Unit 2 microeconomics and macroeconomics

Lead-in

1. Do you know what the difference is between macroeconomics and microeconomics?

2. Are the following statements about microeconomics or macroeconomics?

• … deals with topics of inflation and unemployment.

• … studies how people make decisions to allocate limited resources.

• In … the focus is placed on factors that affect the decisions made by firms and individuals.

• ... includes a national, regional, or global economy.

Key Vocabulary

Study the following vocabulary and do the tasks that follow.

1. allocation n	распределение
2. distribute v	распределять
3. divide v	делиться, подразделять
4. behaviour n	поведение
5. affect v	влиять
6. make a profit	получать прибыль
7. study v	изучать
8. entire adj	весь, взятый в целом
9. unemployment n	безработица
10. income n	доход
11. rate of growth	темп роста
12. gross domestic product (GDP)	валовый внутренний продукт (ВВП)
13. price level	ценовой уровень
14. cause v	быть причиной, вызывать
15. trend n	направление, тенденция
16. interdependent adj	взаимозависимый

Pre-reading Activities

1. Use a dictionary and underline the odd word (лишнее слово) in each line. Explain your choice and learn the vocabulary.

a) distribution – allocation – consumption

b) examine – deal with – study

c) effect – affect – influence

d) allocate – connect – distribute

2. Complete the crossword puzzle using your active vocabulary.

			1		E							8
					C
					O							5					9
				2	N
					O					6
	3				M
					I					7
					4C
					S

1. the state of not having a job

2. complete or full

3. money earned by work or investments

4. to make something happen

5. distribution

6. the amount of money expected, required, or given in payment for something

7. a general direction in which something is developing or changing

8. to inspect (someone or something) thoroughly in order to determine their nature or condition

9. to have an influence on someone or something, or to cause them to change

Reading

Read the text and check whether you answered the Lead-in questions correctly.

Economics is the science that deals with production, allocation, and use of goods and services. It is important to study how resources can best be distributed to meet the needs of the greatest number of people. As we are more connected globally to one another, the study of economics becomes an extremely important issue.

Economics is a broad subject that can be divided into two areas: microeconomics and macroeconomics.

Microeconomics, the study of the economic behaviour of small economic groups such as firms and families, is one of the largest subfields in economics. Microeconomics deals with economic decisions made at a low, or micro, level. It is the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions affect others.

Microeconomics asks questions: “How do individuals make consumption decisions?”, “How do firms make profits and price their goods and services?”, etc.

“Macro” means “large”. Macroeconomics is the field of economics that studies the behaviour of the economy as a whole, not just specific companies, but entire industries and economies. This area of economics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Macroeconomics asks questions like: “What causes inflation?”, “What effect does the national debt have on economic growth?”, etc.

So, macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. These two studies of economics are different, but they are interdependent and complement each other. The factors that are studied by macro- and microeconomics often influence each other.

Comprehension

1. Match these sentence halves describing economics and its two areas.

1. Microeconomics is	a) the economic behavior of individual consumers, firms, and industries.
2. Economics is	b) one of the two main fields of the social science of economics.
3. Microeconomics is the study of	c) the influence of all economic factors on each other.
4. Macroeconomics seeks to understand	d) a social science concerned with the production, distribution, exchange, and consumption of goods and services.

2. Decide whether the following statements are True or False.

1. Resources should be distributed in the best way to meet the needs of people.

2. The study of macroeconomics is an extremely important issue.

3. Microeconomics is one of the largest subfields in economics.

4. Microeconomics is the analysis of the decisions made by individuals and groups.

5. Macroeconomics deals with economic decisions made at a low level.

6. The two studies of economics complement each other.

3. Answer the questions.

1. What is economics?

2. Why is it important to study economics?

3. Is microeconomics the study of the economic behaviour of small economic groups?

4. What kind of analysis is microeconomics?

5. What does macroeconomics examine?

6. What questions are asked by the two areas of economics?

7. Do factors that are studied by macro- and microeconomics influence each other? In what way?