Economic vocabulary and activity are essential to a discussion about the U.S. economy. Many people who are unfamiliar with the workings of the American economy find it difficult to engage in economic conversations without using some kind of vocabulary. Learning the economic vocabulary used in our nation's newspapers, radios, television, and magazines can help them grasp the basic terms and meanings used by economists and Wall Street specialists.
In today's newspaper, magazines, radio, and television newsrooms, economic terminology is found on every page. Even those pages that are dedicated to business or professional advice often have articles that explain how economic conditions affect different industries or businesses. A quick look at this vocabulary will reveal words such as “budget”, “stimulus”, “recession”, and “overshooting.” Clearly, these are not the words most people think of when they consider the term “economic recovery”. As you read on, you will learn many other commonly used terms.
An action word that describes the actions of an individual or a company is called an action word. An example of an action word is “receiving payments,” “performing financial activities”, or “planning ahead.” Basically, the more specific your economic vocabulary becomes, the easier it will be for you to describe what you do in your everyday business life. This way you will be able to express your understanding of how the economic variables affect your company and your personal actions.
When you are learning the economic vocabulary and actions necessary for economic explanation, it is important that you use the appropriate sentence structure. For example, you would not write an essay entitled “The Role of Receivables in a Business Transaction” without first describing the process through which an item is received. In addition, you would not write an explanation of the process by which you receive payment for the items you sell in an essay called “A Review of the Different Sources of Debt Capital.” As you see, you must build your economic vocabulary and sentence structure before using your action words.
Once you have the appropriate sentence structure and you have the right economic vocabulary, you can then use these key words to help you make sense of the different economic variables that affect your business. For example, consider the word “profit” as one of the action words that describe an economic situation. What does this word mean to you? In most cases, when you use the words profit to describe a situation, you are describing the overall profit that a business makes.
On the other hand, if you were to use the phrase “profit for the owner” you would be describing the money that an individual makes from his or her business. The phrase “profit for the company” describes the money an owner makes when his or her business makes money. In either case, the phrase is correct. The problem comes when you mix up these two words. This . . . . . . can easily happen if you are reviewing the company's financial records for the first time or if you are giving a business speech.