Unit 6 Economics Boom and Bust

Unit 6
Economics
Boom and Bust
Sensory Perception
In this unit, you will:
• read about economic bubbles, including a rather unusual one
that occurred hundreds of years ago.
• learn language for describing trends.
• learn language for summarizing.
• increase your understanding of the target academic words for
this unit:
category dimension likewise philosophy stable
accurate compound estate infrastructure specify
attitude denote file norm trend
commodity dispose ideology secure underlie
Self-Assessment of Target Words
• Read the target words of this unit in the objectives box above. Think
carefully about how well you know each word. Then, write each word in
the appropriate column in this chart. When you have finished this unit,
come back and reassess your knowledge of the target words.
I have never I have seen I understand I have tried I use the I use the
seen the the word but the word to use the word with word with
word before I am not sure when I see or word, but I confidence in confidence
what it hear it in a am not sure I either both in
means sentence am using it speaking or speaking and
correctly writing writing
Reading 1:
Before You Read
Read these questions. Discuss your answers in small groups.
1. People sometimes buy collectible items such as paintings or
comic books because they hope to "make a killing" -or earn
a lot of money-by reselling them when the price goes up.
Reading 1:
Before You Read
Can you think of any collectible items where that has been the
case?
Can you think of any cases where collectors "lost their shirts"
-or lost all the money they invested?
Reading 1:
Before You Read
2. Are there any investments that are "sure things" - ones that
are safe and usually make money?
Reading 1:
Before You Read
3. Here are several popular sayings that could relate to buying
and selling. Discuss the possible meanings of these sayings.
Are they good advice?
• Don't count your chickens before they hatch.

Reading 1:
Before You Read
• A fool and his money are soon parted.

Reading 1:
Before You Read
• Don't look a gift horse in the mouth.

Reading 1:
Before You Read
• The early bird gets the worm.

Reading 1:
Before You Read
• Nothing ventured, nothing gained.

Reading 1:
Before You Read
• Don't throw good money after bad.
Reading 1: Read
Economic Bubbles
• This article explains the phenomenon of economic bubbles
and what causes them to burst.
Reading 1: Read
Economic Bubbles
• An economic bubble occurs when speculation in

 commodities (such as oil),
 securities (such as stocks and bonds),
 real estate, or collectibles
• drives up prices well beyond the item's intrinsic value.

• The end result of this boom in price is a crash or bust.
• The price falls sharply once the item is already overpriced.
Reading 1: Read
Economic Bubbles
• Economic bubbles occur when prices trending sharply
upward serve as a positive, rather than a negative,
feedback mechanism.
• For whatever reason:
 fear of shortages,
 greed,
 an excessively optimistic attitude toward the future,
 misinformation about an asset's underlying value),
• buyers believe that the value of the asset will continue to
rise well beyond the current price.
After You Read
Reading Comprehension Activities
Mark each sentence as T (true) or F (false) according to the information in
reading 1. Use dictionary to help you understand new words .
........ 1. The reading implies that economic bubbles can seriously alter one's
attitude about spending money.
........ 2.According to the reading, economic bubbles are the norm in a market-
based economy.
........ 3. The reading implies that in the end no one makes money as the result of
an economic "bubble."
........ 4. The reading says that the dot-com bubble led to widespread economic
disaster .
........ 5. We can infer from the reading that under normal conditions speculators
tend to invest cautiously.
........ 6. The reading suggests that selling items below cost in order to gain market
share is a poor business model.
After You Read
Answer Key:
READING STRATEGY: Describing Trends
READING STRATEGY: Categorizing
This paragraph provides a more detailed description of the NASDAQ stock
market bubble described in Reading 1. First, scan the paragraph to get a
sense of the direction of the trends. Then, complete each sentence with an
appropriate verb in the correct form. The same verb may be used more than
once.
The NASDAQ Composite Index (1) ............................ and fell sharply between
1995 and 2003. On July 17, 1995, the index (2) ................................ 1,000 for
the first time. Over the next four years, the market (3) ........................ steadily,
(4) ............... to over 2200 by January 1999. Over the next 15 months, it
(5) ................... even more rapidly, more than doubling its value. Finally, on
March 10, 2000, it (6) ................... 5,132. And then the bubble burst. Over the
next two and a half years, the NASDAQ (7)...................... dramatically to less
than one-fourth of its peak value. On October 10, 2002, it (8) ................. its
lowest point since passing the 1,000 mark, (9) ...................... to 1,108.
READING STRATEGY: Categorizing
This paragraph provides a more detailed description of the NASDAQ stock
market bubble described in Reading 1. First, scan the paragraph to get a sense
of the direction of the trends. Then, complete each sentence with an
appropriate verb in the correct form. The same verb may be used more than
once.
The NASDAQ Composite Index (1) .........rose................... and fell sharply between
1995 and 2003. On July 17, 1995, the index (2) ............reached.................... 1,000
for the first time. Over the next four years, the market (3) ...........grew.............
steadily, (4) .........climbing...... to over 2200 by January 1999. Over the next 15
months, it (5) ..........increased......... even more rapidly, more than doubling its
value. Finally, on March 10, 2000, it (6) ...........peaked at........ 5,132. And then
the bubble burst. Over the next two and a half years, the NASDAQ
(7)............dropped.......... dramatically to less than one-fourth of its peak value.
On October 10, 2002, it (8) .....reached............ its lowest point since passing the
1,000 mark, (9) ..........falling............ to 1,108.
After You Read
Vocabulary Activities
After You Read
A. Read these comments on investing. Fill in the blanks with a
target word from the chart on page 85 that completes the
sentence in a grammatical and meaningful way. Be sure to use
the correct form.
•A. Answer Key:
After You Read
B. Circle the word that best captures the meaning of the bold target
word in each sentence.
1. The state board of education established new norms for children
studying the language arts.
a. usual behavior b. standards to meet
2. The bookshelf was secured firmly to the wall.
a. fastened b. made safe
3. They filed the legal papers necessary for starting a corporation.
a. stored documents b. registered to begin a process
4. The legal battle over who would inherit her estate went on for many
years.
a. house and land b. money and property
After You Read
5. The fact that a large earthquake had not been felt since 1994 gave
residents a false sense of security.
a. freedom from risk b. protective measures
6. The state passed a bond to build more prisons and improve the
security at existing ones.
a. a stock certificate b. protective measures
7. Qualified math teachers are becoming a precious commodity.
a. something useful b. raw material that can be bought or
sold
8. The magazine is devoted to covering trends in women's apparel.
a. styles of fashion b. general increases or decreases
After You Read
1. The state board of education established new norms for children
studying the language arts.
a. usual behavior b. standards to meet
2. The bookshelf was secured firmly to the wall.
a. fastened b. made safe
3. They filed the legal papers necessary for starting a corporation.
a. stored documents b. registered to begin a process
4. The legal battle over who would inherit her estate went on for many
years.
a. house and land b. money and property
After You Read
5. The fact that a large earthquake had not been felt since 1994 gave
residents a false sense of security.
a. freedom from risk b. protective measures
6. The state passed a bond to build more prisons and improve the
security at existing ones.
a. a stock certificate b. protective measures
7. Qualified math teachers are becoming a precious commodity.
a. something useful b. raw material that can be bought or
sold
8. The magazine is devoted to covering trends in women's apparel.
a. styles of fashion b. general increases or decreases
After You Read
C. In small groups, pick one area of contemporary life from the

box and describe a trend that you see developing in it.
Reading 2:
Before You Read
Read these questions. Discuss your answers in a small group.
1. Mass hysteria is a situation in which a large number of people
panic, act crazily, or show excessive excitement.
Can you think of a situation where people displayed mass
hysteria when a new product came out?
Reading 2:
Before You Read
Read these questions. Discuss your answers in a small group.
2. It is said that people will often do things in a crowd that they
would never consider doing alone. Have you seen any
evidence that this is true?
Reading 2: Read
Tulipomania
• This article chronicles one of the most interesting economic
bubbles in history.
Reading 2: Read
Tulipomania
One of the most entertaining chapters in Charles Mackay's
classic “Extraordinary Popular Delusions and the Madness of
Crowds” (1841) concerns a speculative bubble that occurred in
the Netherlands in the 1630s.
What makes this bubble such a curiosity is that it concerned, of

all things, tulips, a variety of flower grown from bulbs and noted
for its vivid colors and striking patterns.
Are there modern parallels? Tulips seem reasonably priced

today, but what about star athletes?
After You Read
Mark each sentence as T(true) or F(false) according to the
information in Reading 2. Use the dictionary to help you
understand new words.
........ 1. Tulips are native to the Netherlands .
........ 2. Buying tulips was one way to show off one's wealth .
........ 3. The reading implies that tulip trading proved
profitable for many people .
........ 4. Tulip trading was so hysterical that we must
conclude that it seriously damaged the infrastructure of
Amsterdam .
........ 5. The reading suggests that ideology plays a part in
the conclusions that scholars draw about tulipomania.
After You Read
• Mark each sentence as T(true) or F(false) according to the
information in Reading 2. Use the dictionary to help you
understand new words .
Answer Key:
READING STRATEGY: Summarizing
A. The first six paragraphs of Reading 1 offer a lengthy summary
of a chapter in Charles Mackay's book “Extraordinary Popular
Delusions and the Madness of Crowds”.
The article also has shorter summaries of the work of other
writers. Scan the article to find them.
Line numbers: .... .............. ........................................ ..

Whose work is being
summarized? ..................................................................................
......................
What are the main points of the
summary? .......................................................................................
... .
B. Many readings in this book report another author's ideas. Write N if the
reading remains neutral toward the reported (underlined) idea. Write A if
the reading shows agreement.
(Note: item 6 uses an expression not included in the box above.)
B. Answer Key
After You Read
After You Read
A. Fill in the blanks with a target word from the chart that
completes the sentence in a grammatical and meaningful way.
Be sure to use the correct form.
A. Answer Key:
After You Read
B. Which meaning of the word compound is expressed in each sentence?
Match the sentence on the left with the definition on the right. Compare
answers with a partner .
Sentence Definition
........ 1. The lesson today covered how to a. to engage in actions that make
punctuate compound sentences. sth worse
........ 2. After getting her fourth traffic ticket,
she compounded her legal problems by b. to pay interest on both money
forgetting to pay the fine . invested and the accumulated
........ 3. To calculate how many years of interest
compounding it will take for your investment
to double in value, divide the interest rate c. containing two or more parts or
into 72. With six percent interest, it will take elements (usually technical)
12 years.
........ 4. Many plants, such as bean plants, d. two or more things joined or
have compound leaves. combined
After You Read
B. Which meaning of the word compound is expressed in each
sentence? Match the sentence on the left with the definition
on the right. Compare answers with a partner .
B. Answer Key:
After You Read
After You Read
C. In a small group, discuss possible symbolic meanings that
each word or phrase could have in a poem or song. In your
answers, practice using the words denote, symbolize, stand for,
signify, or represent.
1. a rose
•A rose is a kind of flower that symbolizes passion and love.
2. autumn leaves 5. a bright yellow tulip
3. a raven 6. a single wolf hunting in winter
4. a deep, cold lake 7. a distant mountain
After You Read
C. Answer Key:
After You Read
D. The previous chart shows some common collocations, or word partners, for
selected target vocabulary. Refer to the chart and complete these sentences.
I. The professor asked us to analyze the ........................ themes in the story.
2. The teacher instilled a positive ..................... toward literature in her students.
3. They .................. a complaint with the Commodities Futures Trading
Commission for misconduct.
4. All of the objections to the plan were ....................... quickly.
5. The operations committee outlined a .................... course of action to address
the falling stock price.
6 . Efforts to control the flow of traffic through the city only served to ....................
the problem.
•7. All members are expected to conform to establish ................... of ethical
behavior.
After You Read
D. Answer Key:
WRITING AND DISCUSSION TOPICS
A. Write a group story:
Research Assignment
B. Discuss or write in response to these items.
1. Write a one-paragraph summary of the second half of the
article "Tulipomania.”
Begin with this sentence:

• According to the article, more recent writers and researchers
have raised questions about Mackay's account. Mike Dash ...
Research Assignment
2. In your opinion, are there currently any economic

bubbles developing in the world?
Think about things like real estate values, the stock
market, and popular collectibles.
Go online and do research. Give statistical evidence to
support your opinion.
Research Assignment
Each student should choose one of
the previously mentioned topics on
page 95 & 96 to write about and
present it next session.
Thank you

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Unit 6

• Don't count your chickens before they hatch.

• A fool and his money are soon parted.

• Don't look a gift horse in the mouth.

• The early bird gets the worm.

• Nothing ventured, nothing gained.

• An economic bubble occurs when speculation in

• drives up prices well beyond the item's intrinsic value.

C. In small groups, pick one area of contemporary life from the

What makes this bubble such a curiosity is that it concerned, of

Are there modern parallels? Tulips seem reasonably priced

Line numbers: .... .............. ........................................ ..

Begin with this sentence:

2. In your opinion, are there currently any economic

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