IELTS vocabulary: Money and the Economy

Money and the economy appear across an unusually wide range of Task 2 prompts — wealth inequality, taxation policy, consumer spending, unemployment, government spending priorities — and the topic occasionally surfaces in Part 3 discussions about work, ambition, or generational change. The failure mode specific to this topic is that candidates recognise it as a serious, adult subject and reach for grand but empty phrases like "the economy is important for a country's development," which says nothing that couldn't apply to almost any Task 2 topic. Economics vocabulary is genuinely available at a precise, non-technical level, and using even four or five terms correctly does more for a Lexical Resource score than a whole paragraph of vague seriousness.

Inequality vocabulary lets an essay be specific about what kind of gap it's discussing. "Wealth inequality" refers to the uneven distribution of accumulated assets — property, savings, investments — across a population, which is distinct from "income inequality," the uneven distribution of what people actually earn in a given period; a household can have high income but little wealth, or the reverse, and essays that conflate the two are making a less precise argument than they think. "Income gap" is a more casual but acceptable way of referring to income inequality specifically. "Socioeconomic disparity" is a broader umbrella term covering inequality across income, wealth, education, and opportunity together, useful when an essay wants to gesture at the whole cluster rather than isolate one factor. "Social mobility" (the ability of a person to move between economic classes, usually across generations) is the term essays reach for when discussing whether inequality is a fixed, permanent condition or something people can realistically escape.

Fiscal policy vocabulary — the government's tax and spending decisions — is where Task 2 essays on inequality and government responsibility tend to live. "Taxation policy" is the general term; "progressive tax system" refers specifically to one where higher earners pay a higher percentage of their income, contrasted with a "flat tax" (the same percentage regardless of income) or a "regressive tax" (one that, in effect, takes a larger share of income from lower earners, as sales taxes on essential goods often do). "Redistribution" is transferring resources, typically through taxation and public services, from higher to lower earners, and essays should distinguish redistribution as a policy goal from taxation as the mechanism that funds it. "Public spending" and "government expenditure" are near-synonyms worth knowing both of, since essays that only ever use one read as slightly repetitive over a full response. "Austerity" is a specific, citable term for a government deliberately reducing spending, usually to reduce debt, and pairs naturally with essays discussing the social costs of reduced public services.

Monetary and macroeconomic vocabulary covers the broader forces shaping an economy beyond any single government's tax choices. "Inflation" is a sustained rise in the general price level, reducing the purchasing power of a given amount of money, and is worth distinguishing from a simple price increase in one product. "Cost of living" is the practical, everyday consequence of inflation that essays should connect explicitly rather than treating as a separate, unrelated topic. "Economic growth," usually measured by a rising "GDP" (gross domestic product, the total value of goods and services a country produces), is the standard positive benchmark, contrasted with a "recession" (a sustained period of economic decline) when things go the other way. "Minimum wage" (the legally required lowest hourly pay an employer may offer) and "universal basic income" (a regular, unconditional payment made to all citizens regardless of employment) are two genuinely distinct policy tools for addressing low income, and essays that treat them as interchangeable solutions to the same problem miss an important structural difference between them.