trade-off?Try again
3. What is a trade-off?
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Step 2 — Explore the vocabulary
Use the word cards to review each word's meaning, example, word family, and common collocations.
inflation
nounB1–B2A general increase in prices over time.
“Inflation can reduce the purchasing power of household income.”
- rising inflation
- inflation rate
- control inflation
Word family: inflate, inflationary
expenditure
nounB1–B2The amount of money spent by a person, organisation, or government.
“Public expenditure is planned each year.”
- public expenditure
- household expenditure
- government expenditure
Word family: expend, expenditure
revenue
nounB1–B2Money received by a government or organisation.
“Tax revenue helps fund public services.”
- tax revenue
- government revenue
- generate revenue
Word family: revenue-generating
allocate
verbB1–B2To distribute money, time, or other resources for a particular purpose.
“The council will allocate funds to local services.”
- allocate resources
- allocate funds
- allocate a budget
Word family: allocation, allocated
consumption
nounB1–B2The use of goods and services by people or organisations.
“Household consumption often changes when prices rise.”
- consumer consumption
- energy consumption
- patterns of consumption
Word family: consume, consumer, consumable
scarcity
nounB1–B2A situation in which there is not enough of something to meet demand.
“Water scarcity can affect farming and food prices.”
- resource scarcity
- scarcity of resources
- relative scarcity
Word family: scarce, scarcely
incentive
nounB1–B2Something that encourages a person or organisation to act in a particular way.
“A tax incentive may encourage firms to invest.”
- financial incentive
- provide an incentive
- incentive to invest
Word family: incentivise, incentivise
subsidy
nounB1–B2Money given by a government or organisation to support an activity or reduce a cost.
“The subsidy helped farmers pay for essential equipment.”
- government subsidy
- provide a subsidy
- subsidy for farmers
Word family: subsidise, subsidised
taxation
nounB1–B2The system or process by which a government collects taxes.
“Taxation is one way governments raise funds.”
- income taxation
- taxation policy
- system of taxation
Word family: tax, taxable, taxation
investment
nounB1–B2The use of money or resources with the aim of gaining future benefits.
“Investment in transport can support economic activity.”
- foreign direct investment
- long-term investment
- investment in infrastructure
Word family: invest, investor, invested
labour
nounB1–B2Work, especially physical or mental effort, or the workers who do it.
“The factory depends on skilled labour.”
- labour market
- labour costs
- labour force
Word family: labourer, labour-intensive
commodity
nounB1–B2A raw material or basic product that is bought and sold.
“Oil is a commodity traded around the world.”
- commodity prices
- commodity market
- agricultural commodity
Word family: commodities
fluctuate
verbB1–B2To change level or value repeatedly, often rising and falling.
“Fuel prices can fluctuate during periods of uncertainty.”
- prices fluctuate
- fluctuate widely
- fluctuate over time
Word family: fluctuation, fluctuating
deficit
nounB1–B2The amount by which spending or imports are greater than income or exports.
“The country recorded a trade deficit.”
- trade deficit
- budget deficit
- run a deficit
Word family: deficit-financed
surplus
nounB1–B2An amount that is left over or is greater than what is needed.
“The company used its surplus to repay debt.”
- trade surplus
- budget surplus
- surplus production
Word family: surplus
regulation
nounB1–B2An official rule or set of rules used to control an activity.
“Financial regulation can protect customers.”
- government regulation
- safety regulation
- regulation of markets
Word family: regulate, regulator, regulatory
tariff
nounB1–B2A tax placed on goods brought into a country.
“The tariff made imported products more expensive.”
- impose a tariff
- tariff rate
- import tariff
Word family: tariff-free
outsource
verbB1–B2To pay an outside person or company to do work instead of doing it internally.
“The firm decided to outsource its technical support.”
- outsource work
- outsource a service
- outsource production
Word family: outsourcing, outsourced
prosperity
nounB1–B2A state of being successful, especially financially.
“Long-term prosperity often depends on education and stable institutions.”
- economic prosperity
- shared prosperity
- period of prosperity
Word family: prosper, prosperous, prosperously
trade-off
nounB1–B2A situation in which you accept a disadvantage to gain an advantage.
“The policy involves a trade-off between lower prices and support for local producers.”
- make a trade-off
- trade-off between
- difficult trade-off
Word family: trade off
Step 3 — Meaning in context
Choose the best answer, then check your choices.
1. Inflation rose during the year, so the same amount of money bought fewer goods.Try again
1. Inflation rose during the year, so the same amount of money bought fewer goods.
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2. The ministry must allocate funds to different public services.Try again
2. The ministry must allocate funds to different public services.
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3. The price of the commodity changed after a poor harvest.Try again
3. The price of the commodity changed after a poor harvest.
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4. The exchange rate can fluctuate throughout the day.Try again
4. The exchange rate can fluctuate throughout the day.
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5. The country introduced a tariff on certain imported goods.Try again
5. The country introduced a tariff on certain imported goods.
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Step 4 — Complete the sentences
Type the missing word or phrase. Legitimate spelling variants and harmless capitalisation differences are accepted.
1.When rises, money generally buys fewer goods and services.Try again✓
2.Household includes spending on food, housing, and transport.Try again✓
3.Tax is an important source of government .Try again✓
4.The council must its budget between several priorities.Try again✓
5.A government may provide a to help a key industry.Try again✓
6.The price of a traded may change when supply is limited.Try again✓
7.A country's trade occurs when the value of imports exceeds exports.Try again✓
8.A tax on imported goods is called a .Try again✓
Step 5 — Word families
Choose the correct form of the word in brackets.
1. The government is reviewing public __________ for the next financial year. (EXPEND)Try again
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2. The central bank aims to keep prices relatively __________. (STABILITY)Try again
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3. The company plans to __________ some of its customer support work. (OUTSOURCING)Try again
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4. A rise in exports may contribute to national __________. (PROSPEROUS)Try again
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5. New financial __________ can help protect consumers from unfair practices. (REGULATE)Try again
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Step 6 — Collocations
Match each beginning with the most natural ending.
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Step 7 — Quick review
Choose the best answer for each question.
1. Which word means money received by a government or organisation?Try again
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2. If a country's exports are worth more than its imports, it has a trade __________.Try again
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3. A payment that helps support a business or reduce the cost of a product is a __________.Try again
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4. When a business pays an outside provider to perform a task, it may __________ the task.Try again
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5. Which term describes a decision where gaining one thing may mean giving up another?Try again
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