Okuzeka
Economics vocabulary · Core Concepts

Trade-off

Meaning in economics, with examples

nounCore term

In economics, trade-off means: A situation in which getting more of one thing means accepting less of another, so you have to balance two goals against each other.

In Turkish: ödünleşim, tercih ikilemi, denge kurma

How it is used

Used constantly by economists and policymakers: the trade-off between inflation and unemployment, between growth and the environment, between equity and efficiency. People face, make or accept trade-offs. American English also writes tradeoff.

Example sentences

  1. The central bank faces a trade-off between lowering inflation quickly and protecting jobs.

  2. Every budget involves trade-offs: more money for health means less for something else.

Common collocations

  • face a trade-off
  • the trade-off between
  • make trade-offs
  • a difficult trade-off
  • opportunity costThe value of the best alternative you give up when you make a choice, for example the salary you lose by studying full time instead of working.
  • scarcityThe basic problem that resources such as time, money, land and labour are limited while people's wants are not, so choices always have to be made.
  • monetary policyThe actions a central bank takes to influence interest rates, the money supply and credit in order to control inflation and support the economy.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Core Concepts

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This page explains English vocabulary for learners. It is not financial advice.