IV. Listening

1. Listen to the lecture.

2. Do the tasks given in the textbook.

3. Listen to the lecture again, take notes to bе ready to write а summary of it.

V. Match the terms with their definitions:

1. equation 2. equality 3. notation 4. to scatter 5. to reproduce

a. a short expression given in the written form; b. spread over a wide area or a long period of time; c. the situation when smth obtain the same advantages; d. to make smth happen in the same way it happened before; e. statement in mathematics that shows that two totals or amount are equal;

VI. Match the words with their synonyms:

1. sensitive 2. capture 3. ignore 4. conclusive 5. determinant

a. apprehend b. neglect c. decisive d. resolving factor e. responsive

VII. Insert suitable words into the gaps.

predict, model, theory, goal, economic, full detail, to develop, reality, yields. economics, enables, to predict, complex, simplify, describe, gas, useful, prediction, goods, provides

Economic Models and Theories

Economists measure and 1)______ the material side of life, but their main 2)______ is to understand how economies operate. In 3)______, as in other fields, understanding is valuable because it 4)______ us to use logic to answer ‘what if’ questions.

For instance, if you understand how a car operates you can 5)______ what will happen to any car if it runs out of gas. To make such a 6)______ you apply basic logic to a simple description or 7)______ of automobile operation. The simpler the model the easier it is to use it to give general answers to ‘what if’ questions but the less 8)______ the predictions it 9)______. Thus, the simplest 10)______ of auto operation would predict only that any car’s engine will stop if it runs out of 11)______, while a more complex model might enable you 12)______ how far a particular car would move, depending on the road and its speed, when the gas ran out.

Real economies are too 13)______ to think about logically in 14)______, there are too many different 15)______, services, firms, workers and consumers to keep track of. In order 16)______ understandable descriptions of reality, we must 17)______ drastically. But it then follows that all economic theories are wrong - since they leave out some aspects of 18)______. Does it 19)______ generally correct answers to questions of interest? Another way to put this is that the predictions of 20)______ models should be consistent with the available evidence.

VIII. Give terms for the following:

1. A sequence of measurements of a variable at different points in time.

2. The price of a commodity relative to the general price level for goods.

3. A simplifying assumption which enables the economist to focus on key economic relationships.

4. A deliberate simplification of reality based on a series of simplifying assumptions from which it may be deduced how people will behave.

5. An index of the prices of goods purchased by a typical household.

6. The percentage change in a variable per period (typically per year).

7. Measurements of an economic variable at a point in time for different individuals or group of individuals.

8. A way of expressing data relative to a given base value.

9. A graphical device to show how two variables are related.

10. Pieces of information relating to economic variables.