What does economics study?

What do you think of when you hear the word economics? Money, certainly, and perhaps more complicated things like business, inflation and unemployment. The science of economics studies all of these, but many more things as well. Perhaps you think that economics is all about the decisions that governments and business managers take. In fact, economists study the decisions that we all take every day.

Very simply, economics studies the way people deal with a fact of life: resources are limited, but our demand for them certainly is not. Resources may be material things such as food, housing and heating. There are some resources, though, that we cannot touch. Time, space and convenience, for example, are also resources. Think of a day. There are only 24 hours in one, and we have to choose the best way to spend them. Our everyday lives are full of decisions like these. Every decision we make is a trade-off. If you spend more time working, you make more money. However, you will have less time to relax. Economists study the trade-offs people make. They study the reasons for their decisions. They look at the effects those decisions have on our lives and our society.

What are microeconomics and macroeconomics?

Economists talk about microeconomics and macroeconomics. Microeconomics deals with people, like you and me, and private businesses. It looks at the economic decisions people make every day. It examines how families manage their household budgets. Microeconomics also deals with companies – small or large – and how they run their business. Macroeconomics, on the other hand, looks at the economy of a country – and of the whole world. Any economist will tell you, though, that microeconomics and macroeconomics are closely related. All of our daily microeconomic decisions have an effect on the wider world around us.

Another way to look at the science of economics is to ask, what is it good for? Economists don’t all agree on the answer to this question. Some practice positive economics. They study economic data and try to explain the behaviour of the economy. They also try to guess economic changes before they happen. Others practice normative economics. They suggest how to improve the economy. Positive economists say, “this is how it is”. Normative economists say, “we should…” .

So what do economists do? Mainly, they do three things: collect data, create economic models and formulate theories. Data collection can include facts and figures about almost anything, from birth rates to coffee production. Economic models show relationships between these different data. For example, the relationship between the money people earn and unemployment. From this information, economists try to make theories which explain why the economy works the way it does.

B Comprehension

Now read the text again and match each paragraph with the correct heading.

PARAGRAPH 1 …………………….

PARAGRAPH 2 …………………….

PARAGRAPH 3 …………………….

PARAGRAPH 4 …………………….

PARAGRAPH 5 …………………….

A How economists work

B Making deals every day

C Various ideas about economics

D Two areas of economics

E Two types of economist

Before you listen

Discuss these questions with your partner.

-If you live in a modern economy, life is quite easy.

-Before the Industrial Revolution, life was much harder.

-In what ways was life more difficult?

C Listening

Listen to someone talking about life before the Industrial Revolution. Which of these things are mentioned?

1. length of life __

2. housing __

3. illnesses __

4. work __

5. food __

6. having children __

Now listen again and match the descriptions with the numbers.

1. life expectancy A about 250

2. number of children who died before they

reached five years old B 1 in 10

3. number of women who died when they

were giving birth C 26

4. years since the Industrial Revolution D 1 in 3

Grammar: Present Simple

I/we/ you they read/go/speak/drive/eat/take etc.

He/she/it reads/goes/drives/eats/takes etc.

Use do/does to make negative sentences and questions.

Do I/we/you/they read/speak/go/eat?

Does he/she/it read/go/speak/eat?

I/you/we/they/ do not read/speak/go.

He/she/it does not read/speak/go/eat.

Exercises

Complete the sentences using one of the following:

cause(s) close(s) drink(s) live(s) open(s) speak(s) take(s) place

1. Ann…………………... German very well.

2. I never………………..coffee.

3. The swimming pool……………..at 9 o’clock and…………….at 18.30every day.

4. Bad driving……………..many accidents.

5. My parents…………….in a very small flat.

6. The Olympic Games……………..every four years.

Put the verb into the correct form.

1. Jane ... doesn't drink .. (not/drink) tea very often.

2. What time (the banks / close) in Britain?

3. 'Where (Martin/come) from?' 'He's Scottish.'

4. 'What (you/do)?' 'I'm an electrical engineer.'

5. It (take) me an hour to get to work. How long

(it/take) you?

6. I (play) the piano but I (not/play) very well.

7. I don't understand this sentence. What (this

word/mean) ?

Use one of the following verbs to complete these sentences. Sometimes you need the negative: believe eat flow go grow make rise tell translate

1. The sun ...goes.. round the earth. 7 An interpreter from one

2. Rice ....doesn't grow.. in Britain. language into another.

3. The sun in the east. 8 A liar is someone who

4. Bees honey. , the truth.

5. Vegetarians meat. 9 The River Amazon into

6. An atheist in God. the Atlantic Ocean.

Ask Liz questions about herself and her family.

1. You know that Liz plays tennis. You want to know how often. Ask her. How often ...do you play tennis?..

2. Perhaps Liz's sister plays tennis too. You want to know. Ask Liz. your sister

3. You know that Liz reads a newspaper every day. You want to know which one. Ask her.

4. You know that Liz's brother works. You want to know what he does. Ask Liz.

5. You know that Liz goes to the cinema a lot. You want to know how often. Ask her.

6. You don't know where Liz's mother lives. Ask Liz.

Complete using one of the following:

I apologise I insist I promise I recommend I suggest

1. It's a nice day. ...I suggest... we go out for a walk.

2. I won't tell anybody what you said

3. (in a restaurant) You must let me pay for the meal

4 for what I said about you. It wasn't true and I shouldn't have said it.

5 The new restaurant in Hill Street is very good. it.