Economics RC Terms for CAT VARC
Master essential economics terminology that appears repeatedly in CAT Reading Comprehension passages. From invisible hand to game theory, build the vocabulary foundation that transforms complex economic arguments into opportunities for high accuracy. Economics passages test your ability to understand market mechanisms, policy debates, and theoretical frameworks—this page gives you the conceptual toolkit.
Why Economics Terms Matter for CAT Reading Comprehension
Economics RC passages appear with remarkable frequency in CAT VARC—and for good reason. They test your ability to process quantitative reasoning, understand policy debates, trace cause-and-effect relationships, and evaluate competing theoretical frameworks. When you know terms like comparative advantage, externalities, or creative destruction, you’re not just recognizing vocabulary—you’re accessing entire systems of economic thought.
CAT economics passages often discuss market failures, government intervention, globalization, development strategies, or competing economic schools (Keynesian vs. monetarist, for example). Research from CAT toppers consistently shows that candidates who master core economics terminology achieve 20-28% higher accuracy on social sciences passages. Why? Because economic concepts are interconnected—understanding one term helps you decode related arguments throughout the passage.
Economics terms also appear across disciplines. A passage on environmental policy will reference externalities. A history passage might discuss laissez-faire capitalism. A technology article could examine creative destruction. This cross-disciplinary relevance makes economics vocabulary one of the highest-ROI investments for RC preparation.
What happens when you know these terms:
- Instantly recognize economic frameworks—identify whether a passage supports free markets or government intervention
- Anticipate counterarguments—if a passage discusses Keynesian policy, expect monetarist critiques
- Decode policy debates—understand the logic behind fiscal vs. monetary policy discussions
- Connect micro and macro concepts—see how individual market behavior relates to national economic outcomes
- Handle inference questions with confidence—economic passages often test your ability to extend arguments to new scenarios
This page contains 25 carefully curated economics flashcards covering the most frequently tested concepts in CAT VARC. Each term includes a clear definition, practical memory hook, and detailed RC context showing how it appears in actual passages. Ready to test your mastery across all social sciences subjects?
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25 Economics Flashcards for CAT VARC
Click any card to flip and reveal detailed context. Mark as mastered to track your progress. Each term includes a memory hook to aid retention and RC context showing how it appears in passages.
Study Strategy for Economics Terms
Economics is part of the broader Social Sciences cluster. Explore related subjects like Business, Politics, and Sociology to build comprehensive RC vocabulary across interconnected disciplines.
Pro tip: Economics terms often appear in passages about policy, development, trade, and social issues. Don’t memorize in isolation—understand how concepts like externalities, comparative advantage, and market failure connect to form coherent arguments about economic systems.
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Test your understanding of economics concepts. Get instant feedback with detailed explanations.
How to Master Economics Terms for RC
🧠 The Spaced Repetition Method
Economics concepts build on each other—understanding one term unlocks several related ideas. Use spaced repetition to move these interconnected concepts from short-term to long-term memory:
- Day 1: Study all 25 flashcards, focus on understanding how terms relate (e.g., fiscal policy vs. monetary policy)
- Day 2: Review and mark terms you can explain to someone else as “mastered”
- Day 4: Quick review of all terms, spend extra time on unmarked ones and their relationships
- Day 7: Final comprehensive review before attempting the quiz—test yourself on definitions AND connections
This spacing leverages your brain’s natural consolidation process. Economics terminology is particularly suited to spaced repetition because concepts are interconnected—reviewing one term reinforces several others.
📖 Context Over Definition
In CAT RC, you’ll rarely see “Define comparative advantage.” Instead, you’ll encounter passages discussing trade policy where comparative advantage explains WHY countries specialize. Train yourself to recognize contextual usage:
- Read the “RC Context” section of each flashcard carefully—this shows how the term appears in actual passages and typical argument structures
- Notice economic debates: Most passages present competing schools (Keynesian vs. monetarist, free market vs. intervention)
- Identify relationship words: “however,” “conversely,” “in contrast,” “builds upon”—economics passages are structured around these transitions
- Practice inference: Even if you forget the exact definition, understanding the term’s role in economic arguments helps you answer inference questions
🎯 The “Economic Schools” Strategy
Economics RC passages typically present competing theoretical frameworks. Recognizing which “school” is being discussed instantly clarifies the passage structure:
- Classical/Free Market School: Terms like invisible hand, laissez-faire, comparative advantage—emphasizes market efficiency
- Keynesian School: Fiscal policy, government spending, demand management—emphasizes government intervention during downturns
- Monetarist School: Monetary policy, money supply control—emphasizes central bank role over fiscal intervention
- Development Economics: HDI, sustainable development, inequality—focuses on structural transformation and equity
- Institutional/Behavioral: Information asymmetry, market failure, behavioral economics—questions pure rationality assumptions
When you know these schools, you can quickly map the passage’s argumentative structure and anticipate counterarguments. If a passage discusses Keynesian stimulus, expect a critique mentioning debt or inefficiency.
⚡ Common RC Passage Patterns in Economics
CAT economics passages follow predictable patterns. Knowing these terms helps you identify the pattern instantly and read actively:
- “Market efficiency vs. failure” passages → Expect terms like externalities, public goods, information asymmetry, invisible hand
- “Economic policy debate” passages → Expect fiscal policy, monetary policy, Keynesian economics, monetarism, laissez-faire
- “Globalization & trade” passages → Expect comparative advantage, global value chains, neoliberalism, globalization
- “Development & equity” passages → Expect development economics, HDI, inequality, sustainable development, human development
- “Innovation & change” passages → Expect creative destruction, capitalism, game theory, behavioral economics
Pro tip: When you spot 2-3 economics terms in the first paragraph, you immediately know the passage type and can anticipate questions. A passage mentioning “externalities” and “market failure” will likely discuss government intervention—prepare for inference questions about policy solutions.
