English For Students of Economics

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ENGLISH FOR STUDENTS OF ECONOMICS
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Hooshang Khoshsima Omid Khatin-Zadeh

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In the Name of Allah
Most Compassionate and Most Magnificent
ENGLISH FOR STUDENTS

OF ECONOMICS
Hooshang Khoshsima Associate Prof. of TEFL
(Faculty Member of CMU Phd Candidate)
Omid Khatin-Zadeh (Phd Candidate)
Afsane Askari (Phd Candidate)
Morteza Sayareh (Faculty Member of CMU)
Hassan Banaruee (Phd Candidate)
2018
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Contents
UNIT 1: ECONOMICS ...................................................................... 7

UNIT 2: MONEY.............................................................................. 29
UNIT 3: MARKETS ......................................................................... 51
UNIT 4: LABOR AND FINANCIAL MARKETS ........................ 73
UNIT 5: ELASTICITY .................................................................... 95
UNIT 6: SIZE OF THE ECONOMY ........................................... 113
UNIT 7: ECONOMIC GROWTH ................................................ 135
UNIT 8: UNEMPLOYMENT........................................................ 159
UNIT 9: INFLATION .................................................................... 179
UNIT 10: TRADE ........................................................................... 197
REFERENCE ................................................................................. 215

Unit 1
ECONOMICS
UNIT FOCUS:
• Reading 1: Economics
• Reading strategy: Question-Answer Strategy
• Vocabulary: Matching Pairs
• Grammar: Present Simple
• Reading 2: Introduction to Economics
“Economics is the study of how society manages its
scarce resources.”
(N. Gregory Mankiw)
8 ENGLISH FOR STUDENTS OF ECONOMICS
Check up
Think carefully about how well you know each target word in this
unit. Then, write it in the appropriate column in the chart.
distribution goods objectives wages

consumption scarce resources invest
allocation forces alternative policy
agricultural firms loss Monopoly capital
individually industrial labor
Equity Efficiency luxuriousl Economic

incomes y growth
payment services entreprene manufacturing
urial plants
material factors of
owners production
Equipment Price stability
opportunity costs
I have I have I I have I use the I use the

never seen understand tried to word with word with
seen the the word use this confidence confidence
the word when I see word but in either both in
word but am or hear it I am not speaking speaking
before. not in a sure I or writing. and
sure sentence. am using writing.
what it it
means. correctly.
Unit 1: ECONOMICS 9
Reading One
Read the Text. Underline the New Words from the Previous Section.
Economics
Understanding how various economies work

What is the main idea of
is the basic purpose of studying economics. the first paragraph?
We seek to know how an economy1 is
organized, how it behaves, and how 1. wealth and resources
in a country
successfully it achieves 2 its basic objectives 3.
2. Gets
Economics is concerned with production,
distribution 4, and consumption of goods and 3. Goals
services. There are two branches 5 of 4. The action of sharing

economics. Macroeconomics (macro
6 5. Fields
derives from the Greek word for “large”)
investigates 7 how scarce resources are 6. Comes
allocated within the economy as a whole8 or
7. Studies
within an entire 9 industry. Scarcity occurs 10
because human wants exceed the production 8. Complete
possible with our limited time and resources. 9. Whole
Scarcity implies11 that every decision 10. Happens

involves opportunity costs. Opportunity
11. Suggests
costs exist in all situations where available
resources are not abundant12 enough to What is opportunity
satisfy13 all our desires. You can select only cost?
a few of all available alternatives14. For 12. Available in large

example, a little boy goes into a toy store quantity
with $10. Many different toys tempt15 him,
13. Meet, Convince
but he finally narrows his choice to a
Monopoly16 game and a magic set, each 14. Options
costing $10. If he decides to buy the 15. Attract

Monopoly game, the opportunity cost is the
magic set. And if he buys the magic set, the

opportunity cost is the Monopoly game. If a 16. A kind of game.
town hires17 an extra police officer instead 17. Employs

of repaving several streets, the opportunity
18. Losing
cost of hiring the officer is not repaving the
streets. 19. One by one
20. In group
Opportunity cost is the cost of giving up18
the next best alternative. Thus scarcity 21. Normally, Usually
forces us to choose. This idea is reflected in 22. Feel pain, bad
the following definition of economics: experience
Economics is the study of how people,
23. Inactive
individually19 or collectively20, allocate
their limited resources to try to satisfy their 24. Unstable, change
suddenly
unlimited wants. Commonly21 agreed-upon
goals of macro policy include: 25. Profit
26. Successful
High employment: People suffer22 when
many workers cannot find job and 27. The language of
manufacturing plants and much machinery Greece
are idle23. Price stability: If average prices 28. Doing sth officially
are volatile24, people may be uncertain agreed
about how much their wages will buy or Which one is more
whether to consume now or invest in hopes important, macro or
of future returns25. Economic growth: microeconomics?
People want higher incomes each year and 29. Not working well
most hope their children will be even more
30. Misuses, uses
prosperous26 than they are. wrongly
Microeconomics (micro derives from the 31. Big, Vast

Greek27 word for “small”) studies the 32. Distances
economic behavior of individual firms.
Three major goals dominate micro policy28: 33. Make some people
poor.
Efficiency: An inefficient29 economy
Unit 1: ECONOMICS 11
wastes30 resources and fails to provide the

34. People with high
highest possible standard of living for
money and positions in
consumers. Equity: Huge31 gaps32 between society
the rich and the poor leave most people
35. Very comfortably
impoverished33 while a privileged34 few live
luxuriously35. Freedom: Maximum freedom 36. Needs
requires36 people to have the widest possible
37. Ground, Property
range of choices available.
38. Work
In order to produce anything, we need
39. Money in business
resources, or factors of production. Factors
of production are the inputs – land37, labor38, 40. Point of view
and capital39 (buildings and machinery) – we
41. Goods
use to produce final goods and services
(output). From an economist’s standpoint40, 42. Community
resources refer to anything that can be used
43. A country
to produce products41, that is, either goods or
services. Every society42, from a tiny island 44. Complicated, not
simple
nation43 in the Pacific to the most complex44
industrial giants45, needs these resources: 45. Very large
land, labor, and capital and entrepreneurial46 companies
ability. Land and capital are referred to as 46. Starting or arranging

material resources. Labor and business deals to make
entrepreneurship are referred to as human money and often
involves financial risks.
resources. These are resources for the
economy as a whole. 47. Educated in
Economics
As a resource, land has a much more general
48. Farming
meaning than our normal understanding of
the word. Economists47 use the term land in 49. Lumber, Wood
a broad sense to include not only
50. Facility
agricultural48 land and land for building sites
but also other natural resources like 51. Educated in Law
minerals, water, and timber49. The basic
payment made to the owners of land is rent.

52. Start up in business
Capital: In economic terms, capital is “man-
made” goods used to produce other goods or 53. Collects, Puts
services. Equipment50, buildings, tools as together
well as the money that buys other resources 54. Get the profit
are capital goods. Labor: The efforts of a
factory worker, a lawyer51, a sales 55. A company or
business
representative, or anyone who works for a
business are defined as labor. 56. Desirable
Entrepreneurial ability is the least familiar of
57. Customs
four basic resources. The entrepreneur sets
up a business52, assembles53 the needed 58. Strong desires
resources, risks his or her own money, and

reaps the profits54 or absorbs the losses of
this enterprise55.
Although all economies rely on the same basic factors of production,

not all are blessed56 with the same quantity and quality of resources,
besides each economic system reflects the country’s history,
traditions57, aspirations58, and politics. What works for one culture
might not work as well for another, and vice versa.
Dilts, A. D. (2004). Introduction to Microeconomics, E201. (71-86).

Fort Wayne, Indiana, Purdue University.
Digest what you read

A. Based on the information given in the text select True,
False, Not Given.
…….1- Economics deals with production, distribution, and

construction of goods and services.
…….2- People suffer when workers cannot find job and much
machinery are inactive.
…….3- Microeconomics studies the economic behavior of individual
film.
…….4- Land and capital are referred to as material resources.
…….5- Economic systems reflect a country’s history, traditions,
aspirations, and politics.
B. Select the best answer for the items below. Refer to

the text to check your answers.
1- What is the basic purpose of economics?
A) To know how an economy is organized.
B) To allocate the limited sources
C) To understand the mechanism of economies
D) To study the behavior of consumers
2- Why does scarcity occur?

A) Every individual wants everything
B) Economical policies are inefficient
C) Every decision involves opportunity costs
D) Humans want exceed the unnecessary production
3- Which of the goals are not agreed upon in macroeconomics policy?

A) High Employment
B) Economic growth
C) Price stability
D) Equity
4- Which one is not a goal in microeconomics?

A) Efficiency
B) Freedom
C) Factors of production
D) Equity
5- Which one is true about factors of production?

A) They produce anything and resources
B) They are buildings, laborers and machinery
C) They are human resources, capital and land
D) They are capital, land and labor
C. Answer the following questions and discuss them in

the class.
1. What is economics concerned with?
2. What does macroeconomics investigate?
3. Why does scarcity occur?
4. What are the main goals of macro policy?
5. What does microeconomics study?
6. What do resources refer to?
D. Look at the pictures. Using the information in the

text, discuss them in class.
E. Pair work, in respect to the pictures in the previous

section. Answer the questions below.
1- What are critical economic sources in danger of scarcity
in your country?
2- Which factor of production is the most important in
economic growth in your opinion?
3- Does distribution imply an important in economies’
competition?
4- In respect to economical policies, which one is present in
today’s world, equality or equity?
Reading Strategy: Answering questions

This strategy encourages you to learn how to answer questions better.
You are asked to indicate whether the information you used to answer
questions about the text was directly stated in the text, indirectly stated
in the text, or entirely from your own background knowledge.
Questions can be effective because they:

• Give you a purpose for reading
• Focus your attention on what you are to learn
• Help you think actively while reading
• Encourage you to monitor your comprehension
• Help you review content and relate what you have learned to
what you already know
But how?
1- Some questions are always right there in the text, you can find
the answers while reading. As an example in the previous
reading,
Opportunity cost is the cost of giving up the next best alternative.
Understanding how various economies work is the basic purpose of
studying economics.
You could read better if you ask what opportunity cost is. And what is
the basic purpose of studying economics?
2- Sometimes you need to think and search while reading. As an
example in the previous reading,
Opportunity cost is the cost of giving up the next best alternative.
Thus scarcity forces us to choose. This idea is reflected in the
following definition of economics: Economics is the study of how
people, individually or collectively, allocate their limited resources to
try to satisfy their unlimited wants.
You could ask why scarcity forces us to choose and then the answer
would make the text easy to understand.
3- Very often the questions are between you and the writer. As in
the exercise sections C and D you need to use what you already
know, with what you have learned from the text. In this
strategy, your background knowledge helps the learning
process of new items.
Vocabulary Loading
A. Using the words given in the box find pairs from the passage.
Example: distribution- Distribution of goods and services
distribut goo objecti wage Equity luxuriousl Economic

ion ds ves s Efficie y growth
consum scar resourc inves ncy entrepren manufacturing
ption ce es t income eurial plants
allocati forc alterna polic s material factors of
on es tive y payme owners production
agricult firm Monop capit nt Equipmen Price stability
ural s oly al service t opportunity
individu loss industr labor s costs
ally ial
B. Find matching pairs. Translate them into Persian.
Part 1 Part 2 Pairs Translation
various objectives
basic economies
satisfy goods and service
achieve economics
consumption of resources
branches of desires
scarce purpose
limited costs
opportunity his choice
narrows time and resources.


basic objectives
idea is reflected
available goals
absorbs the machinery
agreed-upon resources
macro employment
High Policy
manufacturing stability
idle losses
Price plants
agricultural representative
building terms
basic land
In economic sites
capital payment
sales needed resources

sets up a the profits
assembles the money
risk goods.
reaps business
factors of industrial giant

produce final ability.
From resources
economists'
produce resources
complexs meaning
entrepreneurial sense
material products
human standpoint
general goods and
services
in a broad production
average incomes
volatile economy
Economic behavior
higher firms
economic prices
individual prices
micro choices
inefficient policy
wastes growth
range of resources
C. Pair Work. Fill in the blanks using the proper words

from the previous section.
1. The efforts of a factory worker, a lawyer, a …………………, or
anyone who works for a business are defined as labor.
2. The entrepreneur sets up a business, assembles the needed
resources, risks his or her own money, and reaps the profits or
………………… of this enterprise.
3. All economies rely on the same basic ……………………., not all
are blessed with the same quantity and quality of resources.
4. Economics is concerned with production, distribution, and
………………………and services.
5. If …………………. are volatile, people may be uncertain about
how much their wages will buy or whether to consume now or
invest in hopes of future returns.
Grammar injection
Fill in the blanks with the correct form of the verbs from the reading
one.
Achieve, leave, investigate, occur, imply, hire, force, reflect,
waste, require
1. We seek to know how an economy is organized, how it behaves,

and how successfully it ………………...its basic objectives.
2. Huge gaps between the rich and the poor ………….most people
impoverished while a privileged few live luxuriously.
3. Macroeconomics ………………how scarce resources are allocated
within the economy as a whole or within an entire industry.
4. Scarcity ……………..because human wants exceed the production
possible with our limited time and resources.
5. Scarcity ……………. that every decision involves opportunity
costs.
6. If a town …………..an extra police officer instead of repaving

several streets, the opportunity cost of hiring the officer is not
repaving the streets.
7. Thus scarcity ………….us to choose. This idea is reflected in the
following definition of economics:
8. Besides each economic system …………..the country’s history,
traditions, aspirations, and politics. What works for one culture
might not work as well for another, and vice versa.
9. An inefficient economy …………..resources and fails to provide
the highest possible standard of living for consumers.
10. 11. Maximum freedom …………….people to have the widest
possible range of choices available.
Grammar Handling
A. Economics is a science and its texts are scientific. When reading

scientific passages readers encounter academic facts.
Grammatically often the verbs are present simple. In respect to
the subject of the sentence the verb is singular with third person S
or plural in its base form.
For example:
Macroeconomics investigates how scarce resources are allocated
within the economy.
Could you find five more examples in the passage?
Present Simple Usage:
1- To talk about things which are repeated every day, every week,
every year, etc.
We always go on holiday in the summer.

2- To talk about permanent states which are not temporary.
They live in London.

3- For general facts, for example when talking about science.
Microeconomics studies the economic behavior of individual firms.
Reading Two
Check up
Fill in the blanks using the appropriate words.
exciting otherwise rebellion confront roots
remedy complex
Economics is ………... and important. Anyone who thinks

………….has failed to realize that economic ideas and practices have
moved people to……..…….. and nations to war. Many of the great
issues that ……………..us today – among them unemployment,
inflation, ecological decay – have economic………….. In order to
diagnose and ……………these ailments, we must first understand
their ………….. nature. (Milton H. Spencer)
Discuss the following questions using the

What is the text about?
information provided in the previous text.
1. Have Made
1. Do you share the opinion that economics
is exciting and important? Give your 2. The technical words
reasons.
3. Subjects
2. How can economics help understand the
nature of ailments as unemployment 4. Stockholder
inflation? 5. Gross Domestic
3. List the main economic problems Product
affecting the world today. How can the
6. Gross National
knowledge of economics help solve
Product
them?
7. Available goods and
4. Why are Rembrandts expensive while
services
water is cheap – especially since
everyone needs water more than 8. The need for goods
Rembrandts? and services
5. Why are some luxury apartments vacant 9. Expenses

while there is a shortage of low-cost
housing? 10. Profits generated or
saved
6. Why do the prices of some commodities
fluctuate while the prices of others 11. The value of the
remain stable? money of one country
compared to another’s.
Reading Two
Read the Text. Underline the New Words 12. Quickly
from the Previous Section.
13. Related to
Institutions
Introduction to Economics
14. Work well together
Economists have developed1 the
terminology to describe economic issues3.
2 15. Different
This terminology is important because if you 16. Related to mind

are going to talk about the state of the
17. Affects
economy, you need the terminology to do it.
Shareholder4, GDP5, GNP6, capital, supply7

and demand8, costs9, benefits10, exchange 18. Companies
rate11 are just a few of the terms the meaning 19. Authorities, Nations
of which any educated person in modern
20. Conventions
society needs to know. Two terms to be
introduced to you immediately12 are the 21. Related to religion
economy and economics. The economy is
22. Purposes
the institutional13 structure through which
individuals in a society coordinate14 their 23. Establish, decide
diverse15 wants or desires. Economics is the 24. Specific
study of the economy. That is, economics is
the study of how human beings in a society 25. Educated
coordinate their wants and desires. 26. Carefully
An economic institution is a physical or

mental16 structure that significantly influences17 economic decisions.
Corporations18, governments19, and cultural norms20 are all economic
institutions. Many economic institutions have social, political, and
religious21 dimensions. For example, your job often influences your
social standing. In addition, many social institutions, such as family,
have economic functions22. If any institution significantly affects
economic decisions, it can be considered as an economic institution.
Even cultural norms can affect economies. A cultural norm is a
standard people use when they determine23 whether a particular24
activity or behavior is acceptable.
Learning economic reasoning means learning how to think as an

economist. People trained in economics think in a certain way. They
analyze everything critically. Having put their emotions aside, they
compare the costs and the benefits of every issue and make decisions.

Answer the following questions. Discuss the answers with your

partner.
1. Why is it important to learn economic terminology?
2. What is an economic institution?
3. How can cultural norms affect economies?
4. What is meant by ‘economic reasoning’?
5. What is a cultural norm?
Enhancing Your Vocabulary
1- Match the words on the left with their definitions or synonyms on

the right. Find their Persian equivalents with your partner.
Words Definitions
1. exchange rate a. The desirable and measurable result from
an action, investment or resource.
2. corporations b. A problem of enormous dimensions.
3. society c. A legal entity that is separate and distinct
from its owners.
4. benefits d. Strongly wish for or want (something).
5. diverse e. the rate at which one currency will be
exchanged for another.
6. desires f. in a sufficiently great or important way as
to be worthy of attention.
7. educated g. with decisive or crucial importance in the
success or failure of something.
8. dimensions h. literate, schooled
9. significantly i. Showing a great deal of variety; very
different.
10. critically j. The aggregate of people living together in a
community.
2. Translate the text into Persian.
Economists have developed the terminology to describe economic

issues. This terminology is important because if you are going to talk
about the state of the economy, you need the terminology to do it.
Shareholder, GDP, GNP, capital, supply and demand, costs, benefits,
exchange rate are just a few of the terms the meaning of which any
educated person in modern society needs to know. Two terms to be
introduced to you immediately are the economy and economics. The
economy is the institutional structure through which individuals in a
society coordinate their diverse wants or desires. Economics is the
study of the economy. That is, economics is the study of how human
beings in a society coordinate their wants and desires.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
3. Fill in the blanks with the correct form of the verbs from Reading
Two.
develop introduce coordinate influence consider

determine affect Put aside mean analyze
1. Economists ………………… the terminology to describe economic

issues.
2. Two terms ………………….. to you immediately are the economy
and economics.
3. Economics is the study of how human beings in a society
…………….. their wants.
4. Your job often …………… your social standing.
5. If any institution significantly affects economic decisions, it can
…………………... as an economic institution.
6. A cultural norm is a standard people use when they ……………
whether a particular activity or behavior is acceptable.
7.……………….. their emotions …….., they compare the costs and
the benefits of every issue.
8. Learning economic reasoning means learning how to think as an
economist.
9. Even cultural norms can …………….economies.
10. People trained in economics think in a certain way. They ………...
everything critically.
Self-Check
Check your progress in this unit. Tick (D) the statements which
are true about you.
• I can define economics in English.

• I have learned more than 50 words from this unit.
• I can expand my vocabulary with matching pairs.
• I have learned more than 100 words from this
unit.
• This unit helped me understand my technical
subject better.
Unit 2
Money
UNIT FOCUS:
• Reading 1: Money in an Economic System

• Reading strategy: Metacognitive Strategy
• Vocabulary: Synonyms
• Grammar: Simple Present Passive
• Reading 2: Foreign Exchange
“It is not how much money you make, but how much
money you keep, how hard it works for you, and how
many generations you keep it for.”
(Robert Kiyosaki)
Check up
Market Barter Functions Medium

Tender Fiat Authority Value
Receipts Ratio Customers Trade
Shortage Coincidence Commodities

Export Payment Negotiations
Currency Account Transactions

word word,
the when I see in either both in
but am but I am
word not or hear it not sure speaking speaking
before. sure in a I am or writing. and
what it sentence. using it writing.
means. correctly.
Reading One What is the main idea of

Read the Text. Underline the New Words the first paragraph?
1. Makes easy
Money in an Economic System 2. Related to
Money facilitates1 market activities and is 3. Co-occurrence,

Coexistence
necessary for complex market systems. With
Unit 2: Money 31
money, people can avoid the problems

4. Exchange of goods
associated2 with coincidence3 of wants. and services without
Among, these problems is the pricing of using money
commodities. Prices stated in terms of all 5. Discussing
possible trading goods makes it difficult to
determine what anything costs. In barter4 Are there any other
functions of money?
economies hours are spent in negotiating5
6. Usage
for even simple transactions, these hours are
resources that could have been spent on 7. Contain
other activities (therefore the hours of 8. Means. Tools
negotiations are the opportunity cost of a
9. Stock, fund, supplies
money economy).
10. A standard unit,
The functions6 of money include7; (1) system
medium8 of exchange, (2) store9 of value, 11. Goods

and (3) a measure10 of worth, because 12. Shopped
money is acceptable as a form of payment
13. Artificially, nearly
for all commodities11, barter is no longer
needed. Money can be easily stored in a tin 14. Business deals
can or bank account, so commodities need 15. Considerably,
not be stored and can be purchased12 when significantly
needed. Because money is acceptable in 16. Money that must be

virtually13 all transactions14, prices can be accepted as payment
stated in terms of dollars or yen thereby 17. Stock, supply, Store.

simplifying transactions substantially15. In A supply of commodity
or money not needed for
other words, money is the grease that immediate use but
available if required.
lubricates any complex economic system.
18. Money, legal tender
Fiat money is what is common in modern
19. Supported
economic systems. Fiat money is money
that is defined as legal tender16 by either a 20. Indicated, Made
known
government or some organization with the
authority to define legal tender. In the
United States, the Federal Reserve System
issues Federal Reserve17 Notes, which serve

21. Proportion, the
as the legal tender for the United States.
quantitative relation
The currency18 used here is backed19 by between two amounts
nothing except the faith of the general showing the number of
times one value contains
public that this money will be acceptable by
or is contained within
everyone else with whom you could have the other
an economic transaction.
22. Valued more than it
is
President Nixon in 1971 took the United
States off of the gold standard. Up to that 23. Unused, deserted,
point of time the value of the dollar was rejected
expressed20 in some fixed ratio21 to the 24. Approximately 28

commodity – gold. The end result was the grams
dollar had become seriously over-valued22, 25. During, Business,
and something had to be done so that Content
American exports could resume to our
26. Making the meaning
trading partners. When the U.S. of
23
abandoned the gold standard gold went
How old is fiat money?
from less than forty dollars an ounce24, to
over $1000 an ounce in a matter25 of weeks, 27. An unusual, stupid
thus illustrating26 the folly of pegging27 act of setting prices.
one’s currency to the value of some 28. Producing

commodity.
29. Clients, Buyers
Fiat money is not a new idea. Some 30. The holder, carrier of
European historians identify the first use of the note who the note
belongs to.
fiat money in Europe resulting from gold
and silver smiths issuing28 their customers29 31. Bilateral
receipts for gold or silver left in their care.
32. Belief in honesty and
The receipts were commands over that gold goodness
and silver and began to trade as easily as the
33. Rules
commodity itself, to the extent that the
parties to the transaction knew of the smith 34. Lack, Scarcity
and the note bearer30. This trade in receipts
Unit 2: Money 33
dates back to the mid-fifteenth century.

35. Respects, Polite
Hence, in this case the value of money is behavior
based on some mutual31 trust32 between the
Do you agree with the
principles33 to these transactions. history of fiat money?
The first recorded use of fiat money,

however, dates to three hundred years
earlier in Asia. Because of the shortage34 of
gold and silver to run the Mongol Empire, 36. Stupid, Rubbish
Genghis Kahn began to issue orders, in
37. Orders, rules,
writing, that the written order was to be decisions
given deference35 as a specific amount of 38. Connected with war
gold or silver. Genghis was known to be a and fighting
nonsense36 sort of guy, and the violation of 39. Thinking about the
his decrees37 were clearly unhealthy acts. past
Therefore these orders were the first fiat 40. Economic reasons
money recorded in history, and not backed Did Genghis have a
by anything save the martial38 might of the positive role in his whole
life?
Mongol Army. Perhaps, in retrospect39, it is
better that currency be acceptable on
economic grounds40 than under threat of
violence from a government.
Dilts, A. D. (2004). Introduction to
Microeconomics, E201. (107-109). Fort Wayne, Indiana, Purdue
University.

False, Not Given.
…….1- Money facilitates market activities and is necessary for
complex market systems.
…….2- Fiat money is what is common in modern economic systems.
…….3- The first recorded use of fiat money dates to 3000 years
earlier in Asia.
…….4- Barter is acceptable as a form of payment, so money is no
longer needed.
…….5- Pricing of commodities is a problem of coincidence of
wants.

1- Which sentence is true?
A) Money facilitates market activities but is not necessary for
complex market systems
B) Without money, people can avoid the problems associated

with coincidence of wants.
C) Pricing of commodities is a problem of coincidence of wants.
D) In barter economies hours are wasted on unnecessary

negotiations.
Unit 2: Money 35
2- Which one is not a function of money? Money is a………..

A) measure of worth
B) store of value
C) market facilitator
D) medium of exchange
3- Which expression is wrong about fiat money?

A) It is common in modern economic systems.
B) It is the currency used and acceptable by everyone having
economic transaction in society.
C) It is backed up only by general public currently.
D) It is the legal tender.
4- Why did President Nixon take the U.S.A off of the gold standard?
A) Because the value of the dollar was in a fixed ratio.
B) Because the dollar had become seriously over-valued.
C) To help American exports resume to their trading partners.
D) To decrease the value of gold.
5- Barter is a system that historically existed since the beginnings of

time. Why has barter been displaced by more modern systems?
A. The coincidence of wants makes exchange complicated
B. The coincidence of wants no longer exists in the world’s
economy
C. Gold and silver are now in plentiful supply so that money can
be used
D. None of the above

the class.
1. Does really money facilitate market activities?
2. Which function of money is the most important?
3. If the dollar gains value with respect to the Euro what would
happen to the import and export?
4. What department issues Reserve Notes in Iran?
5. Do you agree with the history of fiat money?
text, discuss them in class. You may choose as a topic
and write a composition (optional).
Unit 2: Money 37

section, answer the questions below.
1- Was gold better than fiat?
2- Was barter market better that modern market?
3- What if Genghis did not exist?
4- Can you think of a new market system?
Reading Strategy: Metacognition
This strategy is "thinking about thinking." Good readers use

metacognitive strategies to think about and have control over their
reading. Before reading, they might clarify their purpose for reading
and preview the text. During reading, they might monitor their
understanding, adjusting their reading speed to fit the difficulty of the
text and "fixing" any comprehension problems they have. After
reading, they check their understanding of what they read. Students
may use several strategies:
1. Identify where the difficulty occurs
"I don't understand the second paragraph on page 23."
2. Identify what the difficulty is

"I don't get what the author means when it is said, “Perhaps, in
retrospect, it is better that currency be acceptable on economic
grounds than under threat of violence from a government.”
3. Restate the difficult sentence or passage in your own words

“I think the author means, by paying attention to past (history), the
money in society be acceptable based on economic reasons not by
force.”
4. Look back through the text

“The fiat money is repeated many times, but I don't remember much
about it. Maybe if I reread the passage, I can figure out its meaning.”
5. Look forward in the text for information that might help them
to resolve the difficulty
“The passage says, in exports value of money is based on some mutual
trust between the principles to these transactions. Hmm, I don't
understand how governments can do that… Oh, the next reading is called
'exchange rate.' I'll read this section to see if it tells how they do it.”
Read the next reading and try to think about these strategies.
Vocabulary Loading
A. Using the words given in the box, find pairs from the passage.
Example: Barter- Barter economy
1.Market 6.Ratio 11.Value 16.Coincidence
2.Tender 7. Functions 12.Trade 17. Shortage
3.Receipt 8. Authority 13.Payment 18.Currency
4.Barter 9.Customer 14.Export 19.Commodities
5.Fiat 10.Medium 15.Account 20.Negotiations
21.Transactions
Unit 2: Money 39
B. Match the words from part A with their synonyms.
A)Deals H)Business place O)Use
B)Invoice I)Currency P)Government
C)Legal tender J)Order, legal Q)Scarcity

tender
D)Proportions K)Goods R)Means, method
E)Buyer L)Discussions S)Transmit
F)Exchange M)Goods exchange T)Price, worth
G)Financial record N)Coexistence U)Remittance
C. Find matching pairs. Translate them into Persian.

Market The problems
Avoid Activities
Pricing of Wants
Coincidence of Commodities
Trading Economy
Barter Goods
Money Economy
Hours of Exchange
Functions of Negotiations
Medium of Money

Store of Tender
Measure of Value
Form of Worth
Bank Public
Legal Payment
Reserve Ratio
General Partners
Fixed Commodity
Trading Notes
Value of Account

Customer Bearer
Note Trust
Mutual Receipts
Gold Smith
Recorded Orders
Issue Decrees
Unhealthy Grounds
Economic Acts
Violation of Gold
Shortage of Use
D. Pair Work. Fill in the blanks using the proper words

1. With money people can avoid the problems associated with
……………….. wants.
2. Because money is acceptable as a …………… payment for all
commodities, barter is no longer needed.
Unit 2: Money 41
3. The end result was the dollar had become seriously over-valued,
and something had to be done so that American exports could
resume to our …………….partners.
4. Some European historians identify the first use of fiat money in
Europe resulting from gold and silver smiths issuing their
…………. receipts for gold or silver left in their care.
5. Genghis was known to be a nonsense sort of guy, and the violation
of his ……………were clearly unhealthy acts.
Grammar injection
one.
Spend, Facilitate, State, Purchase, Express, Begin, Give,

Do, Back, Define
1. Money ……………… market activities and is necessary for

complex market systems.
2. In barter4 economies hours ……………. in negotiating5 for even
simple transactions, these hours are resources that could have been
spent on other activities.
3. Money can be easily stored in a tin can or bank account, so
commodities need not be stored and can …………….. when
needed.
4. Fiat money is money that ………………….. as legal tender by
either a government or some organization with the authority to
define legal tender.
5. The currency used here ………………. by nothing except the faith
of the general public that this money will be acceptable by
everyone else with whom you could have an economic transaction.
6. Up to that point of time the value of the dollar ……………..in
some fixed ratio to the commodity – gold.
7. Because of the shortage of gold and silver to run the Mongol

Empire, Genghis Kahn began to issue orders, in writing, that the
written order was to ………….. deference as a specific amount of
gold or silver.
8. Because money is acceptable in virtually all transactions, prices can
…………… in terms of dollars or yen thereby simplifying
transactions substantially.
9. The end result was the dollar had become seriously over-valued,
and something had to …………….. so that American exports could
resume to our trading partners.
10. Because of the shortage of gold and silver to run the Mongol
Empire, Genghis Kahn ……………. to issue orders
Grammar Handling
In scientific and academic texts when the author is writing the

passage uses plenty of passive verbs. The reason is, in passive voice
the doer, performer or narrator is not important, but the action and
the text are. And in academic texts the text and its information are
reliable not the writer.
Form of Passive
Subject + finite form of to be + Past Participle
How to change active into passive

the object of the active sentence becomes the subject of the passive
sentence
the verb is changed (to be + past participle)
the subject of the active sentence becomes the object of the passive
sentence (or is dropped)
Tense Subject Verb Object

Active An economist defines fiat money
Passive Fiat money is defined by an economist
Unit 2: Money 43
In the example above, it is not necessary to say who defines fiat

money; it is clear that the definition of fiat money is important. So,
you find the passive structure in the text not the active.
Reading Two
Check up
economic issues wages buy spend in complex
International …………… relations also depend, in large measure, on

monetary………... You are unlikely to accept the Turkish Lire …….
payment for your ………..in this country, simply because you can’t
easily use that money to ……… anything. You want U.S. dollars in
payment for your services, because you can easily……….. the dollar.
Look at the pictures. Discuss the following questions using the

1. What is the text about?
2. What do international economic relations depend on?
3. Do you accept to m be paid US dollar for your salary?
4. Do you accept Turkish Lire to be paid for your services?


the first paragraph?
1. Matters, Subjects
2. Doubtful, Improbable
3. Behavior
4. Money
5. Advanced
5. What does the Rial-Dollar Trend show?
6. Eurasian Economic
Read the Text. Union
Foreign Exchange
International economic relations also
depend, in large measure, on monetary
issues1. You are unlikely2 to accept the Why Iranian Tomans is
Turkish Lire in payment for your wages in not considered a hard
currency?
this country, simply because you can’t easily
use that money to buy anything. You want 7. Also
U.S. dollars in payment for your services,
because you can easily spend the dollar. 8. Power
Countries act3 the same way you do. There 9. Top, Most Powerful
are currencies that virtually everyone accepts
10. Comparative,
as payment, and those widely accepted Respective
currencies are called hard currency4. The
currency of the big, developed5, high income 11. Control, Set,
economies are the hard currencies – U.S. Ascertain
dollar, Japanese Yen, Canadian dollar, What currency is the
British Pound and the E.E.U.s’6 Euro. Prior most powerful compared
to the Euro, there were seven countries to Iranian Rials?
whose currencies were considered hard
currencies. In addition7 to the U.S., Japan,
Canada, and the United Kingdom, the French
Franc, German Mark, and Italian Lire were
also considered hard currencies. These seven
Unit 2: Money 45
nations are called the G-7 countries because

12. Obtains, Gets
the size and strength8 of their economies
made them the leading9 economic forces on 13. Importations
the planet, and their currencies the most
accepted. 14. Special, Specific
15. Each
Why the change in the

strength of dollar means
the change of advantage
to disadvantage?
16. Benefit
17. Poor, inadequate
18. Drawback,
Downside
19. Extra, Added
The relative10 value of currency is called the 20. Type

exchange rate. For example, one U.S. dollar 21. Is relevant,
may buy 109 Japanese Yen but only .85
Euros. It is these currency exchange rates 22. Costly
that, in large measure, determine11 net 23. Trade. Offer the sale
exports and foreign investment in the U.S.
24. Overseas
As the dollar gains12 strength, i.e., goes from
109 Yen to the dollar to 120 Yen to the 25. Reduction
dollar, then imports13 are cheaper. If at 110 26. Effects
Yen to the dollar a particular14 Japanese car
costs $20,000 that is also 2.2 million Yen. If 27. Unexpectedly
the dollar gains strength, and it can now 28. Related to,
purchase 125 Yen per15 dollar, then that 2.2 Regarding
million Yen car is only $17,600. As can be 29. Appealing,
readily seen the strong dollar give the Interesting
American consumer an advantage16 in
buying imports. If the dollar becomes weak17 30. Intends, Entails
then that advantage turns to disadvantage18. 31. Tackle, Manage,
Going back to the example above, if the 2.2
million Yen vehicle was available at $17,600
at 125 Yen per dollar, the additional19 cost

of $2400 would be observed if the dollar 32. Causing or relating
to the contraction of a
could only purchase 110 Yen. country’s economy
The same sort20 of analysis applies21 to
33. Budgetary, financial
American exports. With an expensive22
dollar it is hard to sell23 American goods 34. Normally, Usually
abroad24. If the Mexican Peso will buy 10
35. Appropriately
cents we may be able to sell some goods in
Mexico, however if the dollar becomes 36. Image, indication
stronger and Mexicans can only get 5 cents 37. Upgrade, assist,
per peso, we will observe a marked decline25 Advertise
in exports to Mexico.
38. National. Internal
Currency also impacts26 foreign investment.
39. Abroad
If our Mexican friends invest 2 million pesos
in the U.S. when the peso buys 10 cents 40. Prospects, Sides,
($200,000), and then suddenly27 the peso Features
becomes worth 25 cents ($500,000) the 41. About

foreign investor just made 250% on his
42. Rising prices
investment simply because the U.S. dollar
weakened with respect28 to the Mexican
peso.
43. A person who
On the other hand, if the Mexican investor persuades government
bought dollars at 25 cents per peso and over that a law or situation
should be changed
a year the dollar fell to 10 cents per peso, his
investment went from $500,000 to only 40% 44. Parts
of his original investment. In other words,
foreign investment becomes more
29
attractive with strength in the host countries’ currency.
A strong dollar policy means30 that the government will undertake31
policies that will increase32 the value of the dollar with respect to other
currencies. Contractionary32 fiscal33 and monetary policies are
typically34 associated with strong dollar policy and is properly35 the
subject of the next course (macroeconomics). Strength a nation’s
Unit 2: Money 47
currency is typically a reflection36 of its strong economy and

institutions. The relative supply and demand for a currency will also
impact the currency exchange rates.
Strong dollar policies promote37 the importation of goods and services
from abroad, and foreign investment in our domestic38 enterprises. On
the other hand, a weak dollar policy promotes the exportation of goods
and services abroad, and U.S. investment overseas39. Often, the
international aspects40 of domestic monetary and fiscal policies are
less important than political consideration in the U.S. or policy
consideration concerning41 unemployment or inflation42. However,
one must always remember that lobbyists43 and special interest groups
are quick to point-out to policy makers the advantages and
disadvantage of either policy for their constituents44 back home.
Dilts, A. D. (2004). Introduction to Microeconomics, E201. (110-

115). Fort Wayne, Indiana, Purdue University.
1- Match the words on the left with their synonyms on the right.
Find their Persian equivalents with your partner.
Words Definitions
1. Strength a. Financial
2. Monetary b. Power
3. Income c. Rising prices
4. Net d. Benefit
5. Foreign e. Components, Parts
6. Decline f. Respective, proportional
7. Relative g. Reduction
8. Constituents h. Overseas
9. Advantage i. After deductions
10. Inflation j. Earnings
Strong dollar policies promote the importation of goods and services

from abroad, and foreign investment in our domestic enterprises. On
the other hand, a weak dollar policy promotes the exportation of goods
and services abroad, and U.S. investment overseas. Often, the
international aspects of domestic monetary and fiscal policies are less
important than political consideration in the U.S. or policy
consideration concerning unemployment or inflation. However, one
must always remember that lobbyists and special interest groups are
quick to point-out to policy makers the advantages and disadvantage
of either policy for their constituents back home.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
Two.
Mean Promote Depend Undertake Impact

Observe See Call Consider Accept
1. There are currencies that virtually everyone ………………. as

payment, and those widely accepted currencies are called hard
currency.
Unit 2: Money 49
2. Prior to the Euro, there were seven countries whose currencies

…………….. hard currencies.
3. The relative value of currency …………….. the exchange rate.
4. As can ………. readily …..…….. the strong dollar give the
American consumer an advantage in buying imports.
5. If the 2.2 million Yen vehicle was available at $17,600 at 125 Yen
per dollar, the additional cost of $2400 ………………….. if the
dollar could only purchase 110 Yen.
6. Currency also …………….. foreign investment.
7. A strong dollar policy means that the government
…………………. policies that will increase the value of the dollar
with respect to other currencies.
8. Learning economic reasoning …………… learning how to think as
an economist.
9. Strong dollar policies ………………. the importation of goods and
services from abroad, and foreign investment in our domestic
enterprises.
10. International economic relations also ………….., in large
measure, on monetary issues.
Self-check
are true about you.
• I can define currencies and exchange rate in English.
• I can expand my vocabulary with synonyms.
• This unit helped me understand my technical subject
better.
Unit 3
Markets
UNIT FOCUS:
• Reading 1: Markets: Demand

• Reading strategy: Strategic Reader; LIP
• Vocabulary: Collocations
• Grammar: Simple Present Passive
• Reading 2: Supply
“The market economy is very good at wealth

creation but not perfect at all about wealth
distribution.”
(Jonathan Sacks)
Check up
Market Curve Supplier Seller

Schedule Increase Decrease Equation
Effect Slope Function Consumer
Buyer Demand Competitive

Utility Marginal Market
Total Substitution Negative Relation
Downward Sloping

what it it
means. correctly.
Unit 3: Markets 53

Read the Text. Underline the New Words
1. Centre
2. Certainly
Markets
3. Provider
A market is nothing more or less than the
4. Magical
locus1 of exchange it is not necessarily2 a
place, but simply buyers and sellers coming 5. Communication
together for transactions. Transactions occur
because consumers and suppliers3 are able to 6. Hidden
purchase and sell at a price that is 7. Cheaper but high in
determined through the free interaction of quality
demand and supply.
8. Convince
Adam Smith, in the Wealth of Nations,
described markets as almost mystical4 9. Eager
things. He wrote that the interaction5 of 10. Give money
supply and demand "as though moved by an
invisible6 hand" would determine the price 11. Supply
and the quantity of a good exchanged. In
12. Things
fact, there is nothing mystical about markets.
If competitive7, a market will always satisfy8 13. Rule
those consumers willing9 and able to pay10
the market price and provide11 suppliers What is the law of
with the opportunity to sell their wares12 at demand?
the market price. To understand the market, 14. Continually

one need only understand the ideas of supply
and demand and how they interact. 15. Foresee
Demand 16. Exactly, Truly
The law13 of demand is a principle of 17. Says
economics because it has been consistently14 18. Other things equal

observed and predicts15 consumers’ behavior
What is the concept of
accurately16. The law of demand states17 that
ceteris paribus?
as price increases (decreases) consumers
will purchase less (more) of the specific
commodity, ceteris paribus18. In other

words, there is an inverse19 relationship 19. The complete
opposite of something
between the quantity demanded and the price
of a particular commodity. This law of 20. A rule in most
demand is a general rule20. Most people situations
behave this way, they buy more the lower 21. One person
the price. However, everyone knows of a
The fallacy of
specific individual21 who may not behave as
composition arises when
predicted by the law of demand, but one infers that something
remember the fallacy22 of composition23 -- is true of the whole from
the fact that it is true of
because an individual or small group
some part of the whole
behaves contrary24 to the law of demand
does not negate25 it. 22. Misconception
The demand schedule26 (demand curve27) 23. The way things are
combined
reflects the law of demand. The demand
curve is a downward sloping28 function 24. In opposite
(reflecting the inverse relationship of price to 25. Deny
quantity demanded) and is a schedule of the
quantity demanded at each and every price. 26. Curve
As price falls from P1 to P2 the quantity 27. Schedule

demanded increases from Q1 to Q2. This is a 28. Higher or lower in
negative relation between price and quantity, one end
hence the negative slope of the demand
schedule; as predicted by the law of demand. 29. The highest
effectiveness
Consumers obtain utility29 from the
30. Final
consumption of commodities. Economists
have long recognized that past some point, 31. Condition, Situation
the consumption of additional units of a
What effects do income
commodity bring consumers less and less and substitution have on
utility. The change in utility derived from demand?
the consumption of one more unit of a 32. Stop increasing in
commodity is called marginal30 utility. The relation to the efforts you
idea that utility with the amount added to are making
total utility will decline when additional
Unit 3: Markets 55
units are consumed past some point has also

33. Reasonable
the status31 of principle. This principle is
called diminishing32 marginal utility. 34. Personal interest
Because consumers make rational33 choices,
35. Tries
that is they act in their own self interest34,
there are two effects that follow from their 36. Replacement
attempts35 to maximize their well-being
37. Recommend
when the price of a commodity changes.
These two effects are called the; (1) income 38. Consolidates,
effect, and (2) the substitution36 effect. Strengthens
Together these effects guarantee a
downward sloping demand curve.
The income effect is the fact that as a
person's income increases (or the price of
item goes down [which effectively increases
command over goods] more of everything What does the picture
will be demanded. The income effect above show?
suggest37 that as income goes down (price
39. The set of different
increases) then less of the commodity will be
facts that affect a
purchased. situation and must be
considered together
The substitution effect is the fact that as the
price of a commodity increases, consumers 40. Think, Presume
will buy less of it and more of other
41. Most
commodities. In other words, a consumer
will attempt to substitute other goods for the 42. Issue
commodity that became more expensive.
43. Collect
The substitution effect simply reinforces38
the idea of a downward sloping demand What are the price
curve. determinants?
The demand schedule can be expressed as a 44. Influencer

table of price and quantity data, a series of
equations39, or in a downward sloping graph.
To this point, our discussion has focused on
individuals and their behavior. Assuming40

that at least a significant majority41 of
consumers are rational, it is a simple
matter42 to obtain a market demand curve.
One needs only to sum43 all of the quantities
demanded by individuals at each price to
obtain the market demand curve.
Changes in the price of a commodity causes
movements along the demand curve; such 45. What you like
movements are called changes in the
quantity demanded. If price decreases, then 46. Things you like to
choose
we move down and to the right along the
demand curve; this is an increase in the 47. What you think or
quantity demanded. If price increases, then hope will happen
we move upward and to left along the
48. Worth having or
demand curve, this is a decrease in the doing
quantity demanded. Remember, (it is
important) such changes are called changes 49. Change
in the quantity demanded because the 50. The beginning, Start

demand curve is a schedule of the quantities
demanded at each price.
Movements of the demand curve itself, either to the left or right are
called changes in demand. A change in demand is caused by a change
in one or more of the nonprice determinants44 of demand. A shift to
the right of the demand curve is called an increase in demand; and a
shift to the left of the demand curve is called a decrease in demand.
The nonprice determinants of demand are; (1) tastes45 and
preferences46 of consumers, (2) the number of consumers, (3) the
money incomes of consumers, (4) the prices of related goods, and (5)
consumers' expectations47 concerning future availability or prices of
the commodity.
Unit 3: Markets 57
If the tastes and preferences of consumers change they will shift the
demand curve. If consumers find a commodity more desirable48,
ceteris paribus, then an increase in demand will be observed. If
consumer tastes wane for a particular product then there will be a
shift49 to the left of the demand (a decrease in demand).
An increase in the number of consumers or their money income will
result in a shift to the right of the demand curve (an increase in
demand). A decrease in the number of consumers or their income will
result in a shift of the demand curve toward the origin50 (a decrease in
demand). Consumers will also react to expectations concerning future
prices and availability. If consumers expect future prices to increase,
their present demand curve will shift to the right; if consumers expect
prices to fall then we will observe a decrease in current demand.

False, Not Given.
…….1- A market is necessarily a place and locus of exchange.
…….2- Demand and supply are the invisible hands of a market.
…….3- There is an inverse relationship between the quantity
demanded and the price of a particular commodity.
…….4- Consumers obtain utility from the construction of
commodities.
…….5- Changes in the price of a commodity causes movements
along the demand curve.

1- Why does transaction occur? Because…..
A) There are suppliers and sellers in the market
B) There are consumers and sellers in the market
C) Consumers and suppliers buy and sell through demand and
supply
D) Consumers and suppliers buy and sell at a free price
2- Which one is the definition of market by Adam Smith?
A) A mystical integration
B) An invisible hand
C) A determined price
D) A mystical interaction
3- Which one is wrong about the demand schedule?
A) It is the demand curve

B) It is a downward sloping function
C) It reflects the law of demand
D) It is the law of demand
4- Changes in the price of a commodity…...
A) Causes movements along the demand curve

B) Causes movements in the down of the curve
C) Decreases the price
D) Decreases the quantity demanded
Unit 3: Markets 59
5- Which one is not a non-price determinant of demand?

A. Tastes of consumers
B. Number of consumers
C. Expectations of consumers
D. Predictions of consumers

the class.
1. What determines the level of prices in a market?
2. What does a downward-sloping demand curve mean about how
buyers in a market will react to a higher price?
3 What is the difference between the demand and the quantity
demanded of a product?

1- What is the law of demand?
2- What is the difference between demand and demanded

quantity?
3- Is the demand curve always downward?
Reading Strategy: LIP
The first step in being a good strategic reader is to turn on the

meaning. It means that you should recognize different kinds of
meaning. This strategy makes you aware that three different kinds of
meaning can be constructed during reading — literal, inferential and
personal. They develop understanding that a reader’s prior knowledge
plays a significant role in constructing meaning and that multiple
meanings exist around a text.
Literal What do the words say?

Inferential What does the message mean?
Personal What do I think about it?
Unit 3: Markets 61
Turning back to the passage, let us have the word ‘market’ under
focus;
Literal meaning: A place to buy things.
Inferential meaning: It is not necessarily a place but you can buy and
sell things in market.
Personal meaning: It is a medium of exchange, that suppliers and

consumers meet to have transactions.
Try to test yourself by refering to key terms in the text and

recognizing different kinds of meaning they have.
Vocabulary Loading
A. Using the words given in the box find the right collocation from
the passage.
Example: Purchase- Purchase at a price
1.Result 10.Choice 19.Determined 28.Wane

2.Future 11.Contrary 20.Self interest 29.Locus
3.Sloping 12.Schedule 21.Downward 30.Table
4.Income 13.Fallacy 22.Command 31.Substitute
5.Satisfy 14.Unit 23.Interaction 32.Equation
6.Provide 15.Utility 24.Changes 33.Discussion
7.Predict 16.Transaction 25.Nonprice 34.Majority
8.Inverse 17.Consumption 26.Fall 35.Movements
9.Behave 18.Diminishing 27.Find
Note that literal meaning is the

same for all readers. The
infrential meaning is dependant
on how much the reader gets
from the passage. Yet the
personal meaning of every one
of us can be totally different
because it is dependant on how
well a reader is knowledgable in
that area.
Purchase at a price
Unit 3: Markets 63

Locus of Schedule
Free Utility
Predicts Sloping
Fallacy Exchange
Demand Interaction
Obtain Consumers
Diminishing Accurately
Downward Utility
Table of Composition
Majority of Quantity data

Demand To P2
Sloping Choices
From P1 Curve
Series Desirable
Quantity Determinants
Find Product
Future Of equations
Particular Demanded
Nonprice Function
Rational33 Availability
Satisfy Commodities
Inverse Incomes
Behaves Consumers
Consumption Demand
of
Additional Relationship
Law of Less
Invisible Contrary to
Consumers Units
Money And suppliers
More or Hands

1. The demand schedule can be expressed as a table of price and
quantity data, ………………………., or in a downward
sloping graph.
2. Assuming that at least a significant …………………… are
rational, it is a simple matter to obtain a market demand curve.
3. The demand curve is a downward ………………………and is
a schedule of the quantity demanded at each and every price.
4. If the tastes and preferences of consumers change they will
shift the demand……………….
5. If consumers find a commodity more
desirable,………………… then an increase in demand will be
observed.
Unit 3: Markets 65
Grammar injection
one.
Purchase, Sum, Sell, Understand, Maximize, Substitute,
Obtain, Increase, Fall, Pay
1. Transactions occur because consumers and suppliers are able

…………… and sell at a price that is determined through the free
interaction of demand and supply.
2. If competitive, a market will always satisfy those consumers willing
and able ………… the market price.
3. Transactions provide suppliers with the opportunity ………… their
wares at the market price.
4. ……………….. the market, one need only understand the ideas of
supply and demand and how they interact.
5. There are two effects that follow from their attempts ……………..
their well-being when the price of a commodity changes
6. The substitution effect is the fact that as the price of a commodity
increases, consumers will buy less of it and more of other
commodities. In other words, a consumer will attempt
…………………..other goods for the commodity that became
more expensive.
7. Assuming that at least a significant majority of consumers are
rational, it is a simple matter ………………. a market demand
curve.
8. If consumers expect future prices …………, their present demand
curve will shift to the right.
9. One needs only ………………... all of the quantities demanded by
individuals at each price to obtain the market demand curve.
10. If consumers expect prices …………… then we will observe a
decrease in current demand.
Grammar Handling
An infinitive is a phrase, consisting of the word to and the basic

form of a verb, that functions as a noun, an adjective, or an adverb.
There are five types of infinitives.
Subject
To understand the market, one need only understand the idea of
demand and supply.
Direct Object
If consumers expect future prices to increase their present demand
curve will shift to the right.
Subject Complement
Transactions occur because consumers and suppliers are able to
purchase at a price.
Adjective
Assuming that at least a significant majority of consumers are
rational, it is a simple matter to obtain a market demand curve.
Adverb(This type of use is absent in the passage)

I took the English class to try to learn an international language.
In the examples above, generally they express purpose and this is the
main idea to keep on your mind.
Unit 3: Markets 67
Reading Two
Check up
law sloping curve between quantity price
The ……. of supply is that producers will supply more the higher the
……. of the commodity. The supply curve is an upward ………..
function showing a direct relationship ……….. prices and the quantity
supplied. In other words, the supply ……. has a positive slope that
shows that as price increases (decreases) so too does …………
supplied.


2. Can you explain the law of supply? the first paragraph?
3. Can you predict the change in the supply 1. Increasing to a higher

curve based on the price? level
2. Without involving
others in between
3. A formal list or table

of something
4. Per
5. To make something
happen
5. What do the P and Q show? 6. Reduce
Read the Text. 7. Rise
8. Land, oil, capital,

Supply human
9. An amount of money
The law of supply is that producers will that must be paid to
supply more the higher the price of the government according
commodity. The supply curve is an upward1 to your income,
sloping function showing a direct2 property, goods etc.
relationship between prices and the quantity 10. Money that is paid
supplied. In other words, the supply curve by government to
has a positive slope that shows that as price reduce the cost of
increase (decreases) so too does quantity production or lower
prices.
supplied.
As with the demand curve a change in the 11. About
price will result in a change in the quantity 12. Expense

supplied. An increase in price will result in
an increase in the quantity supplied, and a 13. Successful
decrease in price will result in a decrease in 14. Reduction

the quantity supplied. Again, this is because
Unit 3: Markets 69
the supply curve is a schedule3 of the

15. Allocate again
quantities supplied at each4 price.
16. Present
Changes in one or more of the nonprice
determinants of supply cause5 the supply 17. Reuces
curve to shift. A shift to the left of the
18. For, Supporting
supply curve is called a decrease6 in supply;
7
a shift to the right is called an increase in 19. List, Checklist
supply. The nonprice determinants of supply
20. Answer, Feedback
are; (1) resource8 prices, (2) technology, (3)
taxes9 and subsidies10, (4) prices of other
goods, (5) expectations concerning11 future prices, and (6) the number
of sellers.
When resource prices increase, supply decreases (shifts left); and
when resource prices decrease, supply increases (shifts right). If a
more cost12 effective13 technology is discovered then supply increases,
increases in taxes cause the supply curve to shift left (decrease). An
increase in a subsidy effects the supply curve in the same way as a
cut14 in taxes, an increase in supply. If the price of other goods a
producer can supply increases, the producer will reallocate15 resources
away from current16 production (decrease in supply) and to the goods
with a higher market price. For example, if the price of corn drops17, a
farmer will supply more beans.
If producers expect future prices to increase, current supply will

decline in favor of18 selling inventories19 at higher prices later. In
other words, supply will decrease (a shift to the left, and exactly the
opposite response20 will occur if producer expect future prices to be
lower. If the number of suppliers increases, so too will supply, but if
the number of producers declines, so too will supply.
Dilts, A. D. (2004). Introduction to Microeconomics, E201. (120-

130). Fort Wayne, Indiana, Purdue University.
Words Definitions
1. ceteris paribus a. other things being equal
2. complements b. goods that are often used together so that
consumption of one good tends to enhance
consumption of the other
3. demand curve c. a graphic representation of the relationship
between price and quantity demanded of a
certain good or service, with quantity on the
horizontal axis and the price on the vertical
axis
4. excess demand d. at the existing price, the quantity demanded
exceeds the quantity supplied; also called a
shortage
5. excess supply e. at the existing price, quantity supplied
exceeds the quantity demanded; also called a
surplus
6. price ceiling f. a legal maximum price
7. quantity supplied g. the total number of units of a good or
service producers are willing to sell at a given
price
8. price floor h. a legal minimum price
9. substitute i. a good that can replace another to some
extent, so that greater consumption of one
good can mean less
of the other
10. shift in supply j. when a change in some economic factor
(other than price) causes a different quantity
to be supplied
at every price

Unit 3: Markets 71
Changes in one or more of the non-price determinants of supply cause

the supply curve to shift. A shift to the left of the supply curve is
called a decrease in supply; a shift to the right is called an increase in
supply. The non-price determinants of supply are; (1) resource prices,
(2) technology, (3) taxes and subsidies, (4) prices of other goods, (5)
expectations concerning future prices, and (6) the number of sellers.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
………………………
Two.
Result Reallocate Show Effect Cause
Decline Discover Call Supply Occur
1. The law of supply is that producers ……………. more the higher

the price of the commodity.
2. As with the demand curve a change in the price ……………… in a
change in the quantity supplied.
3. If a more cost effective technology ………………… then supply
increases, increases in taxes cause the supply curve to shift left
(decrease).
4. A shift to the left of the supply curve is called a decrease in supply;
a shift to the right ……………………. an increase in supply.
5. If the price of other goods a producer can supply increases, the
producer ………………... resources away from current production
6. The supply curve has a positive slope that …………. that as price
increase (decreases) so too does quantity supplied.
7. Changes in one or more of the non-price determinants of supply
……………… the supply curve to shift.
8. An increase in a subsidy ……………. the supply curve in the same
way as a cut in taxes, an increase in supply.
9. If producers expect future prices to increase, current supply
……………….in favor of selling inventories at higher prices later.
10. In other words, supply will decrease (a shift to the left, and exactly
the opposite response ………………… if producer expect future
prices to be lower.
Self-check
are true about you.
• I can define demand and supply in English.

• I can expand my vocabulary with recognizing different
types of meaning.
better.
Unit 4
Labor and Financial

Markets
UNIT FOCUS:
• Reading 1: Introduction to Labor and Financial Markets

• Reading strategy: Detective Reading
• Vocabulary: Collocations Part Two
• Grammar: Present Perfect
• Reading 2: Why Are Demand and Supply Curves Important?
“In a weak labor market, people go to these schools

to finish their degrees or to get more credentials in
hopes of eventually re-entering the work force.”
(Michael Jaffe)
Check up
Financial Labor Employee Firm

Expense Salary Saving Borrowing
Loan
Hire Demander
Wage
Policy Employment Interest Rate

Process Education Rate of Return
Average Alternatives Misallocation

what it it
means. correctly.
Unit 4: Labor and Financial Markets 75
Reading One
Introduction to Labor and Financial

Markets
The theories of supply and demand do not the first paragraph?
apply1 just to markets for goods. They apply
1. Request, Use
to any market, even markets for financial
services like labor and financial 2. Worker
investments. Labor markets are markets for 3. Getting money in
employees2 or jobs. Financial services order to pay back later
markets are markets for saving or
Who are the demanders
borrowing3. When we think about demand
and suppliers in labor
and supply curves in goods and services and financial service
markets, it is easy to picture who the markets?
demanders and suppliers are: businesses
4. All the people living
produce the products and households4 buy in a house
them. Who are the demanders and suppliers
5. People looking for a
in labor and financial service markets? In
job
labor markets job seekers5 (individuals) are
the suppliers of labor, while firms6 and other 6. Companies
employers who hire labor are the demanders 7. Helps
for labor. In financial markets, any
individual or firm who saves contributes7 to Why are household on
the supply side of the
the supply of money, and any who borrows market?
(person, firm, or government) contributes to
the demand for money. 8. Take part in
As a college student, you most likely 9. Bachelor, Students
participate8 in both labor and financial 10. Be connected with

markets. Employment is a fact of life for
most college students: In 2011, says the

11. In first place
BLS, 52% of undergraduates9 worked part
time and another 20% worked full time.
Most college students are also heavily
involved10 in financial markets, primarily11
as borrowers. Among full-time students,
12. Get money from a
about half take out a loan12 to help finance
bank
their education each year, and those loans
average13 about $6,000 per year. Many 13. Medium
students also borrow for other expenses14, 14. Costs
like purchasing a car.
15. This side or that side
In the labor market, households are on the
supply side of the market and firms are on
the demand side. In the market for financial
capital, households and firms can be on
either side15 of the market: they are
16. Appraised,
suppliers of financial capital when they save calculated
or make financial investments and
demanders of financial capital when they 17. Year
borrow or receive financial investments. 18. Different
In the demand and supply analysis of labor 19. A series of actions

markets, the price can be measured16 by the that are done to produce
products
annual17 salary or hourly wage received. The
quantity of labor can be measured in
various18 ways, like number of workers or the
number of hours worked. Factors that can
shift the demand curve for labor include: a 20. Coaching
change in the quantity demanded of the 21. Choices, Options
product that the labor produces; a change in
22. Limits, Stops
the production process19 that uses more or
less labor; and a change in government 23. Gives hope and
policy that affects the quantity of labor that energy, supports
firms wish to hire at a given wage.
Demand can also increase or decrease (shift)

in response to: workers’ level of education 24. Needed,
and training20, technology, the number of Necessary
companies, and availability and price of
25. The rate of the
other inputs. The main factors that can shift
profit or the income
the supply curve for labor are: how desirable which is made after
a job appears to workers relative to the investment
alternatives21, government policy that either
restricts22 or encourages23 the quantity of 26. The percentage
workers trained for the job, the number of of money charged
workers in the economy, and required24 by a bank when you
education. borrow money or
paid to you when
In the demand and supply analysis of you keep the
financial markets, the “price” is the rate of money in an
return25 or the interest rate26 received. The account
quantity is measured by the money that
27. Moves, Pours
flows27 from those who supply financial
capital to those who demand it. Two factors 28. Change
can shift the supply of financial capital to a
29. Present,
certain investment: if people want to alter28
Available
their existing29 levels of consumption, and if
the riskiness or return on one investment 30. The good feeling
changes relative to other investments. because of good
Factors that can shift demand for capital economic situations
include business confidence30 and consumer that you can trust
confidence in the future—since financial the economy
investments received in the present are 31. Usually,
typically31 repaid32 in the future. Normally
The market price system provides a highly 32. Fast
efficient mechanism for disseminating33
information about relative scarcities of 33. Spreading
goods, services, labor, and financial capital. information
Market participants do not need to know
why prices have changed, only that the

34. Decisions made
changes require them to revisit previous before
decisions34 they made about supply and 35. Allocating the
demand. Price controls hide information resources in the wrong
about the true scarcity of products and way
thereby cause misallocation35 of resources. How can the resources be

misallocated?
Greenlaw, S. A., Taylor, T., Dodge, E. R.,
Gamez, C., Jauregui, A., Keenan, D., . . . Sonenshine, R.
(2016). Principles of macroeconomics. (81-96) Houston, TX:
Openstax College, Rice University.

False, Not Given.
…….1- Market participants do not need to know why prices have
changed.
…….2- Financial services markets are markets for saving or
borrowing.
…….3- In the labor market, households are on the supply side of the
market.
…….4- The quantity of labor can be measured in various ways.
…….5- Price controls cause misallocation of resources.

1- Which of the following changes in the financial market will lead to

a decline in interest rates:
A) A rise in demand
B) A fall in demand
C) A rise in supply
D) A fall in supply
2- Which of the following changes in the financial market will lead to
an increase in the quantity of loans made and received:
A) A rise in demand
B) A fall in demand
C) A rise in supply
D) A fall in supply
3- Which one is the definition of market by Adam Smith?
A) A mystical integration
B) An invisible hand
C) A determined price
D) A mystical interaction
4- Which item is not one of the main factors that can shift the supply
curve for labor?
A) How desirable a job appears to workers relative to the
alternatives
B) The law of demand
C) The number of workers in the economy, and required
education.
D) Government policy that only restricts the quantity of workers
trained for the job
5- Which factor can shift the supply of financial capital to a certain

investment?
A) If people want to alter their exciting levels of consumption
B) If people want to alter their current levels of consumption
C) If the riskiness or return on one investment changes constantly
D) If the riskiness or return on one investment changes relative to
their investments
6- Which factor can shift demand for capital?
A) Business confidence
B) Consumer confidence
C) Financial investments
D) All of the above
7- Where is the place of households in the labor market?
A) On the supply side of the market
B) On the demand side of the market
C) On either side of the market
D) On no side of the market
the class.
1. In the labor market, what causes a movement along the demand
curve? What causes a shift in the demand curve?
2. In the labor market, what causes a movement along the supply
curve? What causes a shift in the supply curve?
3. In the financial market, what causes a movement along the supply
curve? What causes a shift in the supply curve?
4. In the financial market, what causes a movement along the demand
curve? What causes a shift in the demand curve?


1- Name some factors that can cause a shift in the demand curve in
labor markets.
2- Suppose that a 5% increase in the minimum wage causes a 5%
reduction in employment. How would this affect employers and
how would it affect workers? In your opinion, would this be a good
policy?
3- What would be a sign of a shortage in financial markets?
4- If the government imposed an interest rate ceiling of 20%

on all loans, who would gain and who would lose?
Reading Strategy: Detective Reading
Be a reading detective
Based on this strategy students learn
to evaluate reading tasks before they
begin to read. This helps them get
ready to read deliberately and
logically (strategically).
A lack of foresight about the
reading task can create difficulties
for students – they may not consider
why they are reading the text, they
may not allow sufficient time for
reading, or they may choose
material that is too difficult. These
difficulties can reduce their
motivation and make them less
likely to engage productively with
the text. During this activity,
students analyze the task and themselves as readers to understand:
Why they are reading?
How difficult the material is?
How long it will take them to read it?
What kind of information is presented?
What they should know when they finish reading?
In order to be a reading detective you need to ask three questions.
What is it about?
What kind of reading is it?
Why am I reading this?
How can you be like a detective when you read?’
Each reading task will become ‘the case’ to be solved. Explain that
students who are reading detectives must develop the habit of finding
all the clues in order to become successful readers. Like real
detectives, they have to work hard to find all the clues. Now look at
the text briefly and search for clues.
Vocabulary Loading
A.Using the words given in the box find the right collocation from the
passage.
Example: Apply- Theories apply to markets for goods
1.Apply 8.employer 15. Receive 22.Work

2.Picture 9. Relative 16.Provides 23.Loan
3.Demand 10.Contribute 17.As 24.Fact
4.Interest 11.Involved 18.Flow 25.Analysis
26.Require
5.Produce 12.Confidence 19.Rate
6.Mechanism 27. Either side
13.Borrow 20. Shift
7.Participate 28.Disseminating
14.Cause 21.Alter

Job Services .
Financial Seekers
Saving or Firm
Individual or Borrowing
Heavily Student
Full time Involved
Demanders and A Loan
Take out Suppliers
Per Expenses
Borrow for Year

Work Part time
Hire Side
A fact of Salary
Financial Labor
On the Life
Borrow or Wage
Annual Ways
Hourly Process
Various Investment
Production Receive
Financial Capital
Government Education
Labor Encourage
Given Factors
Relative to the Policy
Level of To
In response Wage
Main Alternatives
Restrict or Training
Required Market
Rate of Rate
Previous Confidence
Market Return
Disseminating Resources
Interest Information
Business Participants
Misallocation of Decision

1. In the demand and supply analysis of financial markets, the “price”
is the ………………. or the interest rate received.
2. …………………….. do not need to know why prices have changed
3. Price controls hide information about the true scarcity of products
and thereby cause ……… ………………..
4. The market price system provides a highly efficient mechanism for
…………………… …………… about relative scarcities of
goods,
5. Factors that can shift demand for capital include
…………………… and consumer confidence in the future.
Grammar injection
one.
Finance, Picture, Restrict, Flow, Change, Affect, Hide, Appear,

Require, Measure, Apply
1. The theories of supply and demand do not ………………just to

markets for goods.
2. When we think about demand and supply curves in goods and
services markets, it is easy …………………who the demanders
and suppliers are:
3. In the demand and supply analysis of labor markets, the price can
……………….. by the annual salary or hourly wage received.
4. Among full-time students, about half take out a loan to help
………………their education each year, and those loans average
about $6,000 per year.
5. The main factors that can shift the supply curve for labor are: how
desirable a job …………. to workers relative to the alternatives,
government policy that either …………… or encourages the
quantity of workers trained for the job.
6. A change in the production process that uses more or less labor; and
a change in government policy that …………….. the quantity of
labor that firms wish to hire at a given wage.
7. The quantity is measured by the money that …………….. from
those who supply financial capital to those who demand it.
8. Market participants do not need to know why prices
……………......
9. Changes ……………… market participants to revisit previous
decisions they made about supply and demand.
10. Price controls …………… information about the true scarcity of
products and thereby cause misallocation of resources.
Grammar Handling
Present perfect is a grammatical combination of the present tense

and the perfect aspect that is used to express a past event that has
present consequences.
Subject Auxiliary Verb Main Verb

Prices Have Changed
The sentence “Market participants do not need to know why prices

have changed” from the passages says that the price changing process
started before and the process or the result of this change is still
present.
Can you find more present perfect verbs in the passage?
Try to change the verb into negative.

Reading Two
Check up
Ceilings Result Supplied Falling Equilibrium

Surpluses Consequences
Price …………. prevent a price from rising above a certain level.

When a price ceiling is set below the …………… price, quantity
demanded will exceed quantity……………, and excess demand or
shortages will………… . Price floors prevent a price from …………..
below a certain level. When a price floor is set above the equilibrium
price, quantity supplied will exceed quantity demanded, and excess
supply or ……………will result. Price floors and price ceilings often
lead to unintended ………………...
Look at the picture. Discuss the following questions using the

1. What are the text and the picture about?

2. Can you explain the price floors?
1. Very important,
3. Can you explain the price ceilings? Principal
Read the Text. 2. Drawing
Why are demand and supply curves

important?
The demand and supply model is a fundamental1
diagram2 for a course of Economics. Just as it 3. Stupid
would be foolish3 to try to learn the arithmetic4
4. A branch of
of long division5 by memorizing every possible mathematics dealing
combination of numbers that can be divided by with manipulation of
each other, it would be foolish to try to numbers
memorize6 every specific example of demand 5. Dividing
and supply in this chapter, this textbook, or this
course. Demand and supply is not primarily a 6. Keep on mind
list of examples; it is a model to analyze prices 7. Reason

and quantities. Even though demand and supply
8. Fundamental
diagrams have many labels, they are
fundamentally the same in their logic7. Your 9. Shows
goal should be to understand the underlying8
10. General, Common
model so you can use it to analyze any market.
11 & 12
The figure below displays9 a generic10 demand
and supply curve. The horizontal axis11 shows
the different measures of quantity: a quantity of
a good or service, or a quantity of labor for a
given job, or a quantity of financial capital. The
13. Do. Perform
vertical axis12 shows a measure of price: the
price of a good or service, the wage in the labor 14. Form
market, or the rate of return (like the interest
15. Integrate, Aggregate
rate) in the financial market.
The demand and supply model can explain the

existing levels of prices, wages, and rates of 16. Balance
return. To carry out13 such an analysis, think
17. Probabilities
about the quantity that will be demanded at each
price and the quantity that will be supplied at 18. Occurrence,
each price—that is, think about the shape14 of Consequence
the demand and supply curves—and how these 19. Factor, Element
forces will combine15 to produce equilibrium16.
Demand and supply can also be used to explain

how economic events will cause changes in
prices, wages, and rates of return. There are only
four possibilities17: the change in any single
event18 may cause the demand curve to shift 20. General. Total
right or to shift left; or it may cause the supply
21. Numerous, Many
curve to shift right or to shift left. The key to
analyzing the effect of an economic event on 22. Alone, Separately
equilibrium prices and quantities is to determine
which of these four possibilities occurred. The
way to do this correctly is to think back to the list of factors that shift the
demand and supply curves. Note that if more than one variable19 is changing
at the same time, the overall20 impact will depend on the degree of the shifts;
when there are multiple21 variables, economists isolate each change and
analyze it independently22.
Figure 4.9 Demand and Supply Curves the figure displays a generic
demand and supply curve. The horizontal axis shows the different
measures of quantity: a quantity of a good or service, a quantity of
labor for a given job, or a quantity of financial capital. The vertical
axis shows a measure of price: the price of a good or service, the wage
in the labor market, or the rate of return (like the interest rate) in the
financial market. The demand and supply curves can be used to
explain how economic events will cause changes in prices, wages, and
rates of return.
Greenlaw, S. A., Taylor, T., Dodge, E. R., Gamez, C., Jauregui, A.,
Keenan, D., . . . Sonenshine, R. (2016). Principles of
macroeconomics. (45-80) Houston, TX: Openstax College,
Rice University.
Words Definitions
1. Fundamental a. Effect
2. Diagram b. The state which the quantity demanded
equals the quantity supplied.
3. Vertical axis c. A shape defined by one or more lines in
two dimensions or one or more surfaces in
three dimensions.
4. Generic demand d. When there are various variables in one
equation.
5. Horizontal axis e. The separation of numbers
6. Divisions f. The X axis on a graph.
7. Multiple variable g. The Y axis on a graph.
8. Figure h. Primary demand
9. Equilibrium i. A schematic representation, A drawing
10. Impact j. Forming a necessary base or core; of
central importance
2- Translate the text into Persian.
The demand and supply model can explain the existing levels of prices,
wages, and rates of return. To carry out such an analysis, think about the
quantity that will be demanded at each price and the quantity that will be
supplied at each price—that is, think about the shape of the demand and
supply curves—and how these forces will combine to produce equilibrium.
Demand and supply can also be used to explain how economic events will
cause changes in prices, wages, and rates of return. There are only four
possibilities: the change in any single event may cause the demand curve to
shift right or to shift left; or it may cause the supply curve to shift right or to
shift left. The key to analyzing the effect of an economic event on
equilibrium prices and quantities is to determine which of these four
possibilities occurred.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
………………………………………………………………………….
………………………………………………………………………….
…………………………………………………………………………
………………………………………………………………………….
…………………………………………………………………………
Two.
Display Analyze Understand Use Divide

Supply Explain Combine Be Change
1. It would be foolish to try to learn the arithmetic of long division by

memorizing every possible combination of numbers that can
……………….. by each other.
2. It …………….. foolish to try to memorize every specific example
of demand and supply in this chapter, this textbook, or this course.
3. Your goal should be ………………. the underlying model so you
can use it to analyze any market.
4. The demand and supply model can ………….. the existing levels of
prices, wages, and rates of return.
5. The figure below ……………… a generic demand and supply
curve.
6. To carry out such an analysis, think about the quantity that will be
demanded at each price and the quantity that …………….. at each
price
7. The key ………………… the effect of an economic event on
equilibrium prices and quantities is to determine which of these
four possibilities occurred.
8. Think about the shape of the demand and supply curves—and how
these forces ……………….. to produce equilibrium.
9 Demand and supply can also ……………. to explain how economic
events will cause changes in prices, wages, and rates of return.
10. If more than one variable ……………….. at the same time, the
overall impact will depend on the degree of the shifts
Self-check
are true about you.
• I can define labor and financial market in English.

• I can expand my vocabulary through reading as a
detective.
better.
Unit 5
Elasticity
UNIT FOCUS:
• Reading 1: Introduction to Elasticity

• Reading strategy: Answering Question
• Grammar: Third person S
• Reading 2: Is the elasticity the Slop?
“I try not to break the rules but merely to test

their Elasticity.”
(Bill Veek)
Check up
Think carefully about how well you known each target word in this
Elastic Constant Supply Elasticity Cross-priced

Infinite Elastic Incidence Zero Inelasticity
Price Unitary Demand Tax Of Saving

word word but
the when I see in either both in
but am I am not
word not or hear it sure I speaking speaking
before. sure in a am using or writing. and
what it sentence. it writing.
means. correctly.

Read the Text. Underline the New Words
from the Previous Section. 1. Regulation
Introduction to Elasticity 2. Result in
3. Vitally
Anyone who has studied economics knows
the law1 of demand: a higher price will lead 4. Idea
to a lower quantity demanded. What you
5. Reactivity
may not know is how much lower the
quantity demanded will be. Similarly, the 6. Assume, Think,
Consider
law of supply shows that a higher price will
lead2 to a higher quantity supplied. The Why are sin taxes?
Unit 5: Elasticity 97
question is: How much higher? This chapter

7. Leap
will explain how to answer these questions
and why they are critically3 important in the 8. Clearly
real world.
9. Wrong, Immoral act
To find answers to these questions, we need

to understand the concept4 of elasticity.
Elasticity is an economics concept that
measures responsiveness5 of one variable to
changes in another variable. Suppose6 you
drop two items from a second-floor balcony. 10. Governmental
The first item is a tennis ball. The second 11. Reduce, Drop
item is a brick. Which will bounce7 higher?
12. Goal
Obviously8, the tennis ball will. We would
say that the tennis ball has greater elasticity. 13. Income
Consider an economic example. Cigarette
14. Prevent, deter
taxes are an example of a “sin9 tax,” a tax on
something that is bad for you, like alcohol. 15. Instead, On the other
hand
Cigarettes are taxed at the state10 and
national levels. State taxes range from a low 16. Changing
of 17 cents per pack in Missouri to $4.35 per 17. Think about
pack in New York. The average state
18. On contrary,
cigarette tax is $1.51 per pack. The 2014
reversely
federal tax rate on cigarettes was $1.01 per
pack, but in 2015 the Obama Administration 19. Substantially
proposed raising the federal tax nearly a 20. Portion, Percent

dollar to $1.95 per pack. The key question
is: How much would cigarette purchases
decline11?
Taxes on cigarettes serve two purposes12: to

raise tax revenue13 for government and to
discourage14 consumption of cigarettes.
However, if a higher cigarette tax
discourages consumption by quite a lot,

meaning a greatly reduced quantity of What is the difference
between an elastic and
cigarettes is sold, then the cigarette tax on an inelastic demand
each pack will not raise much revenue for curve?
the government.
Alternatively15, a higher cigarette tax that

does not discourage consumption by much
will actually raise more tax revenue for the
government. Thus, when a government
agency tries to calculate the effects of
altering16 its cigarette tax, it must analyze
how much the tax affects the quantity of
cigarettes consumed. This issue reaches
beyond governments and taxes; every firm
21. Insensitive to
faces a similar issue. Every time a firm changes in price or
considers raising the price that it charges, it income
must consider17 how much a price increase 22. One
will reduce the quantity demanded of what
it sells. Conversely18, when a firm puts its
products on sale, it must expect (or hope)
that the lower price will lead to a
significantly19 higher quantity demanded.
Price Elasticity of Demand and Price

Elasticity of Supply
23. Unchanging factor,
Price elasticity measures the Invariable
responsiveness of the quantity demanded
24. Significantly
or supplied of a good to a change in its
price. It is computed as the percentage20 25. Carry, Support,
change in quantity demanded (or supplied) Endure
divided by the percentage change in price.

Elasticity can be described as elastic (or
very responsive), unit elastic, or inelastic (not very responsive).

Elastic demand or supply curves indicate that quantity demanded or
supplied respond to price changes in a greater than proportional
manner. An inelastic21 demand or supply curve is one where a given
percentage change in price will cause a smaller percentage change in
quantity demanded or supplied. A unitary22 elasticity means that a
given percentage changes in price leads to an equal percentage change
in quantity demanded or supplied.
Polar Cases of Elasticity and Constant Elasticity
Infinite or perfect elasticity refers to the extreme case where either the
quantity demanded or supplied changes by an infinite amount in
response to any change in price at all. Zero elasticity refers to the
extreme case in which percentage change in price, no matter how
large, results in zero change in quantity. Constant23 unitary elasticity
in either a supply or demand curve refers to a situation where a price
change of one percent results in a quantity change of one percent.
Elasticity and Pricing
In the market for goods and services, quantity supplied and quantity
demanded are often relatively slow to react to changes in price in the
short run, but react more substantially24 in the long run. As a result,
demand and supply often (but not always) tend to be relatively
inelastic in the short run and relatively elastic in the long run.
The tax incidence depends on the relative price elasticity of supply
and demand. When supply is more elastic than demand, buyers
bearing25 most of the tax burden, and when demand is more elastic
than supply, producers bear most of the cost of the tax. Tax revenue is
larger the more inelastic the demand and supply are.
Rice University.

False, Not Given.
…….1- Elasticity is an economics concept that measures
responsiveness of one variable changes in
another variable.
…….2- The tax incidence depends on the relative price plasticity of
supply and demand.
…….3 Demands and supply often tend to be relatively inelastic in
the long run and relatively elastic in the short run.
…….4- An inelastic demand or supply curve is one where a given
percentage change in price will cause a larger percentage
change in quantity demanded or supplied.
…….5- Taxes on cigarettes serve two purposes: to raise tax revenue
for government and to discourage consumption of
cigarettes.

A) The law of supply indicated that a higher price will lead to a
lower quantity supplied.
B) State taxes are an example of a “sin tax,” a tax on something
that is bad for you, like alcohol.
C) Price elasticity measures the responsiveness of the quantity
demanded or supplied of a product to a change in its price.
D) Perfect elasticity refers to the extreme case in which
percentage change in price, no matter how large, results in
zero change in quantity.
2- According to the passage which one is a purpose of taxes on

cigarette? The purpose of taxes on cigarette is to………..
A) Decline smoking rate
B) Slow down the price of cigarette
C) Raise tax revenue for government
D) Produce improvements in public places
3- Which one is true about “sin taxes”?

A) Sin taxes law is levied by people.
B) They are taxes on something that is bad for you, like alcohol.
C) Sin taxes levied to certain goods which are not so harmful.
D) Sin taxes include bad habits.
4- What is infinite Elasticity?

A) Ii is a situation where a price change of one percent results in a
quantity change of one percent.
B) Infinite or perfect elasticity refers to the extreme case where
either the quantity demanded or supplied changes by an
infinite amount in response to any change in price at all.
C) It is computed as the percentage change in quantity demanded.
D) None of above.
5- An inelastic demand or supply curve is…..

A. when price factors have a small effect on the quantity
consumers want to buy
B. One where a given percentage changes in price will cause a
smaller percentage change in quantity demanded
C. When the supply is more than demand, and buyers bear less of
the tax burden
D. None of the above

the class.
1. Why is the demand curve with constant unitary elasticity concave?
2. Why is the supply curve with constant unitary elasticity a straight
line?
3. What is the price elasticity of demand?
4. What is the price elasticity of supply? Explain it in your own words.
5. Describe the general appearance of a demand or a supply curve
with zero elasticity.
and write a composition (optional). x

section answer the questions below.
1- Why the men in the picture skip buying Cola?
2- Was ice cream cheaper than candies?
3- What do elastic demands mean?
4- How well people are satisfied with prices?
Reading Strategy: Answering Questions
The Question-Answer Relationship strategy (QAR) encourages

students to learn how to answer questions better. Students are asked to
indicate whether the information they used to answer questions about
the text was textually explicit information (information that was
directly stated in the text), textually implicit information (information
that was implied in the text), or information entirely from the student's
own background knowledge.
There are four different types of questions:
"Right There"
Questions found right in the text that ask students to find the one right
answer located in one place as a word or a sentence in the passage.
Example: Who is Frog's friend? Answer: Toad
"Think and Search"
Questions based on the recall of facts that can be found directly in the
text. Answers are typically found in more than one place, thus
requiring students to "think" and "search" through the passage to find
the answer.
Example: Why was Frog sad? Answer: His friend was leaving.
"Author and You"
Questions require students to use what they already know, with what
they have learned from reading the text. Student's must understand the
text and relate it to their prior knowledge before answering the
question.
Example: How do think Frog felt when he found Toad? Answer: I

think that Frog felt happy because he had not seen Toad in a long
time. I feel happy when I get to see my friend who lives far away.
"On Your Own"

Questions are answered based on a student’s prior knowledge and
experiences. Reading the text may not be helpful to them when
answering this type of question.
Example: How would you feel if your best friend moved away?
Answer: I would feel very sad if my best friend moved away because I
would miss her.
Read the next reading and try to think about other

strategies.
Vocabulary Loading
Example: constant- constant unitary
1.elastic 5.elastic 9.Demand 13.Elasticity

2.Infinite 6.unitary 10.Elasticity 14.Of saving
3.price 7. Supply 11.Zero 15.Inelasticity
4.constant 8.Incidence 12.Tax 16. Cross-price
B. Match the words from part A with their synonyms.
A) The degree to which a demand or H) Perfect

supply is sensitive to change in price or
income
B)The amount of money expected or given I) None

in payment for something
C) A compulsory contribution levied by J)One

the government on workers’ income and
business
D)An economy of or reduction in money K)Occurrence
E) Sensitive to changes in price or income L)Provide
F)Insensitive to change in price or M)Request

income
G) A situation that doesn’t change O) Reciprocal--price

Inelasticity Elasticity
Of saving Zero
Tax Supply
Demand Incidence
Elastic Constant
Unitary Price
Cross-price Elasticity
Elastic Infinite

1. The law of supply shows that a higher ……. will lead to a
higher quantity supplied
2. When ………is more elastic than demand, buyers bear most of
the tax burden.
3. Taxes on cigarettes serve two purposes: to raise …… revenue
for government and to discourage consumption of cigarettes.
4. ………or perfect elasticity refers to the extreme case where
either the quantity demanded or supplied changes by an
infinite amount in response to any change in price at all
5. Constant …….. elasticity in either a supply or demand curve
refers to a situation where a price change of one percent results
in a quantity change of one percent.
Grammar injection
one.
Measure, Describe, Tend, Respond, Range, Put, Tax, Refer,
Give, Do
1.Demand and supply often …….. relatively inelastic in the short

run and relatively elastic in the long run.
2. Elasticity is an economics concept that ……… responsiveness
of one variable to changes in another variable.
3. Constant unitary elasticity in either a supply or demand
curve…… to a situation where a price change of one percent
results in a quantity change of one percent.
4. Cigarettes are ……..at the state and national levels.
5. Elasticity can be…………. as elastic (or very responsive), unit
elastic, or inelastic (not very responsive).
6. .An inelastic demand or supply curve is one where a………

percentage change in price will cause a smaller percentage
change in quantity demanded or supplied.
7. Elastic demand or supply curves indicate that quantity
demanded or supplied …………… price changes in a greater
than proportional manner.
8 State taxes……….from a low of 17 cents per pack in Missouri
to $4.35 per pack in New York
9. When a firm……. its products on sale, it must expect (or hope)
that the lower price will lead to a significantly higher quantity
demanded.
10. A higher cigarette tax that …… not discourage consumption
by much will actually raise more tax revenue for the
government.
Grammar Handling
In English grammar, the third person singular verb ending in suffix

s or es. The term third person refers to someone else, i.e., not the
writer or a group including the writer (I, me, we, and us) or the
writer's audience (you). Whenever you use a noun (as opposed to
pronoun), it is in the third person.
Form of Third person
Subject + singular verb+ s or es +…

Simple tense When supply is The bear most of
more elastic buyers the tax
than demand burden
Third person When supply is The buyer bears most of
more elastic the tax
than demand burden
The third person is the most common point of view used in fiction
writing and is the traditional form for academic writing. Authors of
novels and composers of papers use “he,” “she,” or “it” when
referring to a person, place, thing, or idea.
Reading Two
Check up
Elasticity Elastic Demanded Less Percentage

Demand
A change in price of, say, a dollar, is going to be much …….

important in percentage terms than it would have been at the bottom
of the demand curve. Likewise, at the bottom of the ……..curve, that
one unit change when the quantity demanded is high will be small as a
percentage. So, at one end of the demand curve, where we have a
large…………. change in quantity …………. over a small percentage
change in price, the……….. value would be high, or demand would
be relatively ……. .

2. What do you think about demand curve?
3. Would you usually expect elasticity of demand or supply to be

higher in the short run or in the long run?
4. Discuss about the graph of curve demand in the picture?
5. What do you see in the picture in the left? Fully discussed it in the
class.
Read the Text.
Is the elasticity the slope? What is the main idea of

It is a common mistake to confuse1 the 1. Mistake for

slope2 of either the supply or demand curve 2. Incline, Side, Fall
with its elasticity. The slope is the rate of
change in units along the curve, or the
rise/run (change in y over the change in x).
For example, when price drops3 by $10 and
the number of units demanded increases by
200. So the slope is –10/200 along the entire 3. Fall
demand curve and does not change. The
4. Quite
price elasticity, however, changes along the
curve. Elasticity is the percentage change, 5. Floor, Lowest, Foot
which is a different calculation from the Is the elasticity the

slope?
slope and has a different meaning.
6. The number above the
When we are at the upper end of a demand line in a common
fraction showing how
curve, where price is high and the quantity many of the parts
demanded is low, a small change in the indicated by the
denominator are taken,
quantity demanded, even in, say, one unit, is for example, 2 in 2/3.
pretty4 big in percentage terms. A change in
price of, say, a dollar, is going to be much

less important in percentage terms than it
would have been at the bottom5 of the
demand curve. Likewise, at the bottom of
the demand curve, that one unit change 7. The number below the
when the quantity demanded is high will be line in a common
fraction; a divisor
small as a percentage. So, at one end of the
demand curve, where we have a large 8. Proportion, The
quantitative relation
percentage change in quantity demanded
between two amounts
over a small percentage change in price, the showing the number of
elasticity value would be high, or demand times one value contains
or is contained within the
would be relatively elastic. Even with the
other.
same change in the price and the same
change in the quantity demanded, at the
other end of the demand curve the quantity is much higher, and the
price is much lower, so the percentage change in quantity demanded is
smaller and the percentage change in price is much higher. That
means at the bottom of the curve we would have a small numerator6
over a large denominator7, so the elasticity measure would be much
lower, or inelastic.
As we move along the demand curve, the values for quantity and price
go up or down, depending on which way we are moving, so the
percentages for, say, a $1 difference in price or a one unit difference
in quantity, will change as well, which means the ratios8 of those
percentages will change.
Rice University.

Words Definitions
1. Slope a. Adaptable
2. Demand b. Percentage
3. Rate c. Incline
4. Calculation d. Request
5. Foreign e. Computation
6. Elastic f. Comparatively
7. Relatively g. Amount
2. Translate the text in to Persian.
When we are at the upper end of a demand curve, where price is

high and the quantity demanded is low, a small change in the
quantity demanded, even in, say, one unit, is pretty big in percentage
terms. A change in price of, say, a dollar, is going to be much less
important in percentage terms than it would have been at the bottom
of the demand curve. Likewise, at the bottom of the demand curve
that one unit change when the quantity demanded is high will be
small as a percentage.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………
Two.
Increase Change Is Go Have
1. The slope …..the rate of change in units along the curve, or the
rise/run (change in y over the change in x).
2. Prior to the Euro, there were seven countries whose currencies
…………….. hard currencies.
3. Elasticity between points A and B was 0.45 and ……….. to
1.47 between points G and H.
4. At the bottom of the demand curve, that one unit……….when
the quantity demanded is high will be small as a percentage.
5.At one end of the demand curve, where we …….. a large
percentage change in quantity demanded over a small
percentage change in price, the elasticity value would be high,
or demand would be relatively elastic.
Self-check
are true about you.
• I can define Elasticity and demand curve.
• I can expand my vocabulary with synonyms.
better.
Unit 6
Size of the Economy
UNIT FOCUS:
• Reading 1: Gross Domestic Product

• Reading strategy: Finding Context Clues
• Vocabulary: Context Clues
• Grammar: Phrasal Verbs
• Reading 2: How Do Statisticians Measure GDP?
“GDP is not a good measure of economic

performance, it is not a good measure of well
being.”
(Joseph Stiglitz)
Check up
Business cycle GDP Balance

Depreciation GNP Durable
NNP
Depression Trade
Export
Nominal value Sum Import
Indicator Trough
Peak Structure Double counting
Real value Deficit Standard of living
Recession Surplus Nondurable good
Per capita Inventory National income
Long term Balance Intermediate good

what it it
means. correctly.
Unit 6: Size of the Economy 115
Reading One
Gross Domestic Product

Macroeconomics is an empirical1
What is the main idea of the first
subject, so the first step toward Paragraph?
understanding it is to measure the
1. Experimental
economy. How large is our
economy? The size of a nation’s 2. Not net
overall economy is typically
2 3. Eventual
measured by its gross domestic
product (GDP), which is the value Why is GDP known as the size
of a nation’s economy?
of all final3 goods and services
produced within a country in a given 4. Final amount
year. The measurement of GDP 5. To add a number to itself a
involves counting up the production particular number of times
of millions of different goods and
6. Add all of the numbers
services—smart phones, cars, music
downloads, computers, steel, 7. Calculate all of the numbers
as the final total
bananas, college educations, and all
other new goods and services 8. Send goods and services
abroad
produced in the current year—and
summing them into a total4 dollar 9. Bring goods and services
value. This task is straightforward: from other countries
take the quantity of everything 10. Long lasting, Consumer

produced, multiply5 it by the price at durables like cars, TVs,
which each product sold, and add up6 Furniture
the total. In 2014, the U.S. GDP 11. Soft goods, goods that are
totaled $17.4 trillion, the largest GDP used immediately like food
in the world. Each of the market

transactions that enter into GDP must

involve both a buyer and a seller. The 12. Buildings, Constructions.
GDP of an economy can be measured 13. Stocks, Goods prepared

either by the total dollar value of what 14. Get away from
is purchased in the economy, or by the
15. Counting again
total dollar value of what is produced.
16. A product utilized to
Measuring the Size of the Economy: produce final goods, like salt.
Gross Domestic Product 17. Not with real worth,
The size of a nation’s economy is 18. Numbers which represent

facts and measurement
commonly expressed as its gross
domestic product (GDP), which 19. Officially set value
measures the value of the output of all 20. Nominal value adjusted for
inflation
goods and services produced within
the country in a year. GDP is 21. Adapt
measured by taking the quantities of 22. Change
all goods and services produced,
23. Decided or arranged without
multiplying them by their prices, and any plan or reason.
summing7 the total. Since GDP
Is it possible to compare
measures what is bought and sold in countries based on their GDP?
the economy, it can be measured either
24. A system by which prices,
by the sum of what is purchased in the costs, etc can be compared to
economy or what is produced. the previous ones
25. Existing, Current

Demand can be divided into
26. With a sudden change
consumption, investment, government,
exports8, and imports9. What is 27. When the county’s
economic growth stops and less
produced in the economy can be trade is made
divided into durable10 goods,
11 28. A long period of recession
nondurable goods, services, with not many jobs in economy
structures , and inventories13. To
12
29. The highest level
avoid14 double counting15, GDP counts
only final output of goods and
services, not the production of

30. A short period of time with
intermediate16 goods or the value of little activities and low prices in
labor in the chain of production. an economy
31. The average amount of

Adjusting Nominal Values to Real something calculated according
Values to the number of people
32. The number of people in a

The nominal17 value of an economic place
statistic18 is the commonly
33. Wrong
announced value. The real20 value is
19
the value after adjusting21 for changes 34. Representer

in inflation. To convert22 nominal 35. Not strong
economic data from several different
36. Consider or include
years into real, inflation adjusted data, something to make your decision
the starting point is to choose a base
37. Related to place and
year arbitrarily23 and then use a price environment
index24 to convert the measurements
38. The state of being in good
so that they are measured in the money physical and mental condition
prevailing25 in the base year.
39. Not being equal or the same
Tracking Real GDP over Time
Over the long term, U.S. real GDP have increased dramatically26. At
the same time, GDP has not increased the same amount each year. The
speeding up and slowing down of GDP growth represents the business
cycle. When GDP declines significantly, a recession27 occurs. A
longer and deeper decline is a depression28. Recessions begin at the
peak29 of the business cycle and end at the trough30.
Comparing GDP among Countries
Since GDP is measured in a country’s currency, in order to compare
different countries’ GDPs, we need to convert them to a common
currency. One way to do that is with the exchange rate, which is the
price of one country’s currency in terms of another. Once GDPs are
expressed in common currency, we can compare each country’s GDP
per capita31 by dividing GDP by population32. Countries with large
populations often have large GDPs, but GDP alone can be a

misleading33 indicator34 of the wealth of a nation. A better measure is
GDP per capita.
How Well GDP Measures the Well-Being of Society
GDP is an indicator of a society’s standard of living, but it is only a
rough35 indicator. GDP does not directly take account36 of leisure,
environmental37 quality, levels of health38 and education, activities
conducted outside the market, changes in inequality39 of income,
increases in variety, increases in technology, or the (positive or
negative) value that society may place on certain types of output.
Rice University.

False, Not Given.
…….1- GDP is the value of final goods and services produced
within a country in a given year.
…….2- Supply can be divided into investment, government, exports,
and imports.
…….3- The nominal value of an economic statistic is the commonly
announced value.
…….4- The real value is the value after adjusting for changes in
depression.
…….5- Recessions begin at the peak of the business cycle and end at
the trough.

1- Which sentence is true about GDP?
A) It is the size of a nation’s overall income.
B) It is the value of all final3 goods and services produced in a
year.
C) It is the value of all final3 goods and services produced within
a country in a month.
D) It is the size of a nation’s total income.
2- Which one is not a division of Demand?

A) Consumption
B) Investment
C) Exports and imports
D) Production
3- Which expression is wrong about GDP?

A) Each of the market transactions that enter into GDP must
involve both a buyer and a seller.
B) The GDP of an economy can be measured by the total dollar
value of what is purchased in the economy.
C) The GDP of an economy can be measured by the total dollar
value of what is produced.
D) Each of the market transactions that enter into GDP must
involve both a producer and a seller.
4- What does GDP indicate?

A) Standards of living
B) Inequality in society
C) Inequality in income
D) Levels of education
5- What is true about depression?

A) When GDP declines significantly, a depression occurs.
B) A longer and deeper recession is a depression.
C) Depression begins at the peak of the business cycle and end at
the trough.
D) When GDP increases significantly, a depression occurs.
C. Explain briefly whether each of the following would cause
GDP to overstate or understate the degree of change in the
broad standard of living.
a. The environment becomes dirtier

b. The crime rate declines
c. A greater variety of goods become available to consumers
d. Infant mortality declines
D. Look at the picture. Using the information in the text,
discuss them in class. You may choose as a topic and
write a composition (optional).

1- List some of the reasons why GDP should not be considered an
effective measure of the standard of living in a country.
2- What does GDP not tell us about the economy?
3- Should people typically pay more attention to their real income
or their nominal income? If you choose the latter, why would
that make sense in today’s world?
4- Why do you think that GDP does not grow at a steady rate, but
rather speeds up and slows down?
5- Why might per capita GDP be only an imperfect measure of a
country’s standard of living?
Reading Strategy: Context Clues
Using context clues is a powerful strategy that can help you figure out
the meanings of unknown words. Context refers to the words,
sentences, or even paragraphs that surround a word. When you use
context clues, you use the words that you know in a selection to make
an intelligent guess about the meaning of an unknown word.
Perhaps the thought of guessing seems strange to you. After all, it is
better to know the answer on a test than just to guess. However,
intelligent guessing is very important in reading. English has so many
words that no one can know them all. Good readers often use context
clues when they meet unfamiliar vocabulary.
Context clues have two important advantages:

1. You do not have to interrupt your reading to go to the
dictionary.
2. You can rely on your own common sense. Common sense is a
very effective learning tool.
Context clues and the dictionary are natural partners in helping you
determine the meaning of unknown words. Context clues usually
suggest an approximate meaning for a word and allow you to continue
reading without interruption. After you have finished reading, you can
look up the word in a dictionary. You may be wondering exactly how
to determine the meaning of unknown words that you find in your
reading. Many people find the following steps helpful:
1. As you are reading, try to pinpoint words you do not know.
This advice sounds almost silly, but it isn’t. Many people lose the
opportunity to learn vocabulary simply because they let unknown
words slip by. Don’t let this happen to you. Try to capture difficult
words!
2. Use context clues to make an intelligent guess about an

unknown word’s meaning.
The strategies you will learn in units 7, 8, and 9 will help you do this.
Remember that context clues often give you approximate—not
exact—meanings.
3. Mark the word and check it in a dictionary.
This step will tell you how close your guess was and will give you a
more exact definition.
Read the next reading and try to think about these

strategies.
Vocabulary Loading
A. Using the words given in the box find pairs from the
passage.
1.Business cycle 9.Peak 17.Real value
2.Depreciation 10.GDP 18.Recession
3.Depression 11. Final good & service 19.GDP per capita
4.Nominal value 12.Nondurable good 20. Service
5.Exchange rate 13. National income 21. Double counting
6.Trough 14.Intermediate good 22.Trade Deficit
7.GNP 15. Standard of living 23.Trade Surplus
8.NNP 16. Structure 24.Inventory
25.Trade Balance
26.Durable good
A) Good that has been produced, but not yet been sold
B) Includes all income earned: wages, profits, rent, and profit
income
C) Gap between exports and imports
D) GDP minus depreciation
E) An economic statistic after it has been adjusted for inflation;
contrast with nominal value
F) A significant decline in national output
G) Product which is intangible (in contrast to goods) such as
entertainment or healthcare.
H) All elements that affect people’s happiness, whether bought and
sold in the market or not
I) During the business cycle, the highest point of output before a
recession begins
J) Exists when a nation's imports exceed its exports and is
calculated as imports –exports
K) Exists when a nation's exports exceed its imports and is

calculated as exports – imports
L) During the business cycle, the lowest point of output in a
recession, before a recovery begins
M) The economic statistic actually announced at that time, not
adjusted for inflation; contrast with real value
N) Short-lived good like food and clothing
O) Building used as residence, factory, office building, retail store,
or for other purposes
P) A potential mistake to be avoided in measuring GDP, in which
output is counted more than once as it travels through the stages
of production
Q) Long-lasting good like a car or a refrigerator
R) The price of one currency in terms of another currency
S) Output used directly for consumption, investment, government,
and trade purposes; contrast with “intermediate good”
T) GDP divided by the population
U) The value of the output of all goods and services produced
within a country in a year
V) Includes what is produced domestically and what is produced by
domestic labor and business abroad in a year
W) Output provided to other businesses at an intermediate stage of
production, not for final users; contrast with final good and
service
X) The relatively short-term movement of the economy in and out
of recession
Y) The process by which capital ages over time and therefore loses
its value
Z) An especially lengthy and deep decline in output

Total Value
empirical Subjects
Export and Output
Durable Import
Double Production
Final Goods
Chain of Counting
Price Year
Economic Index
Base Data

Economic Income
Starting Indicator
Real Living
Intermediate Nation
Inequality of Statistic
Environmental Goods
Misleading Point
Standards of Quality
Wealth of a Society
Well-being of a Value
Announced Currency
Nominal Value
Per capita Health
Common Goods
Long Income
Business Value
Levels of Growth
Final Term
GDP Cycle
Nondurable Goods

1. The …………………. is the value after adjusting for changes in
inflation.
2. What is produced in the economy can be divided into durable
goods, ………….……., services, structures, and inventories.
3. The …………………… of an economic statistic is the commonly
announced value.
4. The starting point is to choose a ……………. arbitrarily and then
use a price index to convert the measurements so that they are
measured in the money prevailing in the base year.
5. To avoid ………………….., GDP counts only final output of goods
and services, not the production of intermediate goods or the value
of labor in the chain of production.
Grammar injection
one.
Avoid, Increase, Convert2, Enter, Express, Represent,
Divide, , Buy, Multiply
1. ………………. double counting15, GDP counts only final output of

goods and services, not the production of intermediate16 goods or
the value of labor in the chain of production.
2. GDP is measured by taking the quantities of all goods and services
produced, ……………….. them by their prices, and summing7 the
total.
3. Over the long term, U.S. real GDP …………………..
dramatically26. At the same time, GDP has not increased the same
amount each year.
4. Since GDP measures what ……………………and sold in the
economy, it can be measured either by the sum of what is
purchased in the economy or what is produced.
5. Since GDP is measured in a country’s currency, in order to compare
different countries’ GDPs, we need to ………………. them to a
common currency.
6. Once GDPs ……………………. in common currency, we can
compare each country’s GDP per capita31 by dividing GDP by
population32.
7. Demand can ………………… into consumption, investment,
government, exports8, and imports9.
8. Each of the market transactions that ………………. into GDP must
involve both a buyer and a seller.
9. The speeding up and slowing down of GDP growth ……………….
the business cycle.
10. ………………….. nominal economic data from several different
years into real, inflation adjusted data, Tracking Real GDP over
Time
Grammar Handling
Some verbs are two part verbs (Check Clauses, Sentences and
Phrases). They consist of a verb and a particle: Add + Up = Add up
Often this gives the verb a new meaning:
This is called a phrasal verb. A phrasal verb is a verb that is made
up of a main verb together with an adverb or a preposition, or both.
There are two types of phrasal verb.
intransitive
They have no object
All the profits need be added up.
The prices dropped down.
transitive
They can have an object
The stocks can be easily converted to cash.
Multiply the total by 3.
Read the passage again and list the phrasal verbs.

How many are there?
Do their meanings change if you replace the particles?
Translate them into Persian.
Reading Two
Check up
Administration through portion spending

governments annual
An ……………Census of
Governments gathers information on
state and local………………. Because
a lot of government ………………at
all levels involves hiring people to
provide services, a large …………….of
government spending is also tracked
………… payroll records collected by
state governments and by the Social
Security……………..
Look at the pictures. Discuss which

of the followings are included in
GDP, and which are not?
a. The cost of hospital stays
b. The rise in life expectancy over time
c. Child care provided by a licensed day
care center
d. Child care provided by a
grandmother
e. The sale of a used car
f. The sale of a new car
g. The greater variety of cheese available in supermarkets

h. The iron that goes into the steel that goes into a refrigerator bought
by a consumer.
Read the Text.
How do statisticians measure GDP?

Government economists at the
Bureau1 of Economic Analysis What is the main idea of the
(BEA), within the U.S. Department first paragraph?
of Commerce2, piece together 1. A government department
estimates3 of GDP from a variety of that collects or provides
information
sources. Once every five years, in the
2. Business
second and seventh year of each
decade4, the Bureau of the Census5 3. A calculation of the value,
size etc which may not be
carries out a detailed6 census of complete
businesses throughout7 the United
4. Every 10 years
States. In between, the Census
Bureau carries out a monthly survey8 5. Counting of population
of retail sales9. These figures are 6. Including a lot of information

adjusted with foreign trade data to 7. In every part or time
account for exports that are produced 8. A general description or
in the United States and sold abroad report
and for imports that are produced 9. Sale of goods to customers
abroad and sold here. Once every ten for their own use not for selling
years, the Census Bureau conducts10 to anyone
a comprehensive11 survey of housing 10. Does

and residential12 finance. Together, 11. Complete
these sources provide the main basis 12. Housing
for figuring13 out what is produced
for consumers.
For investment, the Census Bureau

13. Solving, Finding answers
carries out a monthly survey of
14. Expenses, costs
construction and an annual survey of
expenditures14 on physical capital 15. Devices, Facilities
equipment15. For what is purchased by 16. Depend, trust
the federal government, the 17. A department that controls
statisticians rely on16 the U.S. the money that the country
Department of the Treasury17. spends or collects
18. Not global or national
An annual Census of Governments
gathers information on state and 19. Section
local18 governments. Because a lot of 20. Income records
government spending at all levels 21. The government of a country
involves hiring people to provide What does BEA stand for?
services, a large portion19 of
22. A system for carrying
government spending is also tracked passengers and goods from one
through payroll20 records collected by place to another
state governments and by the Social 23. The service responsible for
Security Administration21. looking after the people in a
country
With regard to foreign trade, the
24. Land owners
Census Bureau compiles a monthly
record of all import and export 25. The income from the rent of
places
documents. Additional surveys cover
transportation and travel, and 26. Farming
adjustment is made for financial 27. Pieces
services that are produced in the 28. A period of time between
United States for foreign customers. two events
Many other sources contribute to the 29. Combine

estimates of GDP. Information on 30. Calculated for one year
energy comes from the U.S. 31. An increase in the price or
Department of Transportation22 and value of something
Department of Energy. Information on 32. Printed
healthcare23 is collected by the Agency 33. Really
for Health Care Research and Quality. 34. A set of pages that shows the
Surveys of landlords24 find out about days, months and events
rental25 income. The Department of
Agriculture26 collects statistics on
farming.
All of these bits27 and pieces of information arrive in different forms,

at different time intervals28. The BEA melds29 them together to
produce estimates of GDP on a quarterly basis (every three months).
These numbers are then “annualized”30 by multiplying by four. As
more information comes in, these estimates are updated and revised.
The “advance”31 estimate of GDP for a certain quarter is released one
month after a quarter. The “preliminary” estimate comes out one
month after that. The “final” estimate is published32 one month later,
but it is not actually33 final. In July, roughly updated estimates for the
previous calendar34 year are released. Then, once every five years,
after the results of the latest detailed five-year business census have
been processed, the BEA revises all of the past estimates of GDP
according to the newest methods and data, going all the way back to
1929.
Rice University.

Words Definitions
1. Portion a. Complete
2. Local b. Housing
3. Payroll c. Solving, Finding answers
4. Treasury d. Expenses, costs
5. Equipment e. Devices, Facilities
6. Rely on f. Depend, trust
7. Expenditures g. A department that controls the money that
the country spends or collects
8. Figure out h. Not global or national
9. Residential i. Section
10.Comprehensive j. Income records
Government economists at the Bureau of Economic Analysis (BEA),

within the U.S. Department of Commerce, piece together estimates of
GDP from a variety of sources. Once every five years, in the second
and seventh year of each decade, the Bureau of the Census carries out
a detailed census of businesses throughout the United States. In
between, the Census Bureau carries out a monthly survey of retail
sales. These figures are adjusted with foreign trade data to account for
exports that are produced in the United States and sold abroad and for
imports that are produced abroad and sold here. Once every ten years,
the Census Bureau conducts a comprehensive survey of housing and
residential finance. Together, these sources provide the main basis for
figuring out what is produced for consumers.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
………………………………………………………………………….
…………………………………………………………………………
Two. Some of the verbs are phrasal, use the right particle.
Meld Carry Arrive Account Figure

Publish Multiply Piece Release Come
1. The Census Bureau …………………. a monthly survey of retail

sales.
2. These figures are adjusted with foreign trade data ………………..
exports that are produced in the United States and sold abroad and
for imports that are produced abroad and sold here.
3. Together, these sources provide the main basis for
…………………… what is produced for consumers.
4. Government economists at the Bureau of Economic Analysis
(BEA), within the U.S. Department of Commerce,
……………………. estimates of GDP from a variety of sources.
5. All of these bits and pieces of information …………. different
forms, at different time intervals.
6. The BEA …….. them …………… to produce estimates of GDP on
a quarterly basis (every three months).
7. These numbers are then “annualized” by ………………….. four.
8. As more information ……………….., these estimates are updated
and revised.
9. In July, roughly updated estimates for the previous calendar year
………………..
10. The “final” estimate ………………….one month later, but it is
not actually final.
Self-check
are true about you.
• I can define GDP in English.
• I can expand my vocabulary with context clues.
better.
Unit 7
Economic Growth
UNIT FOCUS:
• Reading 1: Economic Growth

• Reading strategy: Finding Context Clues of Substitution
• Vocabulary: Context Clues
• Grammar: Simple Past
• Reading 2: Calories and Economic Growth
“Economic growth without investment in human

development is unsustainable and unethical”
(Amartya Sen)
Check up
Aggregate Capital Convergence Innovation

production deepening Human Invention
function Contractual capital Rule of law
Compound growth rights Infrastructure
rate Industrial Physical
Modern economic Revolution capital
growth Production Technology
Special economic function
zone (SEZ) Labor
Technological productivity
change

word but
the word when I see in either both in
I am not
word but am or hear it sure I speaking speaking
before. not in a am using or writing. and
sure sentence. it writing.
what it correctly.
means.
Unit 7: Economic Growth 137
Reading One
Economic Growth
Every country worries about economic
growth1. In the United States and other What is the main idea of the
high-income countries, the question is first paragraph?
whether economic growth continues to 1. Increase

provide the same remarkable2 gains in
2. Significant
our standard of living as it did during
the twentieth century. Meanwhile3, can 3. While something else is
middle-income4 countries like South happening
Korea, Brazil, Egypt, or Poland catch 4. Nations with a per capita
up to the higher-income countries? Or gross national income in 2012
must they remain in the second tier5 of between 1.036 and 12.615 $
per capita income? Of the world’s Is it correct to use the word
population of roughly 6.7 billion growth when there is no
people, about 2.6 billion are scraping6 growth?
by on incomes that average less than 5. Levels, Layers
$2 per day, not that different from the
standard of living 2,000 years ago. Can
the world’s poor be lifted from their
fearful7 poverty8?
Dramatic improvements9 in a nation’s
standard of living are possible. After
the Korean War in the late 1950s, the
Republic of Korea, often called South
Korea, was one of the poorest
6. Have money just to live
economies in the world. Most South
Koreans worked in peasant10 7. Frightening
11
agriculture . According to the British
8. The situation of being poor
economist Angus Maddison, whose
life’s work was the measurement of
GDP and population in the world

9. Sudden progress,
economy, GDP per capita in 1990 development
international dollars was $854 per year.
10. Poor
From the 1960s to the early twenty-
11. Farming
first century, a time period well within
the lifetime and memory of many
adults, the South Korean economy
grew rapidly. Over these four decades,
GDP per capita increased by more than
12. Change of the form
6% per year.
13. Very unusual and surprising
According to the World Bank, GDP 14. Fairly, Compared to others
for South Korea now exceeds $30,000 15. Impressive
in nominal terms, placing it firmly
16. Lasting for a long time
among high-income countries like
Italy, New Zealand, and Israel. 17. Best, Developed
Measured by total GDP in 2012, South
18. Long process
Korea is the thirteenth-largest
economy in the world. For a nation of 19. Related to industry
49 million people, this 20. A complete change
12 13
transformation is extraordinary .
21. The process of governing
The Relatively14 Recent Arrival of
22. Efficacy, effectiveness
Economic Growth
23. Decrease
Since the early nineteenth century,
24. Despite, In spite of
there has been a spectacular15 process something
of long-run16 economic growth during
which the world’s leading17 25. Every ten years
economies—mostly those in Western 26. All people of the same age

Europe and North America—expanded
27. Apparently
GDP per capita at an average rate of
about 2% per year. In the last half- 28. In a year
century, countries like Japan, South 29. Very large
Korea, and China have shown the
potential to catch up. The extensive18

30. The total, the final total
process of economic growth, often
31. To say something in an
referred to as modern economic exact and detailed way
growth, was facilitated by the 32. Real
Industrial19 Revolution20, which
increased worker productivity and
trade, as well as the development of
governance21 and market institutions.
Labor Productivity22 and Economic

Growth 33. Compound interest is the
addition of interest to the
principal sum of a loan or
Productivity, the value of what is deposit, or in other words,
produced per worker, or per hour interest on interest.
worked, can be measured as the level What are the components of
of GDP per worker or GDP per hour. economic growth?
The United States experienced a 34. One Percentage Point = 1%

productivity slowdown23 between 1973 35. Capital deepening is a
situation where the capital per
and 1989. Since then, U.S. worker is increasing in the
productivity has rebounded (the economy. This is also referred to
as increase in the capital
current global recession intensity.
notwithstanding24). It is not clear
36. Newly created
whether the current growth in
productivity will be sustained.
The rate of productivity growth is the

primary determinant of an economy’s
rate of long-term economic growth and
higher wages. Over decades25 and
generations26, seemingly27 small
differences of a few percentage points 37. Controlling and organizing
in the annual28 rate of economic 38. Giving attention to market

growth make an enormous29 difference
in GDP per capita. An aggregate30
production function specifies31 how
certain inputs in the economy, like

human capital, physical capital32, and 39. The hypothesis that poorer
economies' per capita incomes
technology, lead to the output will tend to grow at faster rates
measured as GDP per capita. than richer economies.
Compound33 interest and compound
growth rates behave in the same way as
productivity rates. Seemingly small
changes in percentage34 points can
have big impacts on income over time.
Components of Economic Growth
40. Reach
Over decades and generations,
41. Increasing, Rising
seemingly small differences of a few
42. Funds invested in a firm or
percentage points in the annual rate of enterprise for the purpose of
economic growth make an enormous furthering its business
difference in GDP per capita. Capital objectives.
deepening35 refers to an increase in the 43. the additional satisfaction or
amount of capital per worker, either utility that a person receives
from consuming an additional
human capital per worker, in the form
unit of a good or service.
of higher education or skills, or
44. Coming one after the other
physical capital per worker.
45. The decrease in the marginal
Technology, in its economic meaning, output of a production process
refers broadly to all new methods of as the amount of a single factor
production, which includes major of production is incrementally
increased, while the amounts of
scientific inventions36 but also small all other factors of production
inventions and even better forms of stay constant. ... It plays a
management37 or other types of central role in production
institutions. A healthy climate for theory.
growth in GDP per capita consists of 46. Continuous series

improvements in human capital, 47. New idea or invention
physical capital, and technology, in a 48. To have an equal or
market-oriented39 environment with opposite effect to something
supportive public policies and
institutions.
Economic Convergence39
When countries with lower levels of GDP per capita catch up40 to
countries with higher levels of GDP per capita, the process is called
convergence. Convergence can occur even when both high- and low-
income countries increase investment in physical and human capital
with the objective of growing41 GDP.
This is because the impact of new investment in physical and human

capital on a low-income country may result in huge gains as new skills
or equipment are combined with the labor force. In higher-income
countries, however, a level of investment equal to that of the low
income country is not likely to have as big an impact, because the
more developed country most likely has high levels of capital
investment42.
Therefore, the marginal43 gain from this additional investment tends to

be successively44 less and less. Higher income countries are more
likely to have diminishing returns45 to their investments and must
continually invent new technologies; this allows lower-income
economies to have a chance for convergent growth.
However, many high-income economies have developed economic

and political institutions that provide a healthy economic climate for
an ongoing stream46 of technological innovations47. Continuous
technological innovation can counterbalance48 diminishing returns to
investments in human and physical capital.
Rice University.

False, Not Given.
…….1- Dramatic improvements in a nation’s standard of living are

possible
…….2- Productivity is the value of what is produced per worker, or
per hour worked.
…….3- Compound interest and compound growth rates behave in
the same way as productivity rates.
…….4- Capital deepening refers to an increase in the amount of
capital per worker,
…….5- Continuous technological innovation can counterbalance
diminishing returns to investments in human and physical
capital.

the text too check your answers.
1- How was the modern economic growth facilitated?
A) By extensive process of economic growth
B) By worker productivity
C) By the development of governance
D) By the industrial revolution
2- What is the effect of new investment in physical and human capital

on a low-income country?
A) Combination of labor force and new skills
B) Result in high levels of capital investment
C) Combination of labor force and huge gains
D) Result in high levels of country development
3- Which expression is wrong about “Convergence”?

A) Occurs when low-income countries increase investment in
physical and human capital with the objective of growing
GDP.
B) When countries with lower levels of GDP per capita catch up
to countries with higher levels of GDP per capita.
C) Occurs when high-income countries increase investment in
physical and human capital with the objective of growing
GDP.
D) When countries with lower levels of GNP per capita catch up
to countries with higher levels of GDP per capita.
4- Which one is not a component of economic growth?

A) Human capital deepening
B) Physical capital deepening
C) Technological gains
D) Levels of education
5- A healthy climate for growth in GDP per capita does not consist
of…………..?
A) Improvements in physical capital
B) Improvements in technology
C) Improvements in human capital
D) Improvements in public policies
C. Self-check Questions
1. Explain what the Industrial Revolution was and where it began.
2. Explain the difference between property rights and contractual
rights. Why do they matter to economic growth?
3. Are there other ways in which we can measure productivity besides

the amount produced per hour of work?
4. Assume there are two countries: South Korea and Iran. South Korea
grows at 4% and Iran grows at 1%. For the sake of simplicity,
assume they both start from the same fictional income level,
$10,000. What will the incomes of Iran and South Korea be in 20
years? By how many multiples will each country’s income grow in
20 years?
D. Look at the picture. Using the information in the text,

discuss them in class. You may choose as a topic and
write a composition (optional).

1. How can the government of a free-market economy implement to
stimulate economic growth?
2. List the areas where government policy can help economic growth.
3. What are the “advantages of backwardness” for economic growth?
4. What is an aggregate production function?
5. What do economists mean when they refer to improvements in
technology?
Reading Strategy: Context Clues of Substitution

Using context clues is a powerful strategy that can help you figure out
the meanings of unknown words. Context refers to the words,
sentences, or even paragraphs that surround a word. When you use
context clues, you use the words that you know in a selection to make
an intelligent guess about the meaning of an unknown word.
How does a person learn to make “intelligent guesses”?
Substitution in context is perhaps the most useful way to determine a
word’s meaning. To use this strategy, simply substitute a word or
phrase that makes sense in place of an unknown word. The word you
substitute will usually be an approximate definition for the unknown
word. Here are some examples.
1- Middle-income countries remain in the second tier of per

capita income. (As income has levels and as middle itself is a
level, there is a high possibility of substituting level with tier
and geussing the meaning correctly)
2- Can the world’s poor be lifted from their fearful poverty.

(What are the poors dealing with poorness).
3- South Korea was one of the poorest economies in the world.

Most South Koreans worked in peasant agriculture. (what is
the condition of agriculture in poor countries except
weakness and poorness).
Vocabulary Loading
A. Using the words given in the box find pairs from the
passage.
1.aggregate production 7. contractual 13. infrastructure
function rights 14. physical
2. compound growth rate 8.Industrial capital
3. modern economic Revolution 15.technology
growth 9. production 16. innovation
4. special economic zone function 17. invention
(SEZ) 10. labor 18. rule of law
5. technological change productivity
6. capital deepening 11. convergence
12. human capital
A) The process whereby an economy as a whole turns economic

inputs such as human capital, physical capital, and technology
into output measured as GDP per capita
B) An increase by society in the average level of physical and/or
human capital per person
C) All the ways in which existing inputs produce more or higher
quality, as well as different and altogether new products
D) A combination of invention—advances in knowledge—and
innovation
E) A component of physical capital such as roads, rail systems, and
so on
F) Putting advances in knowledge to use in a new product or
service
G) Advances in knowledge
H) The period of rapid economic growth from 1870 onward
I) The process of enacting laws that protect individual and entity
rights to use their property as they see fit. Laws must be clear,
public, fair, and enforced, and applicable to all members of
society
J) Area of a country, usually with access to a port where, among
other benefits, the government does not tax trade
K) Pattern in which economies with low per capita incomes grow

faster than economies with high per capita incomes
L) The plant and equipment used by firms in production; this

includes infrastructure
M) The process whereby a firm turns economic inputs like labor,

machinery, and raw materials into outputs like goods and
services used by consumers
N) The rate of growth when multiplied by a base that includes past
GDP growth
O) The accumulated skills and education of workers
P) The value of what is produced per worker, or per hour worked
(sometimes called worker
productivity)
Q) The widespread use of power-driven machinery and the
economic and social changes that occurred in the first half of the
1800s
R) The rights of individuals to enter into agreements with others
regarding the use of their property providing recourse through
the legal system in the event of noncompliance

Fearful Poverty
Economic Growth
Dramatic Improvement
Poor Economy
Peasant Agriculture
Extraordinary Transformation
Arrival of Economic Growth
Spectacular Process
Long-run Growth
Leading Economies

Expanded GDP per capita
Average Rate
Extensive Process
Industrial Revolution
Worker Productivity
Governance Development
Market Institutions
Labor Productivity
Annual Rate
Aggregate Production function

Physical Capital
Compound Interest
Percentage Points
Scientific Inventions
Market oriented Environment
Business Value
Forms of Management
Supportive Public policies

Economic Convergence
Diminishing Returns

1. Technology, in its economic meaning, refers broadly to all new
methods of production, which includes major
……………………….
2. Higher income countries are more likely to have
……………………….. to their investments and must continually
invent new technologies
3. Small differences of a few percentage points in the
………………… of economic growth make an enormous
difference in GDP per capita.
4. ………………………. and compound growth rates behave in the
same way as productivity rates.
5. An ……………………………. specifies how certain inputs in the
economy, like human capital, physical capital, and technology, lead
to the output measured as GDP per capita.
Grammar injection
one.
Work, Facilitate, Measure, Be , Grow, Expand, Scrape, ,
Exceed, Show, Lift
1. Since the early nineteenth century, there has been a spectacular

process of long-run economic growth during which the world’s
leading economies ……………. GDP per capita at an average rate
of about 2% per year.
2. In the last half-century, countries like Japan, South Korea, and
China ……………..the potential to catch up.
3. Of the world’s population of roughly 6.7 billion people, about 2.6
billion ……………….. by on incomes that average less than $2 per
day, not that different from the standard of living 2,000 years ago.
4. According to the World Bank, GDP for South Korea

now …………… $30,000 in nominal terms, placing it firmly
among high-income countries like Italy, New Zealand, and Israel.
5. Can the world’s poor ………………. from their fearful poverty?
6. the Republic of Korea, often called South Korea, ……….. one of
the poorest economies in the world.
7. …………….. by total GDP in 2012, South Korea is the thirteenth-
largest economy in the world.
8. The extensive process of economic growth, often referred to as
modern economic growth, ………. ……… by the Industrial
Revolution.
9. From the 1960s to the early twenty-first century, a time period well
within the lifetime and memory of many adults, the South Korean
economy ……………. rapidly.
10. Most South Koreans …………… in peasant agriculture.
Grammar Handling
Simple past is used to talk about a completed action in a time before

now. This is the basic past tense. We use it whenever we want to talk
about the past and we don't have any special situation, but finished
actions, states or habits in the past.
The simple past is the basic form of past tense in English. The time
of the action can be in the recent past or the distant past and action
duration is not important.
Used for a single event in the past, and also for past habitual
action
I visited them every day for a year.
It can also refer to a past state:

I knew how to fight even as a child.
Used even for a temporary state

South Korea was very poor.
Read the passage again and list the past tense verbs.
How many are there?
Translate them into Persian.
Reading Two
Check up
flexible spending private to firms investments on
The underpinnings of economic growth are ………………in physical

capital, human capital, and technology, all set in an economic
environment where ………..and individuals can react …… the
incentives provided by well-functioning markets and …………prices.
Government borrowing can reduce the financial capital available for
…………firms to invest in physical capital. But government spending
can also encourage certain elements of long-term growth, such as
…………on roads or water systems, on education, or ….. research
and development that creates new technology.
Look at the pictures. Discuss which of the followings are
included in GDP, and which are not?
1- Is it possible for an economy to continue growing forever?
2- How does an increase in the population growth rate affect

economic growth?
3- Is there economic growth in negative economic growth rate? If no,
why is it called economic growth?
Read the Text.
Calories and Economic Growth What is the main idea of the

first paragraph?
The story of modern economic growth
1. Use of calorie
can be told by looking at calorie
consumption1 over time. The dramatic 2. Sudden surprising increase
rise2 in incomes allowed the average 3. Related to new classical
person to eat better and consume more theory in economics, known as
calories. How did these incomes neoclassic.
increase? The neoclassical3 growth 4. Used to say that something

consensus uses the aggregate you have said is not as
important as what you are going
production function to suggest that the
to say.
period of modern economic growth
came about because of increases in 5. Medium
inputs such as technology and physical 6. Have money
and human capital. Also important was
7. Farming
the way in which technological
progress combined with physical and 8. Permitted
human capital deepening to create
9. In spite of
growth and convergence. The issue of
distribution of income notwithstanding, 10. Involving several countries
or groups
it is clear that the average worker can
afford more calories in 2014 than in 11. Spreading food
1875.
12. Not enough food, lack of
food
Aside4 from increases in income, there
is another reason why the average5 13. A situation when a large
person can afford6 more food. Modern number of people have no food
to live
agriculture7 has allowed8 many
countries to produce more food than

14. Not specific
they need. Despite9 having more than
enough food, however, many 15. Without safety
governments and multilateral10
16. Lack of success
agencies have not solved the food
distribution11 problem. In fact, food 17. Dealing with a lot of
shortages12, famine13, or general14 food information and details
insecurity15 are caused more often by 18. It means that one year from
the failure16 of government now a Toman will buy roughly
macroeconomic policy, according to the same as it buys today.
the Nobel Prize-winning economist 19. Keeping something in the

Amartya Sen. Sen has conducted original and good situation
extensive17 research into issues of
20. Property rights are
inequality, poverty, and the role of theoretical socially-enforced
government in improving standards of constructs in economics for
living. determining how a resource or
economic good is used and
owned.
Macroeconomic policies that strive
toward stable18 inflation, full 21. Eradicate. Remove
employment, education of women, and
22. Hunger
preservation19 of property20 rights are
more likely to eliminate21 starvation22 23. Possible future results or
and provide for a more even effects
distribution of food. Because we have 24. Results

more food per capita, global food
25. Rich
prices have decreased since 1875.
26. Relating to towns and cities
The prices of some foods, however,
have decreased more than the prices of 27. Being fat and unhealthy
others. For example, researchers from 28. Convergence helps private,
the University of Washington have public, and philanthropic
shown that in the United States, investors find and connect with
each other for blended finance
calories from zucchini and lettuce are
deals in emerging and frontier
100 times more expensive than markets.
calories from oil, butter, and sugar.
Research from countries like India, China, and the United States
suggests that as incomes rise, individuals want more calories from fats
and protein and fewer from carbohydrates. This has very interesting
implications23 for global food production, obesity, and environmental
consequences24. Affluent25 urban26 India has an obesity27 problem
much like many parts of the United States. The forces of
convergence28 are at work.
Rice University.
Words Definitions
1. Average a. Many-sided
2. Afford b. Well-balanced
3.Macroeconomic c. Scarcity of food
4. Multilateral d. Try hard
5. Stable e. Plans
6. Famine f. Comprehensive, Contended
7. Strive g. Cultivation
8. Agriculture h. Concerned with large-scale or general
economic factors
9. Policy i. Bear the expense of
10. Extensive j. Norm. Ordinary
Aside from increases in income, there is another reason why the

average person can afford more food. Modern agriculture has allowed
many countries to produce more food than they need. Despite having
more than enough food, however, many governments and multilateral
agencies have not solved the food distribution problem. In fact, food
shortages, famine, or general food insecurity are caused more often by
the failure of government macroeconomic policy, according to the
Nobel Prize-winning economist Amartya Sen. Sen has conducted
extensive research into issues of inequality, poverty, and the role of
government in improving standards of living.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
Two. Some of the verbs are phrasal, use the right particle.
Have Strive Show Conduct Solve

Tell Allow Come Combine Produce
1. Researchers from the University of Washington …………….. that

in the United States, calories from zucchini and lettuce are 100
times more expensive than calories from oil, butter, and sugar.
2. The story of modern economic growth can ……………. by looking

at calorie consumption over time.
3. Sen ………………. extensive research into issues of inequality,
poverty, and the role of government in improving standards of
living.
4. Macroeconomic policies that ………… toward stable inflation, full
employment, education of women, and preservation of property
rights are more likely to eliminate starvation.
5. Despite having more than enough food, however, many
governments and multilateral agencies ……………….. the food
distribution problem.
6. the period of modern economic growth …………….. about because
of increases in inputs such as technology and physical and human
capital.
7. Modern agriculture has allowed many countries …………….. more
food than they need.
8. How did these incomes …………..?
9. Also important was the way in which technological
progress ……………… with physical and human capital
deepening to create growth and convergence.
10. The dramatic rise in incomes ……………… the average person to
eat better and consume more calories.
Self-check
are true about you.
• I can define economic growth in English.
• I can expand my vocabulary with context clues of
substitution.
better.
Unit 8
Unemployment
UNIT FOCUS:
• Reading 1: Introduction to unemployment

• Reading strategy: Graphic and semantic organizer
• Vocabulary: Definitions
• Grammar: Past Perfect
• Reading 2: The role of Banks
“Big ideas, big ambitious projects need to be embedded within

culture at a level deeper than the political winds. It needs to be deeper
than the economic fluctuations that could turn people against an
expensive project because they're on an unemployment line and can't
feed their families.”
(Neil deGrasse Tyson)
Check up
cyclical frictional implicit out of the unemployment

unemployment unemployment contract labor force rate
discouraged efficiency insider- structural Underemployed

workers wage theory outsider unemployment
model

before. not in a sure I am or writing. and
sure sentence. using it writing.
what it correctly.
means.
Unit 8: Unemployment 161
Reading One
Unemployment
Unemployment can be a terrible and

wrenching1 life experience—like a What is the first
paragraph about?
serious automobile accident or a messy2
divorce—whose consequences3 can be 1. Painful
fully understood only by someone who 2. Complex, Chaotic

has gone through4 it. For unemployed
3. Results, Outcomes
individuals and their families, there is
4. See, Experience
the day-to-day financial stress of not
knowing where the next paycheck5 is 5. A check for salary
coming from. There are painful 6. Adaptation,
adjustments6, like watching your Modification
savings account dwindle7, selling a car 7. Diminish, Decrease
and buying a cheaper one, or moving to
8. Explain. Defend,
a less expensive place to live. Even
Warrant
when the unemployed person finds a
9. Primary issue
new job, it may pay less than the
previous one. For many people, their 10.Bigger, Expanding
job is an important part of their self 11. Function, Work
worth. When unemployment separates
12. Practical, Working
people from the workforce, it can affect
family relationships as well as mental 13. Explained, Interpreted
and physical health. The human costs of 14. Calculated
unemployment alone would justify8
making a low level of unemployment an
important public policy priority9 But
unemployment also includes economic
costs to the broader10 society. When
millions of unemployed but willing
workers cannot find jobs, an economic

resource is going unused. An economy
with high unemployment is like a How is the unemployment
rate defined and
company operating11 with a computed?
12
functional but unused factory. The
opportunity cost of unemployment is 15. Models, Systems,
Designs
the output that could have been
produced by the unemployed workers. 16. Relating to the
This chapter will discuss how the structure of populations
unemployment rate is defined13 and 17. Enforce, Levy, Force

computed14. It will examine the
18. Hurt
patterns15 of unemployment over time,
for the U.S. economy as a whole, for 19. Chance
different demographic16 groups in the
20. If not, In other aspects
U.S. economy, and for other countries.
It will then consider an economic 21. Do, Perform
explanation for unemployment, and 22. Foundation, Institution
how it explains the patterns of
unemployment and suggests public 23. Paysheet
policies for reducing it. 24. Study, Review,

Investigation
Unemployment imposes17 high costs.
Unemployed individuals suffer18 from 25. Department, Office
loss of income and from stress. An What are patterns of

economy with high unemployment unemployment?
suffers an opportunity19 cost of unused
26. Economic decline,
resources. The adult population can be slump
divided into those in the labor force
27. Stagflation
and those out of the labor force. In
turn, those in the labor force are 28. Giant
divided into employed and
29. Internationalization
unemployed. A person without a job
must be willing and able to work and
actively looking for work to be

counted as unemployed; otherwise20, a
30. With approval
person without a job is counted as
being out of the labor force. The What Causes Changes in
unemployment rate is defined as the Unemployment over the
Short Run
number of unemployed persons
divided by the number of persons in 31. Recurrent, Periodic
the labor force (not the overall adult 32. Adaptable, Adjustable
population). The Current Population
Survey (CPS) conducted21 by the 33. Balance
United States Census Bureau measures 34. Not clear, Vague

the percentage of the labor force that is
35. Unfavorable, Harmful
unemployed. The establishment22
payroll23 survey24 by the Bureau25 of 36. Cooperation
Labor Statistics measures the net
What Causes Changes in
change in jobs created for the month. Unemployment over the
Long Run?
The U.S. unemployment rate rises
during periods of recession26 and 37. Of or produced by the
27 action of one surface or
depression , but falls back to the
object rubbing against or
range of 4% to 6% when the economy moving over another.
is strong. The unemployment rate
38. Employ
never falls to zero. Despite enormous28
growth in the size of the U.S. 39. Discard
population and labor force in the
40. For all time
twentieth century, along with other
major trends like globalization29 and
new technology, the unemployment
rate shows no long-term rising trend. Unemployment rates differ by
group: higher for African-Americans and Hispanics than for whites;
higher for less educated than more educated; higher for the young than
the middle-aged. Women’s unemployment rates used to be higher than
men’s, but in recent years men’s and women’s unemployment rates
have been very similar. In recent years, unemployment rates in the

United States have compared favorably30 with unemployment rates in
most other high-income economies.
Cyclical31 unemployment rises and falls with the business cycle. In a

labor market with flexible32 wages, wages will adjust in such a market
so that quantity demanded of labor always equals the quantity
supplied of labor at the equilibrium33 wage. Many theories have been
proposed for why wages might not be flexible, but instead may adjust
only in a “sticky” way, especially when it comes to downward
adjustments: implicit34 contracts, efficiency wage theory, adverse35
selection of wage cuts, insider-outsider model, and relative wage
coordination36.
The natural rate of unemployment is the rate of unemployment that

would be caused by the economic, social, and political forces in the
economy even when the economy is not in a recession. These factors
include the frictional37 unemployment that occurs when people are put
out of work for a time by the shifts of a dynamic and changing
economy and any laws concerning conditions of hiring38 and firing39
have the undesired side effect of discouraging job formation. They
also include structural unemployment, which occurs when demand
shifts permanently40 away from a certain type of job skill.
Rice University.

False, Not Given.
…….1- The human costs of unemployment alone would justify
making a high level of unemployment an important public
policy priority.
…….2- Unemployment also includes statistic costs to the broader
society.
…….3- An economy with high unemployment is like a company
operating with a functional but unused factory.
…….4- The opportunity cost of unemployment is the output that
could have been produced by the unemployed workers.
…….5- There are painful adjustments, like watching your savings
account dwindle, selling a car and buying a cheaper one, or
moving to a less expensive place to live.

A) Unemployed individuals suffer from loss of outcome and from
stress.
B) A person without a job must be willing and able to work and
actively looking for work to be counted as employed.
C) The unemployment rate is defined as the number of
unemployed persons divided by the number of persons in the
labor force
D) An economy with low unemployment suffers an opportunity
cost of unused resources.
2- What is the natural rate of unemployment?

A) Is the rate of unemployment that would be caused by statistic
forces
B) Is the rate that only would caused by economic forces
C) Is the rate that would caused by social forces
D) is the rate of unemployment that would be caused by the
economic, social, and political forces in the economy even
when the economy is not in a recession.
3- Which one is wrong about unemployment rate?

A) The unemployment rate never falls to zero.
B) The unemployment rate shows no long-term rising trend.
C) Unemployment rates in the United States have compared
favorably with unemployment rates in most other high-income
economies.
D) The unemployment rate is defined as the number of employed
persons divided by the number of persons in the labor force
4 – Unemployment ……
A) Can be pleasant for individuals
B) Connects people from the workforce
C) Includes economic costs to the broader society.
D) Imposes low costs
5- Which one is not the problem of unemployed person?

A) For unemployed individuals and their families, there is the
day-to-day financial stress
B) For an unemployed there is a monthly financial problems.
C) Unemployed individuals have painful adjustments, like
watching your savings account dwindle, selling a car and
buying a cheaper one
D) For unemployed person there is a stress of not knowing where
the next paycheck is coming from.

the class.
1. What is the difference between being unemployed and being out of
the labor force?
2. How is the unemployment rate calculated?
3. Are all adults who do not hold jobs counted as unemployed?
4. How is the labor force participation rate calculated?
5. What forces create the natural rate of unemployment for an
economy?


1- What do you think about unemployment?
2- Discuss about your future job in the class.
3- Think about the relationship between be educated and
unemployment.
Reading Strategy: Graphic and semantic organizer
Graphic organizers illustrate concepts and relationships between

concepts in a text or using diagrams. Graphic organizers are known by
different names, such as maps, webs, graphs, charts, frames, or
clusters.
Regardless of the label, graphic organizers can help readers focus on
concepts and how they are related to other concepts. Graphic
organizers help students read and understand textbooks and picture
books.
Graphic organizers can:
• Help students focus on text structure "differences between

fiction and nonfiction" as they read
• Provide students with tools they can use to examine and show
relationships in a text
• Help students write well-organized summaries of a text
Here are some examples of graphic organizers:

• Venn diagrams
Used to compare or contrast information from two sources
• Story broad/ Chain of events

Used two or sequence events within a text
• Story map
Used to chart the story structure
• Cause/Effect
Used to illustrate the cause and effects told within a text
Story Map
Vocabulary Loading
Example: Unemployment- Unemployment rate
1. Out of 11.of unemployment
2. Structural 12.Unemployment
3. Rate 13.Contract
4. Implicit 14.Cyclical
5. Unemployment 15.Frictional
6. Natural rate 16.Workers
7.Unemployment 17. Wage theory
8 Model 18.Discouraged
9.Insider-outsider 19.Unemployed
10.The labor force 20.Efficiency
B. Match the words from part A with their definitions.
A) the percentage of B) when the C) the unemployment

adults who are in economy is weak rate that would exist
the labor force or the business is in a growing and
and thus seeking having trouble, healthy economy
jobs, but who do and the employee from the
not have jobs will not expect combination of
huge salary economic, social,
increases when the and political factors
economy or the that exist at a given
business is strong time
D) unemployment E) those who have F) the theory that the
closely tied to the stopped looking productivity of
business cycle, like for employment workers, either
higher due to the lack of individually or as a
unemployment suitable positions group, will increase
during a recession available if they are paid more
G) unemployment that H) an unwritten I) individuals who are

occurs as workers agreement in the employed in a job
move between jobs labor market that that is below their
the employer will skills
try to keep wages
from falling
J) this is the K) across-the-board L) those who are not
percentage of adults wage cuts are hard working and not
in an economy who for an economy to looking for work—
are either employed implement, and whether they want
or who are workers fight employment or not;
unemployed and against them also termed “not in
looking for a job the labor force”
art 1 Part 2 Pairs Translation

Efficiency unemployment
Underemployed Participation rate
Labor force Contract
Insider-outsider Wage theory
Structural Wage
Implicit Cost agreement
Relative wage Unemployment
Wage Coordination

Discouraged Unemployment
Cyclical Rate
Frictional Workers
Natural rate of Model

1. The ………………………..never falls to zero.
2. ……………………. rises and falls with the business cycle.
3. The…………………….is the rate of unemployment that would be
caused by the economic, social, and political forces in the economy
even when the economy is not in a recession.
4. These factors include the…………………….that occurs when
people are put out of work for a time by the shifts of a dynamic and
changing economy
5. ………………. occurs when demand shifts permanently away from
a certain type of job skill.
Grammar injection
one.
Include, Separate, Rise, Is, Propose, Show, Impose, Suffer,
1. When unemployment …………. people from the workforce, it can affect

family relationships as well as mental and physical health.
2. But unemployment also includes economic costs to the broader society.
3. Unemployment ………… high costs.
4. Unemployed individuals ……….. from loss of income and from stress.
5. The unemployment rate is defined as the number of unemployed persons
divided by the number of persons in the labor force
6. The U.S. unemployment rate ………… during periods of recession and
depression
7. Many theories have been …………. for why wages might not be flexible,
but instead may adjust only in a “sticky” way, especially when it comes
to downward adjustments
8. The unemployment rate ……… no long-term rising trend.
Grammar Handling
The past perfect is used in the same way as the present perfect, but it
refers to a time in the past, not the present. The past perfect refers to a
time earlier than before now. It is used to make it clear that one event
happened before another in the past. It does not matter which event is
mentioned first - the tense makes it clear which one happened first.
We typically use the past perfect tense for something that started in
the past and continued up to a given time in the past:
When George died he and Anne had been married for nearly fifty
years.
She didn’t want to move. She had lived in Liverpool all her life.
• We normally use the past perfect continuous for something we
had done several times up to a point in the past and continued
to do after that point:
She didn’t want to move. She had been living in Liverpool all
her life. Everything was wet. It had been raining for hours.
He was a wonderful guitarist. He had been playing ever since he
was a teenager. He had written three books and he was working
on another one. I had been watching the program every week,
but I missed the last episode.
Form of Gerund
Subject + Had+ Past participle
Examples:
You had studied English before you moved to New York.
(Positive)
Had you studied English before you moved to New York?
(Question)
You had not studied English before you moved to New York.
(Negative)
The Past Perfect expresses the idea that something occurred
before another action in the past. It can also show that something
happened before a specific time in the past.
Reading Two
Check up
Created Economy Money Fraction Calculating
The……….. multiplier is defined as the quantity of money that the

banking system can generate from each $1 of bank reserves. The
formula for …………….. the multiplier is 1/reserve ratio, where the
reserve ratio is the …………of deposits that the bank wishes to hold
as reserves. The quantity of money in an …………… and the quantity
of credit for loans are inextricably intertwined. Much of the money in
an economy is ………… by the network of banks making loans,
people making deposits, and banks making more loans.


2. Is it desirable to pursue a goal of zero unemployment? Why or why
not?
3. As the baby boom generation retires, the ratio of retirees to workers
will increase noticeably. How will this affect the Social Security
program?
4. Under what condition would a decrease in unemployment be bad

for the economy?
5. Under what condition would an increase in the unemployment rate
be a positive sign?
Read the Text.
The Role of Banks
Banks facilitate1 the use of money for transactions in the economy

because people and firms can use bank accounts when selling or
buying goods and services, when paying a worker or being paid, and
when saving money or receiving a
loan2. In the financial capital market,
banks are financial intermediaries3; What is the main idea of
that is, they operate between savers the first paragraph?
who supply financial capital and
1. Ease, Help
borrowers who demand loans. A
balance sheet (sometimes called a T- 2. Credit, Mortgage
account) is an accounting tool which
lists assets4 in one column and 3. Mediator, Negotiator
5
liabilities in another column. The
4. Property, Resource
liabilities of a bank are its deposits.
The assets of a bank include its loans, 5. Debts, Financial
its ownership of bonds, and its obligations
reserves6 (which are not loaned out).
6. Stock, Store
The net worth7 of a bank is calculated
by subtracting8 the bank’s liabilities 7. Value
from its assets. Banks run a risk of
8. Deducting
negative net worth if the value of their
assets declines. The value of assets can 9. Suddenly
decline because of an unexpectedly9
high number of defaults10 on loans, or 10. Nonpayment, Default
if interest rates rise and the bank action
suffers an asset-liability time mismatch
in which the bank is receiving a low
rate of interest on its long-term loans

but must pay the currently higher
market rate of interest to attract 11. People who keep
money in banks
depositors11. Banks can protect
themselves against these risks by 12. Vary, Expand
choosing to diversify12 their loans or to
hold a greater proportion13 of their 13. Part, Section, Ratio
assets in bonds and reserves. If banks
14. Deposit again
hold only a fraction of their deposits as
reserves, then the process of banks’ 15. More
lending money, those loans being re-
deposited14 in banks, and the banks 16. A person or thing that
making additional15 loans will create multiplies
money in the economy 17. Make, Produce
The money multiplier16 is defined as 18. Desire, Want

the quantity of money that the banking
system can generate17 from each $1 of 19. Inseparably
bank reserves. The formula for
20. Twisted
calculating the multiplier is 1/reserve
ratio, where the reserve ratio is the 21. Working Bad or
fraction of deposits that the bank Wrongly
wishes18 to hold as reserves. The
quantity of money in an economy and 22. Related to money
the quantity of credit for loans are
inextricably19 intertwined20. Much of
the money in an economy is created by
the network of banks making loans, people making deposits, and
banks making more loans.
Given the macroeconomic dangers of a malfunctioning21 banking
system, Monetary22 Policy and Bank Regulation will discuss
government policies for controlling the money supply and for keeping
the banking system safe.
Rice University.
Match the words on the left with their synonyms on the right. Find
their Persian equivalents with your partner.
Words Definitions
1.Balance a. Money
2.Debit b. Capital
3. Demand c. card
4. Commodity d. Intermediary
5.Bank e. Fund
6. Medium of f. Sheet
7. Financial g. Exchange
8. Money market H. Deposit
Banks facilitate the use of money for transactions in the economy because
people and firms can use bank accounts when selling or buying goods and
services, when paying a worker or being paid, and when saving money or
receiving a loan. In the financial capital market, banks are financial
intermediaries; that is, they operate between savers who supply financial
capital and borrowers who demand loans. A balance sheet (sometimes called
a T-account) is an accounting tool which lists assets in one column and
liabilities in another column. The liabilities of a bank are its deposits. The
assets of a bank include its loans, its ownership of bonds, and its reserves
(which are not loaned out).
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
……………………………………………………………………
Two.
Money Diversify Fraction

Balance sheet Assets Decline
1. The net worth of a bank is calculated by subtracting the bank’s

liabilities from its ……..
2. Banks can protect themselves against these risks by choosing to
………..their loans or to hold a greater proportion of their assets in
bonds and reserves.
3. If banks hold only a ……….. of their deposits as reserves, then the
process of banks’ lending money, those loans being re-deposited in
banks
4. The value of assets can ………. because of an unexpectedly high
number of defaults on loans, or if interest rates rise and the bank
suffers an asset-liability time mismatching.
5. Banks facilitate the use of ………. for transactions in the economy
6. A……………………. is an accounting tool which lists assets in
one column and liabilities in another column.
Self-check
are true about you.
• I can define unemployment rate and medium of
exchange in English.
• I can expand my vocabulary with definitions.
better.
Unit 9
Inflation
UNIT FOCUS:
• Reading 1: Inflation
• Reading strategy: Monitoring Comprehension
• Vocabulary: Synonyms and definitions
• Grammar: Gerund
• Reading 2: From Inflation to Consumer Price Index
“The reality is that zero defects in products plus

zero pollution plus zero risk on the job is equivalent
to maximum growth of government plus zero
economic growth plus runaway inflation.”
(Dixie Lee Ray)
Check up
Adjustable- Employment Hyperinflation Index number

rate- cost index
mortgage
Basket of Core inflation Deflation International
goods index price number
Consumer Cost of living GDP deflator Producer price
price index adjustment number
Index Quality good Indexing Substitution
number bias bias

what it it
means. correctly.
Unit 9: Inflation 181
Reading One
Inflation
Inflation is a general and ongoing1 rise

in the level of prices in an entire2
economy. Inflation does not refer to a What is the main idea of
change in relative prices. A relative
price change occurs when you see that 1. Continuous, Progressive
the price of tuition3 has risen, but the 2. Whole, All
price of laptops has fallen. Inflation, on
3. Fee
the other hand, means that there is
pressure4 for prices to rise in most 4. Force
markets in the economy. In addition, 5. Show, Indicate
price increases in the supply-and- 6. Suggest, Indicate
demand model were one-time events,
representing5 a shift from a previous 7. Total
equilibrium to a new one. Inflation 8. Object, Item, Display

implies6 an ongoing rise in prices. If 9. Related to Parentheses
inflation happened for one year and
10. sth that makes you
then stopped—well, then it would not remember
be inflation any more. One year and
then stopped—well, then it would not 11. Ascribe, Accredit,
Assign
be inflation any more.
This chapter begins by showing how to
combine prices of individual goods and
services to create a measure of overall7
inflation. It discusses the historical and
recent experience of inflation, both in
the United States and in other countries
around the world. Other chapters have 12. Real
sometimes included a note under an
13. Company
exhibit8 or a parenthetical9 reminder10
in the text saying that the numbers have
been adjusted for inflation. In this
chapter, it is time to show how to use

inflation statistics to adjust other
economic variables, so that you can tell
how much of, say, the rise in GDP over
different periods of time can be
attributed11 to an actual12 increase in
the production of goods and services
and how much should be attributed to 14. Flawed, Problems,
the fact that prices for most things have Shortage
risen.
15. Discrimination
Inflation has consequences for people
16. Show, Present,
and firms13 throughout the economy, in represent
their roles as lenders and borrowers,
wage-earners, taxpayers, and 17. If you explain sth in
terms of a particular fact
consumers. The chapter concludes with or event, you are
a discussion of some imperfections14 explaining or describing it
and biases15 in the inflation statistics, only in relation to that fact
or event
and a preview of policies for fighting
inflation that will be discussed in other 18. List
chapters.
19. Change completely,
1.1 Tracking Inflation revolutionize
The price level is measured by using a 20. Replacement

basket of goods and services and 21. Let, Permit
calculating how the total cost of buying
that basket of goods will increase over 22. Consider
time. The price level is often
23. Progress, Getting
expressed16 in terms17 of index18 better
numbers, which transform19 the cost of
buying the basket of goods and 24. Coming
services into a series of numbers in the 25. Omit, Delete
same proportion to each other, but with
an arbitrary base year of 100. The rate 26. Express, Say, Quote
of inflation is measured as the 27. Usual, Ordinary
percentage change between price levels
or index numbers over time.
1.2 How Changes in the Cost of

Living are measured 28. Reduce, Decrease
Measuring price levels with a fixed 29. Take out, Discard,
basket of goods will always have two Omit
problems: the substitution20 bias, by 30. Changing suddenly,
which a fixed basket of goods does not Unstable
allow21 for buying more of what is 31. Some
relatively less expensive and less of 32. The plural for of Index,
what is relatively more expensive; and lists
the quality/new goods bias, by which a 33. A deflator is a value
fixed basket cannot take into account22 that allows data to be
improvements23 in quality and the measured over time in
advent24 of new goods. These problems terms of some base
period, usually through a
can be reduced in degree—for price index, in order to
example, by allowing the basket of distinguish between a
goods to evolve over time—but they changes in the money
value of a gross national
cannot be totally eliminated25. The product (GNP) that come
most commonly cited26 measure of from a change in prices,
inflation is the Consumer Price Index and changes from a
(CPI), which is based on a basket of change in physical output.
goods representing what the typical27 34. Constituent
consumer buys. 35. Goods that are being
sold
The Core Inflation Index further
breaks28 down the CPI by excluding29
volatile30 economic variables. Several31
price indices32 are not based on baskets of consumer goods. The GDP
deflator33 is based on all the components34 of GDP. The Producer
Price Index is based on prices of supplies and inputs bought by
producers of goods and services. An Employment Cost Index
measures wage inflation in the labor market. An International Price
Index is based on the prices of merchandise35 that is exported or
imported.
Rice University.

False, Not Given.
…….1- The human costs of unemployment alone would justify
making a high level of unemployment an important public
policy priority.
…….2- Unemployment also includes economic costs to the broader
society.
…….3- When millions of unemployed but willing workers cannot
find jobs, an economic resource is going used.
…….4- An economy with high unemployment is like a company
operating with a functional but unused factory.
…….5- Unemployment imposes low costs.

A) The opportunity cost of unemployment is the input that could have
been produced by the unemployed workers.
B) For unemployed individuals and their families, there is the monthly
financial stress of not knowing where the next paycheck is coming
from.
C) When the unemployed person finds a new job, it may pay less than
the previous one.
D) When unemployment separates people from the workforce, it can
affect family relationships as well as friendships.
2- Which one is true about unemployment?
A) Unemployment reduces high costs.
B) The unemployment rate is defined as the number of employed
persons divided by the number of persons in the labor force
C) The U.S. unemployment rate rises during periods of recession and

depression, but falls back to the range of 4% to 6% when the
economy is strong.
D) The unemployment rate always falls to zero.
3- What is the natural rate of unemployment?

A) The natural rate of unemployment is the rate of unemployment that
would be caused by statistics.
B) The rate of unemployment is caused by labor forces.
C) The natural rate of unemployment is the rate of unemployment that
would be caused by the economic, social, and political forces in the
economy.
D) The natural rate of unemployment is the rate of unemployment that
only is caused by economic forces.
4 - The rate of inflation is measured as the……

A) Percentage change of price level
B) Percentage change between price levels or index numbers
C) As the cost of the basket market
D) Percentage change of index numbers
5- Which one is not the definition of unemployment?

A) Unemployment separates people from the workforce, and can
affect family relationships as well as mental and physical health
B) Unemployment can be a terrible and wrenching life experience
C) Unemployment just includes economic costs.
D) Unemployment imposes high costs.
the class.
1. What is the difference between being unemployed and being out of
the labor force?
2. How is the unemployment rate calculated?

3. Are all adults who do not hold jobs counted as unemployed?
4. If you are out of school but working part time, are you considered
employed or unemployed in U.S. labor statistics?
5. What happens to the unemployment rate when unemployed workers
are reclassified as discouraged workers?


1- What do you think about vegetable prices in your country?
2- Discuss about inflation in recent years.
3- What is a typical range of inflation in Iran economy in the last
decade?
4- What do you think about inflation and government support?
Reading Strategy: Monitoring Comprehension
Students who are good at monitoring their comprehensions know
when they understand what they read and when they do not. They
have strategies to "fix" problems in their understanding as the
problems arise. Research shows that instruction, even in the early
grades, can help students become better at monitoring their

comprehension.
Comprehension monitoring instruction teaches students to:

• Be aware of what they do understand
• Identify what they do not understand
• Use appropriate strategies to resolve problems in
comprehension
Vocabulary Loading
1. Adjustable 6. Employment 11. Inflation

2.Basket of 7.Deflation 12.International
3. Index 8. deflator 13.Producer
4.Core 9. Hyper 14. bias
5.Cost of 10. number 15.Substitution
Example: Barter- Barter economy

A) a measure of F) a loan used to K) arbitrary year

inflation based on the purchase a home in whose value as an
prices of all the which the interest index number is
components of GDP rate varies with defined as 100;
market inflation from the
Interest rates. base year to other
B) a price, wage, or G) a measure of L)a general and
interest rate is inflation based on ongoing rise in the
adjusted wages paid in the level of prices in an
automatically for labor market economy
inflation
C) an outburst of H) a contractual M) a measure of
high inflation that is provision that wage inflation based on
often seen (although increases will keep the prices of
not exclusively) up with inflation merchandise that is
when economies shift negative inflation; exported or imported
from a controlled most prices in the
economy to a market- economy are falling
oriented economy
D) a hypothetical I) a measure of N) a measure of
group of different inflation typically inflation based on
items, with specified calculated by taking prices paid for
quantities of each one the CPI and supplies and inputs
meant to represent a excluding volatile by producers of
“typical” set of economic variables goods and services
consumer purchases, such as food and inflation calculated
used as a basis for energy prices to using a fixed basket
calculating how the better measure the of goods over time
price level changes underlying and tends to overstate the
over time persistent trend in true rise in cost of
long-term prices living.

Producer Good bias
Substitution Cost index
Index Inflation Index
Hyper Bias
Core Living adjustment
International Of goods
Employment Inflation
Hours of Price Number
Quality Price Index
Consumer Price Number

Adjustable Rate Number
Basket Goods
Cost of Mortgage

1. …………. does not refer to a change in relative prices.
2. The price level is measured by using a …………………and
services and calculating how the total cost of buying that basket of
goods will increase over time.
3. The price level is often expressed in terms of ………………….
4. Measuring price levels with a fixed basket of goods will always
have two problems: the …………………..and the quality/new
goods bias.
5. The most commonly cited measure of inflation is
the……………………………., which is based on a basket of
goods representing what the typical consumer buys.
Grammar injection
one.
Base, Occur, Stop, Break down, Are, Measure, Import,

Express
1. The Core Inflation Index further……………. the CPI by excluding

volatile economic variables.
2. The GDP deflator is ………. on all the components of GDP.
3. ………….price levels with a fixed basket of goods will always
have two problems.
4 Price increase in the supply-and-demand model ……… one-time
events, representing a shift from a previous equilibrium to a new
one.
5. A relative price change ………. when you see that the price of
tuition has risen, but the price of laptops has fallen.
6. If inflation happened for one year and then ………., then it would
not be inflation any more.
7. An International Price Index is based on the prices of merchandise
that is exported or ………...
8. The price level is often………… in terms of index numbers
Grammar Handling
Gerunds are words that are formed with verbs but act as nouns.
They’re very easy to spot, since every gerund is a verb with ing
tacked to its tail. There are no exceptions to this rule.
Like all things grammar, gerunds do take a tiny bit of detective
work to spot. The problem here is that present participles also end
with the letters ing. Besides being able to spot gerunds, you should
be able to tell the difference between a gerund and a present
participle.
Form of Gerund
Subject + infinitive form of to be +ing
Types of Gerunds
Gerunds as subjects
Gerunds as Objects
Gerund as complement

As subject Going to Parties Is fun
As object I Enjoy Reading
As complement A popular Is Stamp-
hobby in collecting
England
Gerunds are not difficult to use as subjects or complements, as in

the above sentences. The problem arises when the learner wants to
use the verb-noun as an object and does not know whether the
gerund or the infinitive is required.
Reading Two
Check up
Said Index Include Contact
A payment is ……..to be indexed if it is automatically adjusted for

inflation. Examples of ………….. in the private sector include wage
……….. with cost-of-living adjustments (COLAs) and loan
agreements like adjustable-rate mortgages (ARMs). Examples of
indexing in the public sector ……….. tax brackets and Social Security
payments.

2. What do you think about deflation?
3. What do you think about Iran’s experience with inflation over
the last 50 years which has been so much milder in many other
countries?
4. What is indexing?
Read the Text.
From Inflation to Consumer Price Index

How the U.S. and Other Countries Experience Inflation
In the U.S. economy, the annual1
inflation rate in the last two decades2
has typically been around 2% to 4%.
The periods of highest inflation in the
United States in the twentieth century 1. Yearly
occurred during the years after World
2. Every ten years
Wars I and II, and in the 1970s. The
period of lowest inflation—actually, 3. Aim
with deflation—was the Great
Depression of the 1930s.
The Confusion Over Inflation

Unexpected inflation will tend3 to hurt 4. Be in debt
those whose money received, in terms
of wages and interest payments, does 5. Worthy
not rise with inflation. In contrast, 6. Effect

inflation can help those who owe4
money that can be paid in less 7. Short time
23. Drinks
valuable5, inflated dollars. Low rates 8. Average
24. Accommodations
of inflation have relatively little
economic impact6 over the short term7. 9. Long time
25. Clothes, Garments
Over the medium8 and the long term9, 10. Make difficult
26. Ticket price
even low rates of inflation can
11. Decisions,
complicate10 future planning11. High 27. Indemnity,
Programming
rates of inflation can muddle12 price Protection
signals in the short term and prevent13 12. Confuse, disarrange,
28. Health
market forces from operating disorder
14 29. Pleasure, Fun,
efficiently, and can vastly complicate 13. Stop
long-term savings and investment Entertainment, Hobby
decisions. 14. Immensely

30. Facilities
Indexing and Its Limitations 15. Part, Division
31. Admittance,
A payment is said to be indexed if it is 16.Entrance

AgreementFee
automatically adjusted for inflation. 17.32. Burial,

Loans forInterment,
buying
Examples of indexing in the private Entombment
houses
sector15 include wage contracts16 with
18.33. Costs, Expenditures
Support, Group
cost-of-living adjustments (COLAs)
and loan agreements like adjustable- 19. Safety in society
rate mortgages17 (ARMs). Examples of
20. Expert at Statistics
indexing in the public sector include
tax brackets18 and Social Security19 21. Classifications, Groups
payments.
22. Main
How do U.S. government
20
statisticians measure the Consumer
Price Index?
According the Consumer Price Index website, there are eight

categories21 used by data collectors:
The Eight Major22 Categories in the Consumer Price Index:
1. Food and beverages23 (breakfast cereal, milk, coffee, chicken, wine,
full-service meals, and snacks)
2. Housing24 (renter’s cost of housing, homeowner’s cost of housing,
fuel oil, bedroom furniture)
3. Apparel25 (men’s shirts and sweaters, women’s dresses, jewelry)
4. Transportation (new vehicles, airline fares26, gasoline, motor
vehicle insurance27)
5. Medical28 care (prescription drugs and medical supplies,
physicians’ services, eyeglasses and eye care, hospital services)
6. Recreation29 (televisions, cable television, pets and pet products,
sports equipment30, admissions31)
7. Education and communication (college tuition, postage, telephone
services, computer software and accessories)
8. Other goods and services (tobacco and smoking products, haircuts
and other personal services, funeral32 expenses33)
Rice University.
Words Definitions
1.Consumer a. Rate-mortgage
2.Cost of b. Brackets
3. Adjustable c. Inflation
4. Tax d. Price index
5. Inflated e. Numbers
6. Index f. Respective, proportional
7. Hyper g. Dollars
In the U.S. economy, the annual inflation rate in the last two decades
has typically been around 2% to 4%. The periods of highest inflation
in the United States in the twentieth century occurred during the years
after World Wars I and II, and in the 1970s. The period of lowest
inflation—actually, with deflation—was the Great Depression of the
1930s.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
………………………………………………………………………
Two provided below.
Tend Can Index

Has Occur Is
1. The periods of highest inflation in the United States in the twentieth

century ……….. during the years after World Wars I and II, and in
the 1970s.
2. Low rates of inflation ……… relatively little economic impact over
the short term.
3. The Confusion over Inflation Unexpected inflation will …….to hurt
those whose money received, in terms of wages and interest
payments, does not rise with inflation.
4. High rates of inflation……muddle price signals in the short term
and prevent market forces from operating efficiently, and can
vastly complicate long-term savings and investment decisions.
5. Examples of ……….. in the private sector include wage contracts
with cost-of-living adjustments (COLAs) and loan agreements like
adjustable-rate mortgages (ARMs)..
6. The period of lowest inflation actually, with deflation …….the
Great Depression of the 1930s.
Self-check
Check your progress in this unit. Tick (4) the statements which
are true about you.
• I can define inflation and in deflation in English.
better.
Unit 10
Trade
UNIT FOCUS:
• Reading 1: Trade
• Reading strategy: Summarizing Strategy
• Grammar: Present Perfect
• Reading 2: The pros and cons of trade
“Where trade unions are most firmly organized,

there are the rights of the people most respected.”
(Samuel Gompers)
Check up
Balan Curre Expor Financi Merchand National Unilater

ce of nt ts of al ise trade saving al
trade accou goods capital balance and transfer
nt and investme
balan servic nt
ce es

what it it
means. correctly.
Unit 10: Trade 199
Reading One
The International Trade and Capital Flows1
The balance of trade (or trade balance)
is any gap between a nation’s dollar
value of its exports, or what its the first paragraph?
producers sell abroad, and a nation’s
1. Current, Circulation,
dollar worth of imports, or the foreign- Motion
2
made products and services that
2. Made in another
households and businesses purchase. country
3
Recall from The Macroeconomic
3. Remembrance,
Perspective that if exports exceed4 Recollection
imports, the economy is said to have a
4. Surpass, Transcend
trade surplus5. If imports exceed
exports, the economy is said to have a 5. Excess, Oversupply,
6 Surfeit
trade deficit . If exports and imports are
equal, then trade is balanced. But what 6. Shortage, Debt
happens when trade is out of balance 7. Significant
and large trade surpluses or deficits 8. Critical point,
exist? emergency
Germany, for example, has had
substantial7 trade surpluses in recent
decades, in which exports have greatly
exceeded imports. According to the
Central Intelligence Agency’s The
9. Activated, Set off
World Factbook, in 2013, Germany ran
a trade surplus of $260 billion. In 10. Negative, Cynical
contrast, the U.S. economy in recent 11. Unwellness, Disorder
decades has experienced large trade
deficits, in which imports have
considerably exceeded exports. In 2014,
for example, U.S. imports exceeded
exports by $539 billion. A series of
financial crises8 triggered9 by
unbalanced trade can lead economies 12. Similar, The same
into deep recessions. These crises begin
with large trade deficits. At some point,
foreign investors become pessimistic10

about the economy and move their 13. Barrage, Volley, Slide,
money to other countries. The
14. Difference, Distance
economy then drops into deep
recession, with real GDP often falling
up to 10% or more in a single year.
This happened to Mexico in 1995
when their GDP fell 8.1%. A number
of countries in East Asia—Thailand, 15. Organize, Compile,
South Korea, Malaysia, and Arrange
Indonesia—came down with the same 16. One-sided
economic illness11 in 1997–1998
17. The past participle of
(called the Asian Financial Crisis). In Swing, Change, Fluctuate
the late 1990s and into the early 2000s, 18. After tax, Final
Russia and Argentina had the
identical12 experience. What are the
connections between imbalances of
trade in goods and services and the
flows of international financial capital
that set off these economic
avalanches13?
19. Influx, A large amount
Measuring Trade Balances of money, people, or
water that moves or is
The trade balance measures the gap14 transferred into a place.
between a country’s exports and its 20. Overseas
imports. In most high-income 21. Efflux, A large amount
economies, goods make up less than of money, people or
half of a country’s total production, water, that moves or is
while services compose15 more than transferred out of a place.
half. The last two decades have seen a
surge in international trade in services;
however, most global trade still takes
the form of goods rather than services.
The current account balance includes 22. Upturn, Escalation, A
the trade in goods, services, and period of great prosperity
money flowing into and out of a or rapid economic growth
country from investments and
unilateral16 transfers.
Unit 10: Trade 201
Trade Balances in Historical and International Context
The United States developed large trade surpluses in the early 1980s,
swung17 back to a tiny trade surplus in 1991, and then had even larger
trade deficits in the late 1990s and early 2000s. As we will see below,
a trade deficit necessarily means a net18 inflow19 of financial capital
from abroad20, while a trade surplus necessarily means a net outflow21
of financial capital from an economy to other countries.
Trade Balances and Flows of Financial Capital
International flows of goods and services are closely connected to the

international flows of financial capital. A current account deficit
means that, after taking all the flows of payments from goods,
services, and income together, the country is a net borrower from the
rest of the world. A current account surplus is the opposite and means
the country is a net lender to the rest of the world.
The National Saving and Investment Identity
The national saving and investment identity is based on the

relationship that the total quantity of financial capital supplied from all
sources must equal the total quantity of financial capital demanded
from all sources. If S is private saving, T is taxes, G is government
spending, M is imports, X is exports, and I is investment, then for an
economy with a current account deficit and a budget deficit: Supply of
financial capital = Demand for financial capital
S + (M – X) = I + (G – T)
A recession tends to increase the trade balance (meaning a higher

trade surplus or lower trade deficit), while economic boom22 will tend
to decrease the trade balance (meaning a lower trade surplus or a
larger trade deficit).
Rice University.
A. Based on the information given in the text select True, False,

Not Given.
…….1- If imports exceed exports, the economy is said to have a trade
deficit.
…….2- According to the Central Intelligence Agency’s The World Fact
book, in 2013, Germany ran a trade surplus of $260 billion.
…….3- If exports and imports are different, then trade is balanced.
…….4- A series of financial crises triggered by unbalanced trade can
lead economies into deep recessions
…….5- At some point, foreign investors become optimistic about the
economy and move their money to other countries.
B. Select the best answer for the items below. Refer to the text to
check your answers.
A) The trade balance measures the gap between a country’s
exports and its imports.
B) Most global trade still takes the form of services rather than
goods.
C) International flows of goods and services are not connected to
the international flows of financial capital.
D) A current account deficit means the country is a net lender to
the rest of the world.
2- Which one is true about measuring trade balance?
A) The trade balance measures the links between a country’s
B) Trade balance refers to the highest incomes.
C) The trade balance measures the gap between a country’s good
and its services.
D) The trade balance measures the gap between a country’s
Unit 10: Trade 203
3- What is balance of trade?

A) any gap between a nation’s dollar value of its exports.
B) the foreign-made products and services that households and
businesses purchase.
C) what its producers sell abroad, and a nation’s dollar worth of
imports.
D) All of the above
4 – What if the exports and imports are equal?

A) Dollar’s value increase
B) Trade balance is different
C) Nation dollar decrease
D) Trade is balanced
5- The current account balance includes the trade in……….

A) Imports
B) Goods and services
C) Exports
D) Incomes
C. Answer the following questions and discuss them in the class.

1. What determines the size of a country’s trade deficit?
2. Why does a recession cause a trade deficit to increase?
3. If a country is running a government budget surplus, why is (T – G)
on the left side of the saving-investment identity?
4. Why do the trade balance and current account balance track so
closely together over time?
5. If the trade deficit of the United States increases how is the current
account balance affected?
D. Look at the pictures. Using the information in the text, discuss

them in class. You may choose one of them as a topic and write
a composition (optional).
E. Pair work, in respect to the pictures in the previous section,

answer the questions below.
1- What do you think about international trading?

2- If foreign investors buy more Iran stocks and bonds, how would
that show up in the current account balance?
3- What determines the size of a country’s trade deficit?
Unit 10: Trade 205
Reading Strategy: Summarizing

Summarizing requires students to determine what is important in what
they are reading and to put it into their own words. Instruction in
summarizing helps students:
• Identify or generate main ideas
• Connect the main or central ideas
• Eliminate unnecessary information
• Remember what they read
Vocabulary Loading
Example: Financial- Financial Capital
Balance Financial Merchandise Transfer

Exports of Current Unilateral Capital
Balance Services Flow Private
Account Trade National
A) A broad measure of the balance of trade that includes trade in

goods and services, as well as international flows of income and
foreign aid
B) The international flows of money that facilitates trade and
investment
C) The balance of trade looking only at goods
D) The total of private savings and public savings (a government
budget surplus)
E) The gap, if any, between a nation’s exports and imports
F) The dollar value of exports divided by the dollar value of a
country’s GDP
G) “One-way payments” made by governments, private entities, or
individuals that are sent abroad with nothing received in return

Exports of Saving and investment
Merchandise Capital
unilateral Product
Trade Perspective
Current Goods and services
Foreign made Trade Balance
Financial Account balance
National Transfer
Macroeconomic Balance
D. Pair Work. Fill in the blanks using the proper words from the
previous section.
1. A recession tends to increase the ……………... while economic

boom will tend to decrease the trade balance.
2. The national saving and investment identity is based on the
relationship that the total quantity of ……………. supplied from all
sources must equal the total quantity of financial capital demanded
from all sources.
3. International flows of ……………….. are closely connected to the
international flows of financial capital.
4. A ……………. deficit means that, after taking all the flows of
payments from goods, services, and income together, the country is
a net borrower from the rest of the world.
Unit 10: Trade 207
Grammar injection
one.
Develop, see ,Experience, Measure, Become, Lead, Include,

Mean, Is, Connect
1. The trade balance …………. the gap between a country’s exports

and its imports.
2. At some point, foreign investors ……………pessimistic about the
economy and move their money to other countries.
3. Financial crises triggered by unbalanced trade can
…………economies into deep recessions.
4. The U.S. economy in recent decades………………….. large trade
deficits, in which imports have considerably exceeded exports.
5. The last two decades …………….. a surge in international trade in
services; however, most global trade still takes the form of goods
rather than services.
6. The current account balance ………….. the trade in goods,
services, and money flowing into and out of a country from
investments and unilateral transfers.
7. The United States ………….. large trade surpluses in the early
1980s, swung back to a tiny trade surplus in 1991, and then had
even larger trade deficits in the late 1990s and early 2000s.
8. A current account deficit ……….. that, after taking all the flows of
payments from goods, services, and income together, the country is
a net borrower from the rest of the world
9. A current account surplus …. the opposite and means the country is
a net lender to the rest of the world.
10. International flows of goods and services are closely……………
to the international flows of financial capital.
Grammar Handling
The present perfect is used to indicate a link between the present and
the past. The time of the action is before now but not specified, and
we are often more interested in the result than in the action itself.
The present perfect is used to describe:
• An action or situation that started in the past and continues in

the present. I have lived in Bristol since 1984 (= and I still do.)
• An action performed during a period that has not yet finished.
She has been to the cinema twice this week (= and the week
isn't over yet.)
• A repeated action in an unspecified period between the past
and now. We have visited Portugal several times.
• An action that was completed in the very recent past,
expressed by 'just'. I have just finished my work.
• An action when the time is not important. He has read 'War
and Peace'. (= the result of his reading is important)
Form of present perfect
Subject + Have/Has + Past Participle
Examples:
I have seen that movie twenty times. (Positive)
Have you read the book yet? (Question)
People have not traveled to Mars. (Negative)
Reading Two
Check up
International Trade, Import, Services, Current Account,

Transfers, Trade
Unit 10: Trade 209
The trade balance Measures the gap between a country’s ……… and
its imports. In most high-income economies, goods make up less than
half of a country’s total production, while services compose more than
half. The last two decades have seen a surge in ……………………..
in services; however, most global ……… still takes the form of goods
rather than ………... The ………………..balance includes the trade in
goods, services, and money flowing into and out of a country from
investments and unilateral …………. .


2. Will nations that are more involved in foreign trade tend to have
higher trade imbalances?
3. If a country is a big exporter, is it more exposed to global financial
crises?
4. Is it better for your country to be an international lender or
borrower?
Read the Text.
The Pros1 and Cons2 of Trade Deficits and Surpluses
Trade surpluses are no guarantee

of economic health, and trade
deficits are no guarantee of What is the main idea of the first
paragraph?
economic weakness3. Either trade
deficits or trade surpluses can 1. Advantages
work out well or poorly,
2. Disadvantages
depending on whether the
corresponding4 flows of financial
capital are wisely5 invested.
The Difference between Level of

Trade and the Trade Balance
3. Lack of power
There is a difference between the
level of a country’s trade and the 4. Equivalent
balance of trade. The level of
5. Cleverly
trade is measured by the
percentage of exports out of GDP, 6. A trading company that is in
agreement with another one.
or the size of the economy. Small
economies that have nearby 7. Conditions
6
trading partners and a history of
8. Used to say sth will still be
international trade will tend to true if another thing happens
have higher levels of trade.
Larger economies with few 9. Increasing productivity
nearby trading partners and a

limited history of international
trade will tend to have lower levels of trade. The level of trade is
different from the trade balance. The level of trade depends on a
country’s history of trade, its geography, and the size of its economy.
A country’s balance of trade is the dollar difference between its
Unit 10: Trade 211
exports and imports. Trade deficits and trade surpluses are not
necessarily good or bad—it depends on the circumstances7. Even8 if a
country is borrowing, if that money is invested in productivity-
boosting9 investments it can lead to an improvement in long term
economic growth.
Rice University.
Words Definitions
1.Unilateral a. The total of private saving and public saving
Transfer
2.National b. the gap, if any, between a nation’s exports and

saving imports
And investment
3.Merchandise c. the international flows of money that facilitates
trade balance trade and investment
4.Financial d. the dollar value of exports divided by the

capital dollar value
of a country’s GDP
5.Export of e. one-way payments” made by governments,
goods and private entities, or individuals that are sent
services abroad with nothing received in return
6. Balance trade f. the balance of trade looking only at goods

There is a difference between the level of a country’s trade and the

balance of trade. The level of trade is measured by the percentage of
exports out of GDP, or the size of the economy. Small economies that
have nearby trading partners and a history of international trade will
tend to have higher levels of trade. Larger economies with few nearby
trading partners and a limited history of international trade will tend to
have lower levels of trade. The level of trade is different from the
trade balance.
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
…………………………………………………………………………
………………………………………………………
Two.
Measure Investment Tend Is Depend
1. Either trade deficits or trade surpluses can work out well or

poorly,……………..on whether the corresponding flows of
financial capital are wisely invested.
2. The level of trade is……………by the percentage of exports out of
GDP, or the size of the economy.
3. Small economies that have nearby trading partners and a history of
international trade will………..to have higher levels of trade.
Unit 10: Trade 213
4. Trade deficits and trade surpluses ……… not necessarily good or

bad—it depends on the circumstances.
5. Even if a country is borrowing, if that money is ………………. in
productivity-boosting investments it can lead to an improvement in
long term economic growth.
Self-check
Check your progress in this unit. Tick (4) the statements which
are true about you.
• I can define Balance of trade and Financial capital in
English.
better.
Reference
Dilts, A. D. (2004). Introduction to Microeconomics, E201. Fort Wayne,

Indiana, Purdue University.
Greenlaw, S. A., Taylor, T., Dodge, E. R., Gamez, C., Jauregui, A., Keenan,
D., . . . Sonenshine, R. (2016). Principles of macroeconomics.
Houston, TX: Openstax College, Rice University.
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ENGLISH FOR STUDENTS OF ECONOMICS

Book · March 2018

Hooshang Khoshsima Omid Khatin-Zadeh

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Afsane Askari Hassan Banaruee

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ENGLISH FOR STUDENTS

UNIT 1: ECONOMICS ...................................................................... 7

REFERENCE ................................................................................. 215

distribution goods objectives wages

Equity Efficiency luxuriousl Economic

I have I have I I have I use the I use the

Understanding how various economies work

services. There are two branches 5 of 4. The action of sharing

Scarcity implies11 that every decision 10. Happens

a few of all available alternatives14. For 12. Available in large

costing $10. If he decides to buy the 15. Attract

magic set. And if he buys the magic set, the

town hires17 an extra police officer instead 17. Employs

Microeconomics (micro derives from the 31. Big, Vast

wastes30 resources and fails to provide the

ability. Land and capital are referred to as 46. Starting or arranging

payment made to the owners of land is rent.

resources, risks his or her own money, and

Although all economies rely on the same basic factors of production,

Dilts, A. D. (2004). Introduction to Microeconomics, E201. (71-86).

Digest what you read

…….1- Economics deals with production, distribution, and

B. Select the best answer for the items below. Refer to

2- Why does scarcity occur?

3- Which of the goals are not agreed upon in macroeconomics policy?

4- Which one is not a goal in microeconomics?

5- Which one is true about factors of production?

C. Answer the following questions and discuss them in

D. Look at the pictures. Using the information in the

E. Pair work, in respect to the pictures in the previous

Reading Strategy: Answering questions

Questions can be effective because they:

Example: distribution- Distribution of goods and services

distribut goo objecti wage Equity luxuriousl Economic

B. Find matching pairs. Translate them into Persian.

Part 1 Part 2 Pairs Translation

opportunity his choice

narrows time and resources.

Part 1 Part 2 Pairs Translation

Part 1 Part 2 Pairs Translation

sales needed resources

assembles the money

Part 1 Part 2 Pairs Translation

factors of industrial giant

Part 1 Part 2 Pairs Translation

C. Pair Work. Fill in the blanks using the proper words

1. We seek to know how an economy is organized, how it behaves,

6. If a town …………..an extra police officer instead of repaving

A. Economics is a science and its texts are scientific. When reading

We always go on holiday in the summer.

They live in London.

3- For general facts, for example when talking about science.

Microeconomics studies the economic behavior of individual firms.