Virtuous English AcademyEconomics & Finance — C1 English Vocabulary
This C1 vocabulary list gathers 60 advanced English words about economics & finance — markets, capital and high finance. Every word comes with a simple definition, its British-English pronunciation and a natural example sentence, so you learn each one in real context. When you are ready, open the flashcards to practise and remember them for good.
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- #Definitions
- #Examples
- #Pronunciation
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solvency/ˈsɒl.vən.si/
The ability to pay all your debts.
“The bank’s solvency was in doubt.”
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insolvency/ɪnˈsɒl.vən.si/
The state of being unable to pay debts.
“The firm faced insolvency.”
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liquidate/ˈlɪk.wɪ.deɪt/
To sell a business's assets to pay its debts.
“They had to liquidate their assets.”
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leverage/ˈliː.vər.ɪdʒ/
The use of borrowed money to invest.
“The deal used a lot of leverage.”
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arbitrage/ˈɑː.bɪ.trɑːʒ/
Buying and selling to profit from price differences.
“He made money through arbitrage.”
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derivative/dɪˈrɪv.ə.tɪv/
A financial contract based on the value of an asset.
“A derivative is a risky product.”
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collateral/kəˈlæt.ər.əl/
Property promised to a lender to secure a loan.
“The house was used as collateral.”
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amortise/əˈmɔː.taɪz/
To pay off a debt gradually over time.
“They amortise the loan over ten years.”
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depreciation/dɪˌpriː.ʃiˈeɪ.ʃən/
A fall in the value of an asset over time.
“The car loses value through depreciation.”
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appreciation/əˌpriː.ʃiˈeɪ.ʃən/
A rise in the value of an asset over time.
“Currency appreciation hurt exports.”
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monetarist/ˈmʌn.ɪ.tər.ɪst/
Relating to control of the money supply.
“He is a strict monetarist.”
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macroeconomic/ˌmæk.rəʊ.iː.kəˈnɒm.ɪk/
Relating to the economy as a whole.
“They study macroeconomic trends.”
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remittance/rɪˈmɪt.əns/
Money sent, especially to another country.
“A remittance arrived from abroad.”
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subprime/ˌsʌbˈpraɪm/
Relating to loans given to high-risk borrowers.
“Subprime loans caused the crash.”
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windfall/ˈwɪnd.fɔːl/
A large amount of money received unexpectedly.
“He spent his windfall wisely.”
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nest egg/ˈnest eɡ/
Money saved for the future.
“She has a small nest egg.”
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frugal/ˈfruː.ɡəl/
Careful with money; not wasteful.
“He leads a frugal life.”
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thrift/θrɪft/
The careful use of money.
“Her thrift impressed everyone.”
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extravagance/ɪkˈstræv.ə.ɡəns/
The spending of too much money.
“His extravagance ruined him.”
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opulence/ˈɒp.jə.ləns/
Great wealth and luxury.
“They lived in great opulence.”
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destitution/ˌdes.tɪˈtjuː.ʃən/
The state of extreme poverty.
“War drove them to destitution.”
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penury/ˈpen.jə.ri/
Extreme poverty.
“He died in penury.”
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solvent/ˈsɒl.vənt/
Able to pay all your debts.
“The company is barely solvent.”
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arrears/əˈrɪəz/
Money owed that should have been paid earlier.
“He fell into rent arrears.”
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default/dɪˈfɔːlt/
The failure to repay a loan.
“They may default on the loan.”
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underwrite/ˌʌn.dəˈraɪt/
To accept financial responsibility for something.
“A bank agreed to underwrite the bond.”
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hedge fund/ˈhedʒ fʌnd/
A fund that invests in risky ways for high returns.
“She works for a hedge fund.”
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annuity/əˈnjuː.ɪ.ti/
A fixed sum of money paid each year.
“He bought an annuity for retirement.”
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compound interest/ˌkɒm.paʊnd ˈɪn.trəst/
Interest paid on both the sum and past interest.
“Compound interest builds wealth.”
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inflationary/ɪnˈfleɪ.ʃən.ər.i/
Tending to cause prices to rise.
“Wages add inflationary pressure.”
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recessionary/rɪˈseʃ.ən.ər.i/
Relating to a period of economic decline.
“We are in a recessionary period.”
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expansionary/ɪkˈspæn.ʃən.ər.i/
Tending to increase economic activity.
“They chose an expansionary policy.”
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belt-tightening/ˈbelt ˌtaɪt.ən.ɪŋ/
The reducing of spending in hard times.
“A round of belt-tightening began.”
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levy/ˈlev.i/
A tax or charge collected by a government.
“The state imposed a new levy.”
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excise/ˈek.saɪz/
A tax on certain goods made or sold in a country.
“Excise on fuel was raised.”
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capital gain/ˌkæp.ɪ.təl ˈɡeɪn/
Profit from selling an asset for more than its cost.
“She paid tax on the capital gain.”
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per capita/pə ˈkæp.ɪ.tə/
For each person.
“Per capita income rose.”
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valuation/ˌvæl.juˈeɪ.ʃən/
An estimate of how much something is worth.
“The firm’s valuation soared.”
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overvalued/ˌəʊ.vəˈvæl.juːd/
Priced higher than the real worth.
“The shares are overvalued.”
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undervalued/ˌʌn.dəˈvæl.juːd/
Priced lower than the real worth.
“Analysts call it undervalued.”
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profiteer/ˌprɒf.ɪˈtɪə/
A person who makes unfair profits.
“A profiteer exploited the shortage.”
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usury/ˈjuː.ʒər.i/
The lending of money at very high interest.
“The lender was accused of usury.”
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brokerage/ˈbrəʊ.kər.ɪdʒ/
A business that buys and sells for others.
“She opened a brokerage account.”
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bullion/ˈbʊl.jən/
Gold or silver in bulk before it is made into coins.
“They store gold bullion.”
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hyperinflation/ˌhaɪ.pər.ɪnˈfleɪ.ʃən/
Extremely fast and severe rise in prices.
“Hyperinflation wiped out savings.”
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indebted/ɪnˈdet.ɪd/
Owing money to someone.
“The nation is deeply indebted.”
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creditworthy/ˈkred.ɪtˌwɜː.ði/
Considered safe to lend money to.
“He is no longer creditworthy.”
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fiduciary/fɪˈdjuː.ʃər.i/
Relating to trust over someone's money or assets.
“They have a fiduciary duty.”
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pecuniary/pɪˈkjuː.ni.ər.i/
Relating to money.
“He had no pecuniary interest.”
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remunerative/rɪˈmjuː.nər.ə.tɪv/
Bringing in a good amount of money.
“It is highly remunerative work.”
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economise/ɪˈkɒn.ə.maɪz/
To spend less money.
“We must economise this winter.”
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squander/ˈskwɒn.də/
To waste money or resources.
“Do not squander your money.”
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accrue/əˈkruː/
To build up over time, as interest does.
“Interest will accrue over time.”
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shortfall/ˈʃɔːt.fɔːl/
An amount by which something is less than needed.
“There was a budget shortfall.”
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overdraft/ˈəʊ.və.drɑːft/
Money taken from a bank account beyond its balance.
“She has a large overdraft.”
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insolvent/ɪnˈsɒl.vənt/
Unable to pay debts.
“The company is now insolvent.”
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recoup/rɪˈkuːp/
To get back money that was lost or spent.
“They hope to recoup the losses.”
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divest/daɪˈvest/
To sell off investments or parts of a business.
“They will divest their oil assets.”
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remit/ˈriː.mɪt/
To send money as payment.
“It is outside the bank’s remit.”
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liquid/ˈlɪk.wɪd/
Easily changed into cash, said of assets.
“Cash is the most liquid asset.”
Using economics & finance words in English
Financial English at this level rewards precision about direction and about who owes what. Appreciation and depreciation are the pair to fix first, and note that appreciation here has nothing to do with gratitude. The page also separates insolvency from bankruptcy, which are legally distinct despite being used interchangeably, and covers the British and American pronunciations of leverage.
What to watch out for
Appreciation is a rise in value
In finance, an asset or a currency appreciates when its value rises and depreciates when it falls: sterling appreciated against the dollar. The everyday meaning of appreciation as gratitude or understanding is a separate sense and does not apply here. Depreciation has a third accounting meaning too — the systematic writing down of an asset’s value over its useful life.
Insolvency is a state; bankruptcy is a process
Insolvency means being unable to pay debts as they fall due, or having liabilities that exceed assets. Bankruptcy is the formal legal process that may follow, and in British usage it applies to individuals — the equivalent for companies is liquidation or administration. So a company can be insolvent for months without ever being bankrupt.
Leverage, collateral, remittance
Leverage means using borrowed money to increase potential returns; British English usually says LEE-ver-ij and American LEV-er-ij. As a verb meaning to exploit an advantage it is common in business and disliked by careful writers. Collateral is the asset pledged against a loan and is uncountable. A remittance is money sent home by someone working abroad — a major category in development economics.
Words learners mix up
Money vocabulary is unusually moralised in English: several of these words describe exactly the same behaviour and differ only in whether the writer approves. Getting that wrong is not a grammar error but an accusation.
Spending little: virtue or vice?
| Word | What it actually means | In a sentence |
|---|---|---|
| frugal | Careful with money as a considered choice. A compliment — it implies self-discipline, not poverty. | A frugal household that still gave generously. |
| thrift | The noun for the same virtue, with an old-fashioned, approving ring. Adjective thrifty. | A generation raised on wartime thrift. |
| economise | The deliberate act of cutting spending, usually because you must. Neutral, slightly formal, and takes on. | They began to economise on heating. |
| belt-tightening | Cutting back across a whole household, company or country at once. Hyphenated, uncountable and slightly euphemistic. | Another round of belt-tightening was announced. |
This is the trap for learners whose own language has one word for the whole idea. Calling a host frugal praises them; calling them stingy or mean — neither of which is on this list — insults them, and English will not let you split the difference.
Spending much: from admiring to damning
| Word | What it actually means | In a sentence |
|---|---|---|
| opulence | Visible, luxurious wealth. Describes surroundings rather than behaviour, and is closer to admiring than critical. | The opulence of the state rooms. |
| extravagance | Spending beyond what is reasonable. Mildly critical, and countable when it means one indulgence: my only extravagance. | The refit was criticised as pure extravagance. |
| squander | To waste something valuable through carelessness. Strongly critical, and its object need not be money — you can squander a lead or an opportunity. | He squandered the inheritance in four years. |
| profiteer | Someone making excessive profit from others’ hardship. Purely condemnatory, and both noun and verb. | Wartime profiteers faced special taxes. |
A windfall is money arriving unexpectedly and through no effort of yours — an inheritance, a legal award, a favourable ruling. It is neutral about you, which is why governments can levy a windfall tax without implying wrongdoing.
When you cannot pay: an ordered ladder
| Word | What it actually means | In a sentence |
|---|---|---|
| arrears | Payments overdue but still owed. Plural only, and the state is expressed with in. | The tenants fell into arrears over the winter. |
| indebted | Owing money — or, in a quite separate sense, owing gratitude: I am indebted to you. | A heavily indebted economy. |
| default | Failing to meet the obligation at all. Noun and verb, and the verb takes on. | The country defaulted on its bonds. |
| destitution | Not a debt state at all: having nothing whatever. The end point, and about people rather than balance sheets. | The policy pushed families into destitution. |
Penury is the formal literary word for extreme poverty and sits alongside destitution, but it describes a condition of life rather than the moment of collapse. Neither belongs in a sentence about a company; for firms the vocabulary is insolvency and liquidation.
Collocations that sound natural
Financial English inherited most of its phrasing from legal drafting, which is why the prepositions are fixed and unguessable. These are the ones that appear in bank letters and central-bank statements.
arrears
fall into arrearsin arrearsrent arrearsclear the arrears
Also a neutral technical use: paid in arrears just means paid after the period worked, with nothing overdue at all.
default
default on a loana sovereign defaultthe risk of defaultdefault rates
The preposition is always on. Unrelated to the computing sense of a default setting.
levy
impose a levya levy on importslevy a chargea windfall levy
Both noun and verb. Excise is the specific duty charged on goods produced and sold inside a country.
interest
compound interestaccrue interestinterest accruesa rise in interest rates
Accrue is what interest does by itself, so it is normally intransitive: interest accrues daily.
shortfall
a funding shortfallmake up the shortfalla shortfall of £2mcover the shortfall
windfall
an unexpected windfalla windfall taxa windfall gaina windfall profit
Formal, neutral or informal?
Four of these words are Latin formality that only appears in contracts, two are metaphors that have escaped into journalism, and one is a genuine moral judgement dressed as a technical term.
- pecuniaryFormal · legalSimply means relating to money, and survives almost only in fixed legal phrases: a pecuniary interest, pecuniary advantage. In ordinary prose the word is financial.
- fiduciaryFormal · legalInvolving trust placed in someone managing another’s money: a fiduciary duty. Names a legal obligation, not a feeling, and the noun for the person is also fiduciary.
- remunerativeFormalProfitable, well-paid: remunerative work. The related noun remuneration is standard in employment contracts, where ordinary speech would say pay.
- usuryHistorical · moralLending at excessive interest. Once meant charging any interest at all, and it carries centuries of religious condemnation. The living form is the adjective: usurious rates.
- nest eggInformal idiomSavings put aside for the future: a decent nest egg for retirement. Warm and domestic — never used of a company or a state.
- belt-tighteningJournalistic metaphorReduced spending in hard times, hyphenated and uncountable: a further round of belt-tightening. Common in news coverage of budgets and slightly euphemistic.
- bullionTechnicalGold or silver in bulk, as bars rather than coins. Uncountable, and it appears in reserves and trade reporting, not in retail contexts.
- liquidSense shiftIn finance, easily converted into cash: a liquid asset, the market is liquid. The abstract noun is liquidity, and the verb liquidate means selling assets to raise cash or winding a company up entirely.
Sentences to try
Four frames from financial analysis. Check the direction of value in each.
- The currency appreciated sharply after the announcement.
- The company was insolvent long before it entered administration.
- The loan required property as collateral.
- Remittances account for a significant share of national income.
Questions about economics & finance vocabulary
What does "appreciation" mean in finance?
An increase in the value of an asset or a currency over time: The house has seen considerable appreciation since 2010, the yen appreciated against the euro. Its opposite is depreciation, a fall in value. This is entirely separate from the everyday sense of appreciation meaning gratitude or a sensitive understanding of something, which is why context does all the work. Note that depreciation carries a third, accounting-specific meaning: the planned reduction of an asset’s book value across its useful life.
What is the difference between insolvency and bankruptcy?
Insolvency is a financial condition: being unable to pay debts when they are due, or owing more than you own. Bankruptcy is a formal legal status that a court declares, and in British usage it applies to individuals rather than companies — an insolvent company goes into administration or liquidation instead. American English uses bankruptcy for both. So insolvency is the underlying problem and bankruptcy is one possible legal outcome of it, and a business can be insolvent without either.
How do you pronounce "leverage"?
British English most commonly says LEE-ver-ij, with the first syllable rhyming with fee. American English says LEV-er-ij, rhyming the first syllable with ever. Both are recorded and neither will cause confusion. As a noun it means the use of borrowed capital to increase the potential return on an investment, and by extension any strategic advantage. Its use as a verb meaning to exploit or make use of — leverage our expertise — is standard in business English but is widely disliked in careful prose.