English for Business Management Economics
Chapter I: Economics
Unit 1: Economic Activity
Text 1.1
Most people work in order to earn their living.
They produce goods and services.
Goods are either produced on farms, like maize and milk, or in factories, like cars and
paper.
Services are provided by such things as schools, hospitals and shops.
Some people provide goods; some provide services.
Other people provide both goods and services.
For example, in the same garage, a man may buy a car, or he may buy some service which
helps him to maintain his car.
The work which people do is called their economic activity.
Economic activities make up the economic system.
The economic system is the sum-total of what people do and what they want.
The work which people undertake either provides what they need or provides them with
money.
People buy essential commodities with money.
Exercise 1
Answer the following questions:
1. Why do most people work?
2. What do they produce?
3. Where are goods produced?
4. What do schools, hospitals and shops provide?
5. What two different things can a man buy in, for example, a garage?
6. What do we call the work which people do?
7. What is an economic system the sum-total of?
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English for Business Management Economics
8. What two things can work provide for the worker?

especially in conversational English. It is generally either left out, or replaced by
who or that. It is almost impossible in clauses that end with a preposition.
Example: Do you think one should stay faithful to the person to whom one is
married?
• That can often (but not always) be used instead of whom or which, and quite often
instead of who.
E.g. The trumpet is the instrument that really excites me.
She is the only person that understands me.
• After nouns referring to times and places, when and where can be used to mean at
which or in which. After the word reason, why is used to mean for which.
Example: Can you suggest a time when it will be convenient to meet?
Is there any reason why you should have a holiday?
I know a wood where you can find wild strawberries.
• Whose is a possessive relative word.
Example: This is Henry, whose wife works for my brother-in-law.
Exercise 1
Combine these pairs of sentences as in the example:
Example: The services are useful. The workers provide services.
The services which the workers provide are useful.
a. The goods are essential. They need the goods.
b. The schools and hospitals are essential. They provide schools and hospitals.
c. The goods are valuable. He buys the goods.
d. The money buys essential commodities. People can earn this money.
e. The goods and services are very useful. People produce these goods and services.
f. The work is called economic activity. We do this work.
g. The work provides them with money. People do this work.
h. The economic activities make up the economic system. People undertake these
economic activities.

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Exercise 1
Decide whether the following statements are true (T) or false (F), and if they are false say
why.
1. Most people produce either goods or services.
2. Services are either agricultural or manufactured.
3. Education and medicine are provided by schools and hospitals.
4. Cars and paper are agricultural goods.
5. Paper is non- agricultural commodity.
6. The work which people do is called an economic system.
7. A city has its own economic system.
8. Economic activity is the sum-total of what people do and want.
9. The work people undertake provides them with money, or with what they need.
10. Most people do not want to buy non-essential commodities and services.
Exercise 2
In the sentences below replace which with that. When you have done this, re-write all the
sentences without either which or that. The meaning remains the same but the sentences
become less formal.
1. The goods which they wanted were essential minerals.
2. The schools and hospitals which they provide are essential.
3. The goods which he buys are valuable.
4. The money which the people earned bought many commodities.
5. The goods and services which people produce are very useful.
6. The work which we all do is called economic activity.
7. The work which most people do provides them with money.
8. The economic activities which people undertake make up the economic system of a
town, city, country or larger area.
9. The economic system which people belong to is the sum-total of their needs and
actions.
10. The work which he undertook was useful but non-essential.
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2. What is the American system based on?
3. What is the Russian system based on?
4. When did Karl Marx live?
5. What economic system is the British system similar to?
6. On what two things is the British system based?
7. Who can own property in the United States and Britain?
8. What must British and American citizens obey?
9. What three things can Britons and Americans use as they wish?
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English for Business Management Economics
Exercise 2
Make these sentences passive, as in the example
Example: Most people produce goods and services.
Goods and services are produced by most people.
1. Some people provide both goods and services.
2. Economists study the economic system.
3. That man owns the house.
4. They will provide shelter and clothes.
5. Economic changes affect our lives.
6. They will maintain his car.
7. The economists explained the economic system.
8. They explained the methods.
9. He told me how the Russian system works.
Exercise 3
Here are two lists. The first list contains adjectives. The second list contains nouns
and noun phrases. Arrange the words in each list so that the adjectives match the nouns in
ways which relate to the text. The first two are done for you.
Capitalistic satisfaction
Economic Russian system
Private necessities

d. The men satisfied the economist that they would do the work rapidly.
e. The economist described the whole economic system in a strictly scientific way.
f. The economic system affected the people’s lives in many ways.
g. They studied the supply of both essential and non-essential commodities.
h. The people enjoy a strong economy in that country.
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English for Business Management Economics
i. The citizens exercise a considerable amount economic freedom.
j. They must obey the law.
2. Word formation - Suffixes
When you are reading, you will come across unfamiliar words. It is often possible to
guess the meanings of these words if you understand the way words in English are
generally formed.
Affixes
Prefixes + stem + suffixes
An English word can be divided into three parts: a prefix, a stem and a suffix. Pre-
means “before”; a prefix, therefore, is what comes before the stem. Consider, as an
example, the prefix DE- (meaning “reduce” or “reserve”) in a word like demagnetize
(meaning “to deprive of magnetism”. A suffix is what is attached to the end of the stem.
Consider, as an example, the suffix, -ER (meaning “someone who”) in programmer (“the
person who programs”). Both prefixes and suffixes are referred to as affixes.
Prefixes usually change the meaning of the word, for example, un- changes the
word to a negative. Unmagnetizable means “not able of being magnetised”. Suffixes, on
the other hand, change the word from one part of speech to another. For example, -ly
added to the adjective quick gives the adverb quickly. Let now consider some suffixes and
their usual meanings.
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English for Business Management Economics
Suffixes
Nouns verbs adjectives Adverbs

investment in new business activities. Property in both USA and Britain can be owned by
individual citizens and these citizens exercise considerable economic freedom of choice.
They can choose what they want to do and how they want to earn their living, but are not
of course entirely free to do as they wish. They must obey the law. Otherwise, however,
they can use their time, money and effort as they wish.
Exercise 1
Decide whether the following statements are true (T) or false (F), and if they are false say
why.
1. The economic systems of the USA and USSR are the same.
2. In the USA the means of production are privately owned.
3. Karl Marx was an eighteenth century economic thinker.
4. The British system is based on the principles of Karl Marx.
5. Because British has a system of private enterprise, we can say that its economy is
similar to the American economy.
6. Capital is essentially surplus income used for business activities.
7. Individual citizens in Britain and the United States have complete economic freedom.
8. British citizens can choose what they want to do as long as they obey the law.
Exercise 2
1. Find single words in the first paragraph of the text for which these words could be
substituted.
a. founded b. possession c. main teaching d. countries
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English for Business Management Economics
2. Find single words in the second paragraph of the text for which these words could be
substituted.
a. stores b. described c. extra d. single
e. have and use f. selection g. pick h. completely
i. follow j. physical power
Study the words
Principle (n)

In the private sector are the majority of the nation’s industries, both large and
small.
The private sector includes giant companies like ICI and BP and a great number of
small family businesses.
In 1962 the British government set up an official body to plan national economic
policies. This body is called the National Economic Development Council. The members
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English for Business Management Economics
of this council are representatives of the employers, employees and other interested
people.
Exercise 1
Answer these questions. You may answer either YES or NO. Give your reasons. Quote
from the text in support of your answer.
1. Are there any completely communistic states?
2. Are there any completely capitalistic states?
3. Do the various national economies tend towards one or other ideology?
4. Are the various economic systems difficult to classify?
5. Have most countries found economic control necessary?
6. Has the USA felt the same need?
7. Are the under-developed countries interested in control and planning?
8. Has the India had a number of national economic plans?
9. Is the Indian economy based entirely on private enterprise?
10. Does the Indian economy have two distinct sectors?
11. Is the Indian system a mixed economy?
12. Is BOAC a nationalized British industry?
13. Is the ICI a nationalized British Industry?
14. Was the NEDC set up by British government?
15. Are both employers and employees represented on NEDC?
Exercise 2
Answer these questions, basing your answer on the text.

Simple
Note
ify
ification
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English for Business Management Economics
NOTE: remember to remove the “e” in simple, note and pure.
a. This plan is not simple enough. We must therefore _______ it. The ______ of plan
is essential.
b. The economy of that country belongs in the Marxist group or class. We must
therefore ______ it as communistic. The _______ of the economy of that country
is not difficult.
c. That water is not pure enough. It is necessary therefore to _______ it. The
________ of the water is a matter of public health.
d. Please send a note to the members of the Council. You should _______ them of the
date of the next Council meeting. The _______ should reach them this week.
e. The economics teacher tried to make the situation clear. He tried to ________ his
description by making it simpler. When he has made this ________, his students
understood the whole mater much better.
2. Forming new words from the basic word
Exercise 2
Seven words can be formed from the basic word nation. This table shows you how to do
it. Make a list of the words and put each word in its suitable place in the sentences. You
will also need the word nation itself.
Stem Suffix
1 2 3
ize d
ation
ism
ist ic

Union Congress, together with members of the government, eminent industrialists and
leading economists.
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