As much as grammarians hate to admit it, sometimes language refuses to play by the rules. It’s therefore easy to make mistakes without realising it.
The word ‘geographical’, for example, means ‘relating to geography’, so the term ‘economical’ must mean ‘relating to the economy’, right? If only life were that simple…
The actual meaning of ‘economical’ is ‘to make effective use of money’ or ‘not wasteful or extravagant’. As such, we might say:
We need an economical approach to marketing.
An ‘economical approach’ here would be one that offers value. Saying something is ‘economical’ doesn’t have to be about money, though. It can refer to any situation in which something is used sparingly or efficiently:
This sandwich is perfect due to an economical application of mustard.
Something that’s excessive or wasteful is ‘uneconomical’. So although ‘economical’ does often relate to money, it’s not a word we’d usually employ when talking about the economy.
The term to use when discussing markets, money and finances is ‘economic’ (no ‘-al’ required):
A person’s spending power depends on their economic status.
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Various economic factors contributed to the financial crisis in 2008.
As above, the main use of this word is to refer to the economy or the science of economics (e.g. ‘economic theories’).
These terms are frequently confused because they break the normal rules.
Usually, the suffix ‘-al’ means ‘pertaining to’, so a word modified with ‘-al’ will be an adjectival form of another word (such as with ‘magic’ and ‘magical’).
The term ‘economical’ is a little different. Even though it is an adjective, it relates specifically to effective use of resources, not the economy in general.
The best way to remember this is to think of ‘economical’ as a modification of ‘economic’, where ‘economic’ means ‘pertaining to money’. Adding ‘-al’ gives it the narrower meaning of ‘to make effective use of money’. Remember:
Economical = Efficient or not wasteful
Economic = About the economy, money or finances
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