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TOEFL Preparation: Lesson 20 - Financial Systems

Target Words 1. allocate 2. commodity

3. decline 4. equity 5. inflation 6. net 7. per capita

8. regulate

9. subsidy 10. tangible

Definitions and Samples

1. allocate v. To give out different amounts for different purposes The budget allocates $58 billion to the military and only about $2 billion to education. Usage tips Things that can be allocated are things that can be “spent”—money, time, energy, etc. Parts of speech allocation n

2. commodity n. A thing that can be bought and sold, such as grain, oil, or wood Tulip bulbs were one of the most valuable commodities in seventeenth-century Holland. Usage tips A thing is called a commodity only in the context of buying or selling it. 3. decline v. To decrease in power or amount America’s railroads declined because the automobile dominated American life. Parts of speech decline n

4. equity n. The value of one’s share in an investment Barnard’s equity in the business was one-third, or about $350,000. Usage tips In this meaning, equity is always singular and usually followed by an in phrase.

5. inflation n. A situation in which prices for many items rise quite fast

During the rapid inflation of the 1970s, prices for food and fuel sometimes rose 20 percent in a single month.

Parts of speech inflate v, inflationary adj

6. net adj. After all costs have been subtracted from an amount

My gross salary is around $35,000, but my net pay is closer to $29,000. Parts of speech net v, net n

7. per capita adv. For each person Research shows we’re likely to sell 15 light bulbs per capita per year in medium-sized cities. Parts of speech per capita adj

8. regulate v. Control according to a set of rules Trading on the NewYork Stock Exchange is regulated by officials of the exchange and by federal law. Parts of speech regulation n, regulatory adj

9. subsidy n. Money given by a government or other organization to support an activity Federal subsidies to grain farmers have helped them stay in business despite three years of bad weather. Parts of speech subsidize v 10. tangible adj. Obviously real because it can be seen, touched, or otherwise observed One tangible benefit of putting electrical cables underground is a clearer view of the sky.


Cross out the one word or phrase that doesn’t fit into each of the lists. 1. things that can be allocated money/time/temperature/attention 2. kinds of commodities oil/sadness/corn/meat 3. tangible things fairness/a road/trees/money 4. things you can have equity in company/house/child/racehorse


Circle the word that best completes each sentence.

  1. Buy a car now, before (equity/inflation) drives the price up.

  2. Most investors make a mistake. During a stock-market (decline/subsidy) they get frightened and sell.

  3. The government is giving a (regulation/subsidy) to tobacco farmers so they can compete with foreign producers.

  4. Cortecal Inc. estimates that it spends $80.00 (per capita/net) on its annual picnic and on its NewYear party for the company’s 1,300 employees.

  5. I think that artificial “holidays” like Valentine’s Day or Secretary’s Day are just an attempt to turn private feelings into a(n) (commodity/equity).

TOEFL Success

Read the passage to review the vocabulary you have learned. Answer the questions that follow.

The great unsettled question of economics is: “How much should the government regulate business?” Conservatives generally argue for a decline in government involvement, but they favor certain subsidies to farmers, steelmakers, or airplane manufacturers.

Some conservatives also see no conflict between their small-government views and their eagerness for the government to allocate more money for roads into national forests.

The net result of these incursions into national forests is a tangible infrastructure that helps some companies but not the public.

Publicly owned trees, land, and oil become commodities from which a few private companies (many owned by small-government conservatives) profit. No per capita benefit goes to the American people, aside perhaps from the brief anti-inflation effect that comes with new oil exploration. Bonus Structure— Aside perhaps from means “maybe except for.”

1. What is the main idea of this reading?

a. Conservatives have tried to keep others from expanding government regulations.

b. Even though conservatives say they want to limit government involvement in business, they actually do often favor it.

c. There are several views about the proper role for government in business.

d. Small-government conservatives want the government to allocate a certain amount of federal money per capita to help all Americans.

2. Which of the following does the author claim?

a. Industries will become subsidies. b. Oil exploration causes inflation. c. Some elements of nature will become commodities.

d. Infrastructure will be made of trees, oil, and land.

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