Interest, Capital, and Market in Economics

Read economics vocabulary that looks familiar but carries technical meaning.

Economics texts use everyday words in specialized senses. 'Interest' is the cost of borrowing money, or the payment earned for lending it, usually stated as a percentage per year; it is not curiosity. 'Capital' means resources used to produce goods and services, such as machinery, buildings, or money invested in a business; it is not a city or an uppercase letter. A 'market' is any arrangement in which buyers and sellers exchange, which may be global and digital rather than a physical place.

'Demand' is the quantity buyers are willing and able to purchase at each price, not an insistent request. Worked example: 'Rising interest rates made it harder for firms to raise capital, cooling demand in the housing market. ' Translated: borrowing grew more expensive, businesses had less money to invest, and fewer people bought homes. One sentence, four technical terms, one clear chain of cause and effect.

• 1Interest is the cost of borrowing or the reward for lending.
• 2Capital means productive resources, including invested money.
• 3Market and demand have technical meanings in economics.