They.re both, actually. Persia, or Fars, is the ancient term for the country. The people and their language are called Farsi.
And as all Persians are quick to point out, their language is not related to Arabic in any way. Like English, Italian, Russian, Urdu and Hindi, Persian is a member of the Indo-European family of languages and shares a number of grammatical ties. Some words, such as the Persian .lab. for the English .lip,. haven.t changed since the first Indo-European tribes went their separate ways perhaps 5,000 years ago.
Most ethnic minorities in the country speak a dialect of Farsi or a related language, such as Kurdish. Azaris in the northwest, however, speak a dialect of Turkish, and there are many Arabs living in the region bordering Iraq.
The term Iran is derived from Aryan, the name historians and anthropologists gave to a wave of tribes that migrated out of the Caucacus Mountains, traveling south and east into Persia and India.
Reza Shah adopted the current official name, Iran, in 1935, and the current regime has never changed it back.