UNIT I
FUNDAMENTALS OF ECONOMICS
WARM-UP
1. Why have you decided to become an economist?
2. What are the advantages of being an economist in your
country?
3. What job positions can you take after you have graduated
from your university?
TERMS EXERCISES
TASK 1.
Match the terms below with their definitions.
1.economics
a) to try to save money by reducing the
amount that you are spending
2. economy
b) not using a lot of money, energy, etc.
3. to economize c) the scientific study of the system by
which a country’s wealth is made and used
4. an economist d) relating to trade, industry, and money
5. economic
e) a person who studies or has
a special knowledge of economics
6. economical
f) the system of trade and industry by
which the wealth of a country is made and
used
TASK 2.
Fill in the gaps with some of the words
presented in TASK 1 in the appropriate grammatical
form.
1. She's a professor of ----- at Armenian State University of
Economics. 2. Tourism contributes millions of pounds to the
local -----. 3. You could ----- on food by not eating in restaurants
all the time. 4. Some ----- think that full employment in Europe
is an unattainable goal. 5. With rents so high, it wasn’t -----to
continue to live in the city. 6. The country has been in a very
poor ----- state ever since the decline of its two major
industries.
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TASK 3. Read the text below and decide whether the
following statements are true or false according
to it.
1. Our needs and wants are limited and the resources for their
satisfaction are unlimited.
2. Economics deals with the issues of studying how the
economy allocates the limited resources to produce all the
necessities for the societies.
3. Macroeconomics studies households and businesses while
microeconomics studies the big picture.
4. Microeconomics studies the budget of a country as well as
money supplies.
5. We can analyze almost all economic subjects by looking at
their incentives, trade-offs, opportunity costs, marginal
thinking and the principle that trade creates value.
Economists study how decisions are made. Examples of
economic decisions include whether you should buy or lease a
car, sublet your apartment, or buy that Iphone latest model
you’ve been eyeing. And just as individuals must choose what
to buy within the limits of their income, society as a whole must
determine what to produce from its limited set of resources. Of
course, life would be a lot easier if we could have whatever we
wanted, whenever we wanted it. Unfortunately, life does not
work that way. Our wants and needs are nearly unlimited, but
the resources available to satisfy these wants and needs are
always limited.
The term used to describe the limited nature of society’s
resources is scarcity. Even the most abundant resources, like
the water we drink and the air we breathe, are not always
abundant enough everywhere to meet the wants and needs of
every person. So how do individuals and societies make
decisions about scarce resources? This is the basic question
economists seek to answer. Economics is the study of how
individuals and societies allocate their limited resources to
satisfy their nearly unlimited wants.
The study of economics is divided into two subfields:
microeconomics and macroeconomics. Microeconomics is the
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study of the individual units that make up the economy, such as
households and businesses. Macroeconomics is the study of the
overall aspects and workings of an economy, such as inflation
(an overall increase in prices), economic growth, employment,
interest rates, and the productivity of the economy as a
whole. To understand the difference, consider a worker who
gets laid off and becomes unemployed. Is this an issue that
would be addressed in microeconomics or macroeconomics?
The question seems to fit parts of both definitions. The worker
is an individual, which is micro, but employment is one of the
broad areas of concern for the economy as a whole, which is
macro. However, because only one worker is laid off, this is a
micro issue. If many workers were laid off and the result was a
higher unemployment rate across the entire economy, the
issue would be broad enough to be studied by
macroeconomists. However, macroeconomics is more than just
an aggregation of microeconomics. Macroeconomists examine
government policies regarding the state budget and money
supply, the reasons for inflation and unemployment, economic
growth, international trade, and government borrowing—topics
that are too complex to be understood using only
microeconomic analysis.
The study of economics can be complicated, but we can
make it very accessible by breaking it down into a set of
component parts. Almost every economic subject can be
analyzed through the prism of one of these foundations:
 Incentives
 Trade-offs
 Opportunity cost
 Marginal thinking
 The principle that trade creates value
VOCABULARY NOTES
lease (v)
sublet (v)
eye (v)
վարձակալել
ենթավարձել, վարձով տալ
/li s/
/ sʌb let/
/aɪ/
ուշադրության տակ պահել,
զննել
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set (n)
scarcity (n)
abundant (adj)
scarce (adj)
unit (n)
/ skeə(r)səti/
/əˈbʌndənt/
առատ, հարուստ
սակավ
/skeə(r)s/
/ ju nɪt/
interest rate (n)
/ɪn fleɪʃ(ə)n/
/ˈɪntrəstreɪt/
productivity (n)
/ prɒdʌk tɪvəti/
lay off (v)
/leɪɒf/
issue (n)
address (v)
/ˈɪʃu /, /ˈɪsju /
/əˈdres/
fit (v)
/fɪt/
employment (n)
broad (adj)
/ɪm plɔɪmənt/
/brɔːd/
concern (n)
/kən sɜː(r)n/
inflation (n)
հավաքածու, խումբ, բազմություն
սակավություն
/set/
միավոր
գնաճ
տոկոսադրույք
արտադրողականություն,արդյու
նավետություն
աշխատանքից հարկադրված
ազատել, կրճատել
հիմնահարց, թողարկում
հասցեագրել, անդրադառնալ
համապատասխանեցնել,
համապատասխանել
զբաղվածություն
լայն, ընդարձակ
մտահոգություն,
շահագրգռություն,
կարևորություն
գործազրկություն
unemployment (n) /ʌnɪm plɔɪmənt/
aggregation (n)
/ æɡrɪˈɡeɪʃn/
state budget (n)
/steɪt bʌdʒɪt/
supply (n)
/səˈplaɪ/
topic (n)
complex (adj)
complicated (adj)
prism (n)
incentive (n)
trade-off/tradeoff
(n)
opportunity cost
marginal thinking
(n)
համախմբում, ամբողջություն
պետական բյուջե
առաջարկ, ապահովում
թեմա
/ tɒpɪk/
/kəm pleks/
բարդ, խրթին
/ kɒm.plɪ.keɪ.tɪd/
/ prɪz.əm/
բարդ, խճճված
հատվածակողմ, պրիզմա
/ɪn sentɪv/
/treɪd ɒf/
խթան, մղում, դրդապատճառ
/ˌɒp.əˈtʃu .nə.tikɒst/
/ mɑː(r)dʒɪn(ə)l θɪŋkɪŋ/
այլընտրանքային արժեք
փոխզիջում
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սահմանային մտածողություն
redundancy (n)
/rɪˈdʌn.dən.si/
gaze at (v)
stunt (n)
/ɡeɪz/
/stʌnt/
diminish (v)
/dɪˈmɪn.ɪʃ/
գործազրկություն,
ավելորդություն
ակնապիշ նայել
հնարք
պակասել, նվազել
TASK 4. Answer the following questions choosing the right
option based on the article
1. The phenomenon of scarcity stems from the fact that
a. Most economies’ production methods are not very good.
b. In most economies, wealthy people consume
disproportionate quantities of goods and services.
c. Governments restrict production of too many goods and
services.
d. Resources are limited.
e. People are greedy.
2. Can companies produce unlimited amounts of goods and
services?
a. Yes, as the resources are abundant.
b. No, as the resources are limited and scarce.
c. None of the above-mentioned.
3. What is the subject matter of macroeconomics?
a. It studies households and businesses, how they perform
in the economy.
b. It studies the overall functioning of the economy, i.e. the
big picture.
c. Both the above-mentioned.
4. What is the subject matter of microeconomics?
a. It studies individuals, households and businesses within
the economy.
b. It studies state budgets and business budgets.
c. Both above-mentioned are true.
5. Is the state budget included in macroeconomic studies?
a. It is separate from micro- and macro- studies.
b. No
c. Yes
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6. Why should we try to save the resources while producing
goods and services?
a. There are unlimited resources in the world.
b. Resources are concentrated in one part of the world.
c. Resources are scarce and limited.
7. Which word from the text is closest in the meaning to
‘effectiveness’?
a. Sublet
b. Productivity
c. Growth
d. Supply
8. Which word from the text is closest in the meaning to
‘complicated’?
a. Scarce
b. Abundant
c. Interest
d. Complex
9. Which word from the text is closest in the meaning to
‘redundancy’?
a. Unemployment
b. Rates
c. Lease
d. Eyeing
10. Which word from the text is closest in the meaning to ‘gazing
at’?
a. Fitting
b. Eyeing
c. Issuing
d. Leasing
TASK 5. Find the odd word in each group of words.
1.
2.
3.
4.
5.
6.
7.
value
cost
downturn
income
diminish
expand
international
valid
monetary
recession
encourage
define
expend
global
merit
financial
slowdown
motivate
decrease
enlarge
multinational
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advantage
fiscal
stunt
incentivize
decline
stretch
multiply
8.
9.
lay-off
goods
employment
productivity
redundancy
efficiency
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dismissal
effectiveness
TASK 6. Complete the text with the words from the box.
consumption, blocks, rational, efficient, resources, employ, allocate,
activities, labor, governments, mining
Economics is a social science concerned with the production,
distribution, and 1. --- of goods and services. It studies how
individuals, businesses, 2. ---, and nations make choices about
how to 3. --- resources. Economics focuses on the actions of
human beings, based on assumptions, that humans act with 4.
--- behavior, seeking the most optimal level of benefit or utility.
The building 5. --- of economics are the studies of labor
and trade. Since there are many possible applications of human
labor and many different ways to acquire 6. ---, it is the task of
economics to determine which methods yield the best results.
Economists 7. --- many different methods of research from
logical deduction to pure data 8. ---. Economic theory often
progresses
through
deductive
processes,
including
mathematical logic, where the implications of specific human 9. -- are considered in a "means-ends" framework. This type of
economics deduces, for example, that it is more 10. --- for
individuals or companies to specialize in specific types of 11. --and then trade for their other needs or wants, rather than trying
to produce everything they need or want on their own.
TASK 7. Complete each sentence with a word formed from
the verb in brackets.
1. The Gross Domestic Product (GDP) is considered by many
to be the broadest measure of a country's (to economize)
performance.
2. Many (to invest), analysts, and traders don't actually focus on
the (to finalize) annual GDP report, but rather on the two
reports issued a few months before.
3. The industrial (to produce) report, released monthly by the
Federal Reserve, reports on the changes in the production of
factories, mines, and (to utilize) in the U.S.
4. It is (to prefer) for a country to see (to increase) values of
production and capacity utilization at high levels.
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5. Families and tribes would build their own (to dwell), grow their
own crops, fashion their own clothes, bake their own bread,
etc.
6. Later, as (to civilize) developed, economies based on
production by social class emerged, such as feudalism and
slavery.
7. Capitalism is defined as a system of production whereby
business owners organize (to produce) resources including
tools, workers, and raw materials to produce goods for sale in
order to make a profit and not for personal consumption.
8. Economic socialism is a system of production where there is
limited (to own) of the means of production and a system of
prices, profits, and losses is not the sole (to determine) used
to establish who is engaged in production, what to produce
and how to produce it.
TASK 8. Search the words on paper version.
abundant
analysis
complex
depression
economic
expansion
incentivize
marginal
aggregation
boom
concern
diminish
economy
government
individual
market
allocate
bubble
demand
downturn
expand
incentives
inflation
monetary
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supply sublet
unlimited
value
recession
recovery
resources
scarcity
stagnation
TASK 9. Identify whether each of the following statements
identifies a microeconomic issue or a
macroeconomic issue.
Microeconomics and Macroeconomics: The Big Picture
1.
2.
3.
4.
The national savings rate is less than 2% of income.
Jim was laid off from his job and is currently unemployed.
Apple decides to open 100 new stores.
The government passes a jobs bill designed to stabilize the
economy during a recession (an economic downturn).
TASK 10.1. Pre-listening. Look through the words below
and learn their definitions.
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caveat - a warning to consider something before taking any
more action, or a statement that limits a more general
statement
bottom-up - considering the smaller or less important parts or
details of a plan, organization, etc. first
top-down - starting from the highest levels or from the most
general ideas of an organization, system, etc.
scope - the range of a subject covered by a book,
programme, discussion, class, etc.
to interrogate - to ask questions about something as a way of
analysing it or finding out more about it
variable - a number, amount, or situation that can change
finite - having a limit or end
TASK 10.2. Pre-listening. Fill in the gaps with some of the
words presented above.
1. ----- analysis usually encompasses a vast universe of
macro variables while ----- analysis is more narrowly focused. 2.
I'm afraid that problem is outside the ----- of my lecture. 3.
The ----- in the equation are X, Y, and Z. 4. He agreed to the
interview, with the ----- that he could approve the final article.
5. The funds available for the health service are ----- and we
cannot afford to waste money. 6. This all sounds perfectly
sensible until we start ----- the underlying assumptions.
TASK 10.3. You are going to watch a video explaining the
difference between macroeconomics and
microeconomics. Visit the following website:
https://www.youtube.com/watch?v=nJbWj_kHCJQ&t=2s and
answer the questions or fill in the gaps when listening
to the sentences below.
1. Economics is the study of how scarce or ----- resources
are allocated for production, distribution, and
consumption, both ---- and collectively.
2. What kind of approach does microeconomics take?
3. The prefix “macro” indicates a large or collective -----.
4. What kind of approach does macroeconomics take?
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5. What official bodies is macroeconomics used by and for
what purposes?
6. According to the video, in the media only ----- questions
are discussed.
7. Start small before going -----.
9. What is the caveat that should be borne in mind?
WRAPPING UP
1. What is the most fundamental issue of economics as a
discipline in the statements mentioned below?
a. The allocation of resources among competing wants
because there are unlimited wants but limited resources.
b. How to ensure continuous economic growth in the face of
uncertainty.
c. How to maximize profits for companies and consumer
value for citizens.
2. What I have learnt in this unit is that --3. Which terms have I learnt and memorized so far?
HOMEWORK
Prepare a small presentation on the topic of economics, its main
issues or choose micro or macro studies with examples and
justify your choice.
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