Business English

The economy comprises millions of people and thousands of firms as well as the government and local authorities, all taking decisions about prices and wages, what to buy, sell, produce, export, import and many other matters. All these organizations and the decisions they take play a prominent part in shaping the business environment in which firms exist and operate.

The economy is complicated and difficult to control and predict, but it is certainly important to all businesses. You should be aware that there are times when businesses and individuals have plenty of funds to spend and there are times when they have to cut back on their spending. This can have enormous implications for business as a whole.

When the economy is enjoying a boom, firms experience high sales and general prosperity. At such times, unemployment is low and many firms will be investing funds to enable them to produce more. They do this because consumers have plenty of money to spend and firms expect high sales. It naturally follows that the state of the economy is a major factor in the success of firms.

However, during periods when people have less to spend many firms face hard times as their sales fall. Thus, the economic environment alters as the economy moves into a recession. At that time, total spending declines as income falls and unemployment rises. Consumers will purchase cheaper items and cut expenditure on luxury items such as televisions and cars.

Changes in the state of the economy affect all types of business, though the extent to which they are affected varies. In the recession of the early 1990s the high street banks suffered badly. Profits declined and, in some cases, losses were incurred. This was because fewer people borrowed money from banks, thus denying them the opportunity to earn interest on loans, and a rising proportion of those who did borrow defaulted on repayment. These so-called "bad debts" cut profit margins substantially. Various forecasters reckoned that the National Westminster Bank's losses in the case of Robert Maxwell's collapsing business empire amounted to over £100 million.

No individual firm has the ability to control this aspect of its environment. Rather, it is the outcome of the actions of all the groups who make up society as well as being influenced by the actions of foreigners with whom the nation has dealings.

VOCABULARY NOTES

to comprise – включать в себя, составлять

local authorities – местные органы власти

to take (syn. to make) decisions – принимать решения

to play a prominent part – играть заметную (значительную) роль

to shape the environment – формировать обстановку, среду, окружение

to predict (syn. to forecast) – предсказывать

to be aware – осознавать, знать

to cut back on spending – сокращать расходы

enormous implications – большое значение, смысл, влияние

general prosperity – всеобщее процветание

to enable smb to do smth – делать возможным для кого-то, позволять кому-либо что-либо делать

consumers – потребители

to alter – изменяться

a recession – упадок

total spending – общие, суммарные расходы

to decline – снижаться

income – доход

unemployment – безработица

to purchase (syn. to buy) – покупать

to cut expenditure – сокращать расходы

luxury items – предметы роскоши

to affect (syn. to influence smb. smth) – влиять

the extent – степень

to some extent – в некоторой степени

the high street banks – центральные банки

to suffer badly – сильно пострадать

profits – прибыль

to incur (syn. to bear, to suffer) losses – нести убытки, потери

to borrow from – занимать, брать взаймы

to deny the opportunity – лишать возможности

to deny – отрицать

to earn interest – получать процентный доход

loans – ссуды, займы

to default on repayment – не выполнять обязательств по выплате (долгов, процентов и т. п.)

a debt – долг

profit margins – размеры прибыли

the outcome of the actions – результат действий

to make up society – составлять общество

to have dealings – иметь торговые (деловые) связи

Assignments (задания)

I. Suggest the Russian equivalents

the government and local authorities; firms experience high sales; their sales fall; total spending declines as income falls; luxury items; the high street banks suffered badly; to earn interest on loans; so-called "bad debts"

II. Replace the parts in italics by synonyms

The economy comprises millions of people; losses were incurred; the nation has dealings; changes in the state of the economy affect all types of business;

profits declined; losses amounted to over £ 100 million.

III. Increase your vocabulary

There is a set of words related to the word economics. In a table we can show them like this.

Econom	у
	ics
	ic	al	ly
	ist

Each word has a different use. Try to put the right word in the blanks in these sentences:

1. Marx and Keynes are two famous __.

2. Those people are studying the science of__.

3. We sometimes call a person's work his __ activity.

4. People should be very __ with the money they earn.

5. The __ system of a country is usually called the national __.

6. The people in that town live very __.

Translate into English

1. Состояние экономики очень тревожное.

2. Экономическая политика правительства часто подвергается справедливой критике.

3. Она очень экономная хозяйка.

4. Мировая экономика – это наука, которая изучает состояние экономики в разных странах мира.

5. Моя новая машина гораздо экономичнее старой.

The table shows how words are formed around the verb to produce.

Produc

iv(e)

ity

ion

Use these words in the suitable blanks in the sentences below:

1. The company __ a new commodity every year.

2. The company's newest __ is a special blue soap powder.

3. The __ of soap powders met last year to discuss prices.

4. That factory is not as __ now as it was 5 years ago.

5. The __ of that factory has gone down over the last 5 years.

6. The manager of the factory has decided that they must increase their of packets of soap powder.

Translate into English

1. В этом году наша компания изготовила (выпустила) вдвое больше автомобилей, чем в прошлом.

2. Производители этой модели оборудования не смогли найти для нее рынка сбыта.

3. Эта фирма известна своей высококачественной продукцией.

4. Производство нового самолета начнется в следующем году.

5. Они работают очень много, но все их усилия не слишком продуктивны.

6. Руководство ищет эффективные способы повышения производительности труда.

IV. Fill in the gaps with the words and expressions from the text

1. The economy is complicated and difficult to __.

2. When the economy __, firms experience high sales and __.

3. The economic environment __ as the economy moves into __.

4. Changes in the state of the economy __ all types of business.

5. During a __ fewer people borrowed money from banks, thus __ to earn interest on __.

6. So-called "bad debts" cut __ substantially.

7. The economic __ is __ of all the groups who make up society as well as __ of the actions of foreigners with whom the nation __.

V. Translate into English

to affect smb, smth

1. Перемена погоды плохо повлияла на выступление спортсменов.

2. Эта новость сильно на него подействовала.

3. Рост цен повлиял на спрос.

4. Его мнение не повлияет на мое решение.

to deny

1. Она рассердилась, узнав, что лишена возможности его видеть.

2. Она ни в чем себе не отказывает.

3. Мы лишены возможности уплатить по счету в срок.

to some, what, such an, a certain extent

1. В некоторой степени вы правы.

2. В какой степени ему можно верить?

3. Ковер был грязный до такой степени, что невозможно было понять, какого он был цвета.

4. В определенной степени я согласен с вами.

VI. Find in the text English equivalents for the following

играть заметную роль; формировать среду; сокращать расходы на... (2 вар.); сократить размеры прибыли; переживать подъем; переживать тяжелые времена; прийти в упадок; доходы падают (2 вар.); нести убытки; состояние экономики; иметь большое значение для бизнеса в целом;

отсюда, естественно, следует; лишать возможности; результат действий;

не выполнять обязательств по уплате.

VII. Answer the questions

1. What does the economy comprise?

2. What's a boom in the economy? What characterises the state of the economy at that time?

3. What happens when the economy moves into a recession?

4. What are "bad debts"?

5. What happened to some banks in the early 1990s and why?

VIII. Translate using all the active possible

1. Состояние экономики (экономической среды) имеет большое значение для успешной деятельности фирм.

2. Когда экономика находится на подъеме, то фирмы продают больше товаров, что ведет к получению больших прибылей и процветанию.

3. Упадок экономики характеризуется сокращением объема производства и сбыта продукции. Отсюда, естественно, следует, что доходы предприятий снижаются и они несут убытки.

4. Результатом деятельности всех субъектов производства (групп общества) является формирование той или иной экономической среды в которой развивается бизнес.

5. У фирмы не было возможности увеличить расходы на рекламу в результате чего она потеряла часть рынка сбыта.

MEASURING ECONOMIC ACTIVITY (ИЗМЕРЕНИЕ ЭКОНОМИЧЕСКОЙ АКТИВНОСТИ)

There are a large number of statistics produced regularly on the operation of the world's major economies. The UK's economy is no exception in this respect. You will probably have noticed that often the headlines in newspapers or important items on television news programmes relate to economic data and the implications for individuals and businesses. A prime example of this occurs when interest rates are increased: the media responds by highlighting the adverse effects on businesses with debts and householders with mortgages.

Data is provided on a wide range of aspects of the economy's operation. Statistics are available to show.

* the level of unemployment

* the level of inflation

* a country's trade balance with the rest of the world

* production volumes in key industries and the economy as a whole

* the level of wages

* raw material prices, and so forth.

The main statistics illustrating the economy's behaviour relate to the level of activity in the economy. That is, they tell us whether the economy is working at fall capacity using all or nearly all, available resources of labour, machinery and other factors of production or whether these resources are being under-utilized.

The unemployment figures for the economy give an indicator of the level of activity. As the economy moves towards a recession and a lower level of prosperity it is likely that unemployment figures will rise. An alternative measure of the level of activity is national income statistics, which show the value of a nation's output during a year. Economists use the term Gross National Product to describe this data. Changes in the level or trends of such key data have great significance for businesses, as we shall see later.

There are numerous sources of data on the economy of which we can make use. The government publishes much through the Treasury, Department of Trade and Industry, the Bank of England and the Department of Employment. The Central Statistical Office, which was established during the Second World War, publishes about half of the government's economic data.

Much of this is contained in its annual publication, "The Annual Abstract of Statistics". It also publishes the equally valuable "Social Trends" annually. Additionally, private organizations, such as the banks, building societies and universities, publish figures on various aspects of the economy's performance.

Economic statistics are presented in many forms, the most common being graphs and tables. Although these statistics can be valuable in assisting managers, they should be treated with some caution when predicting the future trend of the economy and thus helping the business to take effective decisions.

VOCABULARY NOTES

to measure – измерять, рассчитывать, оценивать

economic activity – экономическая деятельность

is no exception in this respect – в этом отношении не является исключением

important items – важные вопросы, проблемы

to relate to – относиться к чему-либо, иметь отношение; рассказывать

by highlighting the adverse effects on... - в первую очередь освещая неблагоприятное влияние на...

householder – домовладелец, домохозяин

household – домашнее хозяйство

mortgage – закладная

data – данные

on a wide range of aspects – по самым разнообразным аспектам

statistics are available to show – статистика показывает

trade balance – торговый баланс

key industries – основные отрасли промышленности

wages – заработная плата (рабочих)

salary – оклад, жалованье (служащих)

raw material prices – цены на сырье

at full capacity – на полную мощность

available resources – доступные, имеющиеся в наличии ресурсы

labour – труд

machinery – оборудование

factors of production – производственные факторы, факторы производства (труд, земля, природные ресурсы, капитал)

to be under-utilized – не использоваться полностью

unemployment figures – количество безработных

indicator — показатель

national income – национальный доход

the value of a nation's output – оценка объема производства страны

Gross National Product (GNP) – валовой национальный продукт (ВНП)

trend – направление, тенденция, тренд

the Tresuary – Государственное казначейство. Министерство финансов (в Великобритании)

the Department of Employment – Министерство по вопросам занятости (в Великобритании)

the Central Statistical Office – Центральное статистическое управление

to contain – содержать

equally valuable – такой же важный

building societies – англ. строительные общества (специализированные сберегательные учреждения)

graphs and tables – графики и таблицы

to assist – помогать, оказывать помощь

they should be treated with some caution – к этим данным следует относиться с некоторой осторожностью

Assignments

I. Suggest the Russian equivalents

important items on TV programmes relate to economic data and the implications for individuals and businesses; a prime example; the adverse effects; householders; statistics are available to show; available resources of labour; at full capacity; key industries; key data; the value of a nation's output;

the Treasury; building societies; they should be treated with some caution;

trend (find it in 3 sentences)

II. Replace the parts in italics by synonyms

a large number of, the operation of the world's major economies; headlines relate to; the implications for individuals and businesses; by highlighting the adverse effects on businesses; these resources are being under-utilized; figures give an indicator of, changes have great significance for; numerous; additionally;

economic statistics are presented in many forms

III. Fill in the gaps with the words and expressions from the text

1. The headlines in newspapers often __ economic data and __ for individuals and businesses.

2. The statistics tell us whether the economy is working __ using all or nearly all, __ resources of labour, machinery and other factors of production or whether these resources are being __.

3. Economists use the term __ to describe the value of a nation's output during a year.

4. Although these statistics can be __ in assisting managers, they should __ with __ when __ the future trend of the economy.

IV. Find in the text English equivalents for the following

много (многочисленные); в этом отношении; средства массовой информации; подчеркивать, выделять; закладные; объем производства; сырье; не полностью используется; уровень занятости; валовой национальный продукт; опубликовать в каких-либо источниках

V. Increase your vocabulary

it is likely (unlikely) that...

smb is likely (unlikely) to be (to do smth)

1. Эта статистика, возможно, будет опубликована в ежегоднике Центрального статистического бюро.

2. Вряд ли эти цифры говорят о низком уровне занятости.

3. Похоже, что эти производственные мощности используются не полностью.

4. Может быть, экономика будет работать на полную мощность, если будут использованы все факторы производства.

VI. Give explanations in English

media; householders; mortgages; trade balance; wages; building societies

VII. Answer the questions

1. Why does the media relate to economic data and the implications for individuals and businesses?

2. What aspects of the economy's operation are statistics available to show?

3. What do statistics show?

4. What are the sources of data on the economy in the UK? In Russia?

5. What is the GNP?

6. Why should statistics be treated with some caution?

VIII. Translate using all the active possible

1. К официальным статистическим данным по уровню инфляции в стране следует относиться с осторожностью.

2. Валовой национальный продукт – это совокупность товаров и услуг, произведенных национальной экономикой за год.

3. Объем производства продукции в ключевых отраслях промышленности в значительной степени показывает уровень активности населения.

4. Если в экономике отмечается падение производства, то следствием этого становится рост безработицы и понижение уровня зарплаты.

5. Средства массовой информации сообщили об отрицательном влиянии на производство увеличившейся процентной ставки.

THREE ECONOMIC ISSUES (ТРИ ВОПРОСА ЭКОНОМИКИ)

Three economic issues

Economics is the study of how people choose to allocate scarce resources to satisfy their unlimited wants. The main problem in economics is the question of allocating scarce resources between competing uses. In this section three economic issues are discussed to show how society allocates its scarce resources between competing uses. In this connection the question what, how and for whom to produce is of great significance.

The oil price shocks

Oil is an important commodity in modem economies. Oil and its derivatives provide fuel for heating, transport, and machinery, and arc basic inputs for the manufacture of industrial petrochemicals and many household products ranging from plastic utensils to polyester clothing. From the beginning of this century until 1973 the use of oil Increased steadily. Over much of this period the price of oil fell in comparison -with the prices of other products. Economic activity was organized on the assumption of cheap and abundant oil.

In 1973 – 74 there was an abrupt change. The main oil-producing nations, mostly located in the Middle East but including also Venezuela and Nigeria, belong to OPEC — the Organisation of Petroleum Exporting Countries. Recognizing that together they produced most of the world's oil, OPEC decided in 1973 to raise the price at which this oil was sold. Although higher prices encourage consumers of oil to try to economize on its use, OPEC countries correctly forecast that cutbacks in the quantity demanded would be small since most other nations were very dependent on oil and had few commodities available as potential substitutes for oil. Thus OPEC countries correctly anticipated that a substantial price increase would lead to only a small reduction in sales. It would be very profitable for OPEC members.

Oil prices are traditionally quoted in US dollars per barrel. Fig. 1 shows the price of oil from 1970 to 1986. Between 1973 and 1974 the price of oil tripled, from $2,90 to $9 per barrel. After a more gradual rise between 1974 and 1978 there was another sharp increase between 1978 and 1980, from $12 to $30 per barrel. The dramatic price increases of 1973 – 79 and 1980 – 82 have become known as the OPEC oil price shocks, not only because they took the rest of the world by surprise but also because of the upheaval they inflicted on the world economy, which had previously been organized on the assumption of cheap oil prices.

People usually respond to prices in this or that way. When the price of some commodity increases, consumers will try to use less of it but producers will want to sell more of it. These responses, guided by prices, are part of the process by which most Western societies determine what, how and for whom to produce.Consider first how the economy produces goods and services. When, as in the 1970s, the price of oil increases six-fold, every firm will try to reduce its use of oil-based products. Chemical firms will develop artificial substitutes for petroleum inputs to their production processes; airlines will look for more fuel-efficient aircraft; electricity will be produced from more coal-fired generators. In general, higher oil prices make the economy produce in a way that uses less oil.

Oil price ($ per barrel)

Figure 1. The price of oil. 1970 – 86

How does the oil price increase affect what is being produced? Finns and households reduce their use of oil-intensive products, which are now more expensive. Households switch to gas-fired central heating and buy smaller cars. Commuters form car-pools or move closer to the city. High prices not only choke off the demand for oil-related commodities; they also encourage consumers to purchase substitute commodities. Higher demand for these commodities bids up their price and encourages their production. Designers produce smaller cars, architects contemplate solar energy, and research laboratories develop alternatives to petroleum in chemical production. Throughout the economy, what is being produced reflects a shift away from expensive oil-using products towards less oil-intensive substitutes. The for whom question in this example has a clear answer. OPEC revenues from oil sales increased from $35 billion in 1973 to nearly $300 billion in 1980. Much of this increased revenue was spent on goods produced in the industrialized Western nations. In contrast, oil-importing nations had to give up more of their own production in exchange for the oil imports that they required. In terms of goods as a whole, the rise in oil prices raised the buying power of OPEC and reduced the buying power of oil-importing countries such as Germany and Japan. The world economy was producing more for OPEC and less for Germany and Japan. Although it is the most important single answer to the 'for whom' question, the economy is an intricate, interconnected system and a disturbance anywhere ripples throughout the entire economy,

In answering the 'what' and 'how' questions, we have seen that some activities expanded and others contracted following the oil price shocks. Expanding industries may have to pay higher wages to attract the extra labour that they require. For example, in the British economy coal miners were able to use the renewed demand for coal to secure large wage Increases. The opposite effects may have been expected if the 1986 oil price slump had persisted.

The OPEC oil price shocks example illustrates how society allocates scarce resources between competing uses.

A scarce resource is one for which the demand at a zero price would exceed the available supply. We can think of oil as having become more scarce in economic terms when its price rose.

VOCABULARY NOTES

to allocate resources – распределять ресурсы

scarce resources – ограниченные, скудные ресурсы

scarcity – дефицит

to satisfy unlimited wants – удовлетворять неограниченные потребности

competing uses – конкурирующие сферы использования

to be of great significance – иметь большое значение

commodity (syn. good) – товар, предмет широкого потребления

modern economy – современная экономика

oil and its derivatives – нефть и нефтепроизводные

to provide fuel for heating and transport – обеспечивать топливом системы теплоснабжения и транспорт

basic inputs – основные составляющие

to range from... to... – от... до...

plastic utensils – изделия из пластика

polyester clothing – одежда из синтетических тканей

to increase [-z], v. steadily – постоянно увеличиваться

increase [-s], n. – увеличение

over much of this period – большая часть этого периода

in comparison with (syn. as compared with) – по сравнению с

on the assumption of – исходя из предположения (допущения)

abundant oil – нефть, имеющаяся в изобилии, избытке

an abrupt change – резкое изменение

oil-producing nations – страны, производящие нефть

to be located in – располагаться в

to belong to – принадлежать

OPEC (the Organization of Petroleum Exporting Countries) – ОПЕК (Организация стран – экспортеров нефти)

to raise the price – повышать цену

(о encourage consumers – побуждать, поощрять потребителей

to economize on its use – экономить на использовании

to forecast correctly – правильно прогнозировать

cutbacks in quantity demanded – сокращения требуемого количества

to be dependent on oil – быть зависимым от нефти

to be available (syn. to be in stock; ant. to be out of stock) – иметься в наличии potential substitutes – потенциальные (возможные) заменители

to anticipate – предсказывать, предвидеть, прогнозировать

substantial price increase [-s] – существенное, значительное повышение цен

to lead (led, led) to (syn. to cause, to entail, to result in) – привести к

reduction in sales – сокращение продаж

to be profitable for – быть прибыльным, выгодным

OPEC members — страны – члены ОПЕК.

to quote prices in US dollars per barrel – назначать, котировать цены в долларах США за баррель

to triple ['tripl] – возрастать в три раза, утраивать

a gradual rise – постепенное увеличение

sharp, dramatic increase – резкое повышение

to take by surprise – застать врасплох

upheaval [i:] – переворот

to inflict upheaval on the world economy – наносить удар по (причинять ущерб) мировой экономике

to respond to prices – реагировать на цены

a producer – производитель

to determine what, how and for whom to produce – определять что, как и для кого производить

to increase six-fold – возрастать в шесть раз

oil-based products – нефтепродукты

artificial substitutes for petroleum – искусственные заменители бензина production processes – производственные процессы

fuel-efficient aircraft – самолет с экономичным расходом топлива

oil-intensive products – продукты с высоким содержанием нефти

switch to – переключиться на

commuters – жители пригорода, регулярно приезжающие в город на работу или учебу

car-pools – группа людей, договорившихся по очереди обслуживать друг друга автомашиной

to choke off the demand – задушить спрос

substitute commodities – товары-заменители

to bid up the price – наращивать цену

to encourage production – стимулировать производство

to contemplate solar energy – рассматривать (обдумывать) вопрос об использовании солнечной энергии

to reflect a shift away from... towards (to)... – отражать переход (смену, замену) от... к...

OPEC revenues – доходы стран – членов ОПЕК

nearly $300 billion – почти 300 миллиардов долларов

industrialized Western nations – индустриальные (промышленные) западные страны

in contrast – по контрасту

oil-importing nations – страны, импортирующие нефть

to give up the production – отказаться (прекратить) от производства

in exchange for – в обмен на

to require – требовать

the buying (syn. purchasing, spending) power – покупательная способность

an intricate interconnected system – сложная взаимосвязанная система

a disturbance – нарушение равновесия, отклонение, срыв

to ripple throughout the entire economy – прокатиться волной через всю экономику

some activities expanded/contracted – некоторые виды деятельности расширились/сократились

to pay higher wages to attract the extra labour – платить более высокую зарплату для привлечения дополнительной рабочей силы

to renew – восстанавливать, возобновлять

demand for – спрос на

to secure wage increases – добиваться повышения зарплаты

price slump – резкое снижение цен

to persist – сохраняться, продолжать существовать

to exceed – превышать

the available supply – имеющееся предложение

to become more scarce in economic terms – стать более скудным, недостаточным в экономическом смысле

Assignments

I. Suggest the Russian equivalents

to increase steadily; try to economize on the use of...; to choke off the demand;

to encourage consumers to purchase smth; to encourage the production of...

II. Replace the parts in italics by synonyms

three economic questions; to give a share of resources; to have scarce supplies of raw materials; a sudden change; realising that; potential replacements; to encourage people who use oil; price increases six times; try to cut down on the use of oil

III. Find in the text antonyms for the following words rare, scarce; outputs; expensive; exports; straightforward; get, acquire; not to need; getting smaller

IV. Fill in the gaps with the words and expressions from the text

1. Economics is the study of how people choose __ scarce resources to satisfy their __.

2. Economic activity was organized on the assumption of__ oil.

3. In 1973 – 74 there was an __ change in oil prices.

4. __ countries correctly forecast that __ in the quantity demanded would be small.

5. Most nations are very dependent on oil and have few commodities available as __ for oil.

6. Oil prices are traditionally __ in US dollars per barrel.

7. The price of oil __, from $2.90 to $9 per barrel.

8. There was another __ between 1978 and 1980, from $12 to $30 per ban-el.

9. The dramatic price increases inflicted __ on the world economy.

10. These responses, __ prices, are part of the process by which most Western societies __ what, how and for whom to produce.

11. Chemical firms will develop __ for petroleum inputs to their production processes; airlines will look for more __ aircraft.

12. Finns and __ reduce their use of__ products.

13. Commuters form __ or move closer to the city.

14. High prices not only __ for oil-related commodities; they also encourage consumers to purchase __.

15. OPEC __ from oil sales increased from $35 billion in 1973 to nearly $300 billion in 1980.

16. The rise in oil prices raised __ of OPEC.

17. The economy is an __, interconnected system and a __ anywhere ripples throughout the entire economy.

18. __ industries may have to pay higher wages to attract the __ labour that they require.

19. A scarce resource is one for which the demand at a zero price would __ the available supply.

V. Find in the text English equivalents for the following

распределять ресурсы; ограниченные ресурсы; значительное повышение цен повлечет за собой несущественное снижение объема продаж; цена возросла в три раза; резкий подъем; резкий взлет цен; возросшие доходы; повысить/понизить покупательную способность; повышать заработную плату для привлечения дополнительной рабочей силы

VI. Explain in English

prices are quoted; a gradual rise; a sharp increase; household; commuters;

commodities

VII. Check your grammar

Present Tenses

Use the following verbs to complete the paragraph below:

concern, base, discuss, be, show, take up, hope for, say, offer, wish, live, suggest, provide, govern

Students __ economics for different reasons. Some __ a career in business, some __ for a deeper understanding of government policy, and some ___ about the poor or the unemployed. This book __ an introduction, which__ that economics__ a live subject. It__ real insights into the world in which we __. The material that we__ in this book __ by two ideas. The first __ that there __ a body of economics, which has to be learned in any introductory course. The second __ on the belief that modem economics is more readily applicable to the real world than traditional approaches __.

Past Tenses

Write the following sentences out in full, like this:

Keynes/famous/ his/ day/ economist/ own/ a/in... (be) Keynes was a famous economist in his own day

· 1915/ Treasury/ London/ in/ he/ in/ the/... (join)

· best-known/ 1935/ his/ book/ in... (publish)

· public/ war/ during/ he/ service/ the/ to... (recall)

· 5th/ in/ Cambridge/ June/ Keynes/ 1883/ on... (bear)

· student/ he/ distinguished/ a... (be)

· instrumental/ the IMF/ in/ the/ 1944/ World Bank/ he/ in/ and/ starting... (be)

· Cambridge University/ to/ 1902/ he/ in... (go)

· a/ he/ as/ Cambridge/ teacher/ to... (return)

· time/ he/ a/ economist/ by/ as/ this/ brilliant... (accept)

· also/ heavy/ his/ he/ by/ workload... (exhaust)

· The General Theory of Employment, Interest and Money/ it... (call)

· 1919/ in/ he/ with/ Treaty of Versailles/ he/ because/ the... (resign, disillusion)

· April/ on/ 21st/ he/ 1946... (die)

· book/ conventional/ this/ thinking/ enemies/ many/ and/ him... (go against, make)

Arrange the sentences you have made into a single paragraph.

VIII. Answer the questions

1. What are the three main questions of the economy?

2. What do you need in order to understand economics?

3. What happened to the price of oil from 1900 to 1973?

4. What did OPEC decide in 1973?

5. Why was there only a small reduction in oil sales?

6. What is an oil price shock? What did the oil price shocks lead to?

7. How do people respond to a higher price for a commodity?

8. What effect do higher oil prices have on the economy?

9. What happens throughout the economy when there are high oil prices? 10 What 2 effects did high prices have on oil-importing countries?

11. When did oil become scarce?

12. What is a scarce resource?

IX. Translate using all the active possible

1. Решение вопроса о распределении ограниченных ресурсов в экономике (обществе) зависит от того, что именно, каким способом и для кого данное общество намерено производить.

2. Цены на нефть стабильно растут и отсюда, естественно, следует что потребители нефти пытаются более экономно ее использовать

3. Невероятный скачок цен на нефть в 70-х годах привел к резкому изменению экономической среды в целом. Однако результатом этого было лишь несущественное снижение объема продаж.

4. Резкое снижение спроса на нефть способствовало росту производства заменителей нефти.

5. Расширяющиеся отрасли производства для привлечения дополнительной рабочей силы вынуждены повышать уровень заработной платы Возросшие доходы поднимают покупательную способность общества.

6. Возросшие доходы поднимают покупательную способность. Одновременно для привлечения дополнительной рабочей силы расширяющиеся отрасли производства вынуждены повышать уровень заработной платы.

INCOME (ДОХОД)

The second of the three economic issues is the question of income, that is, income distribution, the way in which income – that's what people earn – is distributed or shared around.

You, and your family, have an income. You have an annual income, that is what you earn in a year. This income allows you to enjoy various goods and services. It means you have a certain standard of living. Your standard of living, of course, includes what you think of as necessary to your life, things like food, water, somewhere to live, health and education. But your income doesn't just cover the necessities of life. It also includes recreation, whether that's sport or TV or a holiday. Your income will be less than some of your neighbours', but it will be more than some of your other neighbours'. Your neighbours mean not just people living in your own country, but also people living in other countries.

Just as you and your family have an income, so nations, different countries, also have an income — the national income, it's often called. A national income is not the money the government gets. The national income is the sum total of the incomes of all the people living in that country, in other words, everyone's income added together. In the same way one can think of world income as the total of all the incomes earned by all the people in the world.

Concerning the distribution of national and world income, some questions are to be asked: who, in the world, gets what share of these incomes? The distribution of income, either in the world or in a country, tells us how income is divided between different groups or individuals. Table 1 shows the distribution of world income. There are three headings down the left-hand side of the table: income per head, percentage of world population and percentage of world Income. In poor countries, like India, China and the Sudan, the income per head is only one hundred and fifty-five pounds per year. But at the same time, they have fifty point seven per cent of the world's population. These poor countries only have five per cent of the world's income.

In middle-income countries the income per head is eight hundred and forty pounds, that's in countries like Thailand and Brazil. In the major oil countries, like Kuwait and Saudi Arabia, it's seven thousand, six hundred and seventy. In industrial countries it's six thousand, two hundred and seventy.

Turning to middle-income countries again, they have twenty-five point one per cent of world population, with fourteen point two per cent of world income. The major oil countries have point four per cent of population, the industrial countries fifteen point six. The oil countries have one point five per cent of world income, the industrial countries sixty-four point eight.

The first economic question is for whom does the world economy produce? As the table shows, it produces essentially for the people living in the rich industrial countries. They get sixty per cent of the world's income, although they only have sixteen per cent of its population. This suggests an answer to the

second question, that is of what is produced. The answer is that most of world production will be directed towards the goods and services that these same rich industrialised countries want.

The third question is how goods arc produced. In poor countries, with little machinery, not very much technical training and so on, workers produce much less than workers in rich countries. And poverty is very difficult to escape. It continues on and on. And this goes some way towards accounting for the differences in national incomes. It accounts for an unequal distribution of income, not just between countries but also between members of the same country, although there individual governments can help through taxation. In other words, governments can act to help distribute income throughout their population.

VOCABULARY NOTES

income distribution – распределение дохода

an annual income – годовой доход

a certain standard of living – определенный уровень жизни

to cover the necessities of life – охватывать основные жизненные потребности

recreation – отдых, досуг

national income – национальный доход

share of income – доля, часть дохода

income per head – доход на душу населения

percentage of world population – процент мирового населения

percentage of world income – процент мирового дохода

essentially – в основном, большей частью

world production – мировое производство

rich industrialised countries – богатые промышленные страны

not very much technical training – недостаточное техническое обучение

to escape – зд. избежать

to account for (syn. to explain) – объяснять

the differences in national incomes – различия в национальных доходах

unequal distribution of income – неравное распределение дохода

throughout population – среди населения

Assignments

I. Suggest the Russian equivalents

income is shared around; income doesn't just cover the necessities of life; to suggest an answer to the question; to direct the production towards the goods and services; individual governments

II. Fill in the table with the data from the text Table 1. The distribution of world income

Poor countries

Middle-income countries

Major oil countries

Industrial countries

Soviet bloc

Income per head

% of world

population % of world income

III. Fill in the gaps with the words and expressions from the text

1. You have __, that is what you earn in a year.

2. Your income doesn't just __ the necessities of life.

3. It includes __, whether that's sport or TV or a holiday.

4. __ is the sum total of the incomes of all the people living in that country.

5. __ is the total of all the incomes earned by all the people in the world.

6. In poor countries __ is only one hundred and fifty-five pounds per year.

7. In __ countries the income per head is eight hundred and forty pounds.

8. Most of world production __ towards the goods and services that these same rich industrialised countries want.

9. In poor countries, with __, not very much technical training workers produce much less than workers in rich countries.

10. This goes some way towards __ the differences in national incomes.

IV. Find English equivalents

распределение доходов; ежегодный доход; определенный уровень жизни;

национальный доход; мировой доход; доля национального дохода; доход на рушу населения; процент мирового населения; страны со средним уровнем дохода; в основном; скудное техническое оборудование; недостаточное техническое образование; объяснение разницы в уровнях национальных доходов; неравное распределение доходов; избежать бедности

V. Give the definition of income distribution

VI. Give the definition of national Income

VII. Answer the questions

1. What countries are called poor?

2. For whom and what does economy produce?

3. What is the role of governments in distributing incomes?

VII. Translate into English using all the active possible

1. Национальный доход — это общая сумма, полученная населением в виде заработной платы, ренты, процента и прибыли в течение определенного периода, обычно в течение одного года.

2. Источники неравенства – это причины, вызывающие неравенство в распределении дохода. Поскольку существуют два основных источника доходов – трудовые доходы и доходы от собственности, источники неравенства разделяют на 2 группы: источники, вызывающие неравенство в трудовых доходах; и источники, вызывающие неравенство в доходах от собственности. В развитых странах источниками неравенства в трудовых доходах являются, в основном, образование и профессия. Доходы от собственности еще более дифференцированы, чем доходы от трудовой деятельности, поскольку обусловлены неравенством в распределении богатства. Основными источниками неравенства в доходах от собственности являются предпринимательская деятельность и наследство.

THE ROLE OF GOVERNMENT (РОЛЬ ПРАВИТЕЛЬСТВА)

Having mentioned the effect of government tax policy on the income distribution, it's necessary to examine in greater detail the role of the government in society In every society governments provide such services as national defence, police, public education, firefighting services, and the administration of justice. In addition, governments through budget make transfer payments to some members of society.

Transfer payments are payments made to individuals without requiring the provision of any service in return. Examples are social security, retirement pensions, unemployment benefits, and, in some countries, food stamps. Government expenditure, whether on the provision of goods and services (defence, police) or on transfer payments, is chiefly financed by imposing taxes, although some (small) residual component may be financed by government borrowing. Tabl. 2 compares the role of the government in four countries.

Tabl. 2. Government Spending as a Percentage of National Income

Country	Purchase of goods and services	Transfer payments	Debt interest	Total
	%	%	%	%
UK	23,0	17,2	5,1	45,3
Japan	14,9	12,7	4,6	32,2
USA	20,1	12,2	4,8	37,1
Italy	27,0	23,0	9,2	59,4

In each case, we look at four measures of government spending as a percentage of national income: spending on the direct provision of goods and services for the public, transfer payments, Interest on the national debt, and total spending.

Italy is a "big-government" country. Its government spending is large and it needs to raise correspondingly large tax revenues. In contrast, Japan has a much smaller government sector and needs to raise correspondingly less tax revenue. These differences in the scale of government activity relative to national income reflect differences in the way different countries allocate their resources among competing uses.

Governments spend part of their revenue on particular goods and services such as tanks, schools and public safety. They directly affect what is produced. Japan's low share of government spending on goods and services in Tabl. 2 reflects the very low level of Japanese spending on defence.

Governments affect for whom output is produced through their tax and transfer payments. By taxing the rich and making transfers to the poor, the government ensures that the poor are allocated more of what is produced than would otherwise be the case; and the rich get correspondingly less.

The government also affect how goods are produced, for example through the regulations it imposes. Managers of factories and mines must obey safely requirements even where these are costly to implement, firms are prevented from freely polluting the atmosphere and rivers, offices and factories are banned in attractive residential parts of the city.

The scale of government activities in the modem economy is highly controversial. In the UK the government takes nearly 40 per cent of national income in taxes. Some governments take a larger share, others a smaller share. Different shares will certainly affect the questions what, how and for whom, but some people believe that a large government sector makes the economy inefficient, reducing the number of goods that can be produced and eventually allocated to consumers.

It's commonly asserted that high tax rates reduce the incentive to work. If half of all we earn goes to the government, we might prefer to work fewer hours a week and spend more time in the garden or watching TV. That is one possibility, but there is another one: if workers have in mind a target after-tax income, e.g. to have at least sufficient to afford a foreign holiday every year, they will have to work more hours to meet this target when taxes are higher.

Whether on balance high taxes make people work more or less remains an open question. Welfare payments and unemployment benefit arc more likely to reduce incentives to work since they actually contribute to target income. If large-scale government activity leads to important disincentive effects, government activity will affect not only what, how, and for whom goods are produced, but also how much is produced by the economy as a whole.

This discussion of the role of the government is central to the process by which society allocates its scarce resources. It also raises a question. Is it inevitable that the government plays a prominent part in the process by which society decides how to allocate resources between competing demands? This question lies at the heart of economics.

VOCABULARY NOTES

having mentioned – упомянув, рассмотрев

government tax policy – налоговая политика государства

to examine in greater detail – рассмотреть более подробно

to provide service – оказать услугу

national defence – национальная оборона

firefighting service – противопожарная служба

administration of justice – отправление правосудия

to make transfer payments – осуществлять трансфертные платежи

without requiring the provision of any service in return – не требуя ответных услуг

social security – социальное обеспечение (за счет государственных налогов) retirement pensions – пенсии за выслугу лет

unemployment benefit (syn. dole) – пособие по безработице

to be, live on the dole – жить на пособие по безработице

food stamps – талоны на продовольствие

to impose taxes – облагать налогами

residual component – остаточная часть

to be financed by government borrowing – финансироваться правительственными займами

direct provision of goods and services for the public – прямое (непосредственное) снабжение (обеспечение) граждан товарами и услугами

interest on the national debt – проценты по национальному долгу

correspondingly – соответственно

the scale of government activity – размах (масштаб) государственной деятельности

relative to – в отношении чего-либо

to reflect differences – отражать различия

to affect directly – непосредственно влиять

low share – низкая (малая) доля

to affect through tax and transfer payments – оказывать воздействие через систему налогообложения и трансфертные платежи

to ensure that – обеспечивать такое положение, при котором...

than would otherwise be the case – как было бы в противном случае

to impose regulations – издавать административные положения, постановления, распоряжения

to obey safety requirements – соблюдать требования безопасности

to be costly to implement – использование (применение) обходится дорого

to pollute freely – безнаказанно загрязнять

to ban (syn. to prohibit) – запрещать

residential parts of the city – жилые части города

to be highly controversial – быть крайне неоднозначным

a large/small share – большая/малая доля, часть

to share – делить, разделять с кем-либо, e.g. I) to share smb's views, 2) to share a room with a classmate

to make the economy inefficient – снижать эффективность экономики, делать экономику неэффективной

eventually (syn. at last) – в конце концов, в конечном счете

it's commonly asserted – принято считать, по всеобщему утверждению

the incentive to work – стимул, мотивация к работе

to earn (money) – зарабатывать (деньги)

to earn one's living – зарабатывать на жизнь

a target after-tax income – целевой, базовый, чистый доход (после выплаты налогов)

at least sufficient to afford a foreign holiday – быть достаточным, по крайней мере, для того, чтобы провести отпуск за границей

to meet a target – достичь цели

on balance – с учетом всего вышесказанного, в конечном счете

welfare payments – государственные пособия (напр., по безработице, по страхованию)

since (syn. as, for, because) – поскольку, так как

to contribute to – вносить вклад в

large-scale government activity – широкомасштабная деятельность правительства

to raise (syn. to bring up) a question – поднять вопрос

to be inevitable – неизбежно

to lie at the heart of economics – быть в самом центре экономики

Assignments

I. Suggest the Russian equivalents

to obey safety requirements; governments take a larger/smaller share; to make the economy inefficient; measures of government spending; interest on the national debt; total spending; to allocate resources between competing demands

II. Replace the parts in italics by synonyms

it's generally declared; managers of factories must obey the requirements;

Government directly influence what is produced; to bring up a question; to collect taxes; Government's expenditure is financed by imposing taxes.

III. Find the terms in the text, -which describe the following:

· money paid to people without asking for a service in return

· money paid to people when they stop working

· money paid to people who have no work

· money owed by the government of a country

· money received by governments from taxation

· money a worker keeps after paying taxes

IV. Using the information in the text, say if these statements are correct or incorrect

· Governments do not make free transfer payments.

· Food stamps are an example of a transfer payment.

· Most government income comes from borrowing.

· Japan raises more taxes than Italy.

· Japan spends very little on defence.

· The poor get more of what is produced through taxation and transfer payments.

· Governments do not affect how goods are produced.

· Nobody questions the scale of government economic activity.

· Many people believe that high taxes result in people not wanting to work so hard.

V. Fill in the gaps with the words and expressions from the text

1. Having mentioned the effect of government __ on the income distribution, it's necessary to examine in greater detail the role of the government in society.

2. Government expenditure is chiefly financed by __ taxes.

3. Italy's government spending is large and it needs to __ correspondingly large tax revenues.

4. These differences in the scale of government activity relative to __ reflect differences in the way different countries allocate their resources among __ uses.

5. By taxing the rich and making transfers to the poor, the government __ that the poor are allocated more of what is produced than would otherwise be the case.

6. Managers of factories and mines must __ safety requirements.

7. Offices and factories are __ in attractive residential parts of the city. , 8. __ of government activities in the modern economy is highly controversial.

9. Different __ will certainly affect the questions what, how and for whom.

10. A large government sector makes the economy inefficient, reducing the number of goods that can be __ allocated to consumers.

11. __ that high tax rates reduce the incentive to work.

12. Welfare payments and unemployment benefit are more likely to reduce _ to work since they actually contribute to __.

VI. Find in the text English equivalents for the following

пенсии за выслугу лет; пособие по безработице; продовольственные карточки (талоны); облагать налогом; правительственные займы; налоговая политика правительства; распределение доходов; переводные (трансфертные) платежи; взимать налоги; собирать налоговые поступления; принято считать (по всеобщему утверждению); уменьшать заинтересованность в работе; целевой (плановый) чистый доход после уплаты налогов.

VII. Answer the questions

1. What are transfer payments? Give some examples.

2. Using Tabl. 1 compare the UK and the USA on the same basis.

3. In what way can governments affect what and for whom is produced?

4. Why does a large government sector make the economy inefficient?

5. What are the two possibilities of responding to high tax rates on the part of workers?

6. What is the possible outcome of large-scale government activity?

7. Summarise in your own words the arguments for and against high taxes.

VIII. Translate using the active possible

1. Переводные платежи, к которым относятся социальное обеспечение, выплата пенсий за выслугу лет, пособия по безработице и т.д., непосредственно влияют на налоговую политику правительства.

2. Правительственные расходы (2 варианта) в основном финансируются за счет налогообложения, поэтому, чем больше сумма расходов (2 варианта), тем больше налоговых поступлений необходимо государству.

3. Степень участия государства в делах экономики может быть большей или меньшей.

4. Таким образом, государство играет важную роль в распределении ограниченных ресурсов общества.

THE PRODUCTION POSSIBILITY FRONTIER (ГРАНИЦЫ ВОЗМОЖНОСТЕЙ ПРОИЗВОДСТВА)

Let's turn to the most important tool for an economist – the production possibility frontier. This frontier shows the maximum combinations of output that the economy can produce, if it uses all its available scarce resources.

The easiest way to explain it is to complete a figure. First, the vertical axis or line, is labelled "food output". The units of food output run from nought at the bottom to 25 at the top, entering the units of food output in fives: 0, 5, 10, etc. Along the horizontal axis (or the bottom line) we have units of film output. Let's enter in the units of film output in fives again, this time up to 30.

Suppose we have an economy with only food and film industries. Now, if we put all the workers into producing food, we shall produce 25 units of food, but no units of film. We can mark this on the diagram with point A – no film, 25 units of food. It means point A comes on the vertical line at the number 25. Now, at the other extreme, if the economy puts all its workers into producing film, it will produce 30 units, but it will not produce any food. So, the next point is on the bottom, horizontal line, at 30 units. Let's label it as point E.

These two points, A and E, arc the two extreme points of the production possibility frontier. Let's put in three more points. Point В is where the economy is producing 22 units of food and 9 units of film. Point С is where the economy is producing 17 points of both film and food. And, finally, point D is where we have 10 units of food and 24 units of film. Now draw a line joining all these points together, from A to E. The line drawn is not a straight line, it's a concave curve. It is this concave curve that is called the production possibility frontier.

The production possibility frontier represents a trade-off. More of one commodity, food or film, means less of the other, and this is because of the law of diminishing returns. It states that if, in the production of a commodity, one factor of production is increased by stages while the other factors are kept unchanged, the stage will sooner or later be reached where each farther addition to the increasing factor will produce a smaller and smaller increase in output.

In our example, movements from A to B, to С and so on along the curve involve the transfer of one or more workers from one industry to the other, say, from food production to film production. The number of workers in the film industry increases, and so does the film output, but on the whole each additional worker produces less additional film. That is to say, each transfer reduces output per person in the film industry. At the same time a decrease in the food industry can be observed. So with each transfer we get less additional film output and have to give up increasing amounts of output. That's why a society faces the problem of choosing between different products, as the scarcity of available resources does not allow it to increase the production of one good without decreasing the production of the other. As all the resources are scarce, points outside the frontier (point F in the example) represent the level of production unattainable at the given stage of development. On the contrary, it is inefficient to produce within the frontier (point G in the example), as it means poor management of production. By moving on to the frontier, society could have more of some goods without having less of any other good.

VOCABULARY NOTES

a tool – инструмент

output – объем производства

a figure – чертеж, рисунок

the vertical axis (line) – вертикальная ось

to label – обозначить

food output – количество произведенных (объем производства) продовольственных товаров

nought – ноль

the horizontal axis (the bottom line) – горизонтальная ось

film output – количество произведенной (объем производства) пленки

at the other extreme – на другом полюсе

to draw a line joining all these points together – провести линию, соединяющую все эти точки

a straight line – прямая линия

a concave curve – вогнутая кривая (ant. convex – выпуклый)

a trade-off – альтернатива, выбор

the law of diminishing returns – закон сокращающейся доходности

the production of a commodity – производство товара

by stages – постепенно

each further addition – каждое последующее дополнение

an increase in output – увеличение объема производства

to involve the transfer – включать в себя, подразумевать перемещение

to reduce output per person – сокращать выработку на одного человека

additional output – дополнительный объем производства

amounts of output – объем производства, количество произведенной продукции

good – зд. благо

outside the frontier – за пределами границы

the level of production unattainable – уровень производства, недостижимый...

on the contrary – напротив

within the frontier – внутри границы

poor management of production – плохая организация производства

Assignments

I. Suggest the Russian equivalents the most important tool for the economist; the production possibility frontier;

the maximum combinations of output; to involve the transfer of workers

II. Fill in the gaps with the words and expressions from the text

1. The production possibility frontier is the most important __ for an economist.

2. This frontier shows the maximum combinations of __ that the economy can produce, if it uses __.

3. To complete a figure of __ we need to draw __ together.

4. The line drawn is not __, it's __. It is this concave curve that is called __.

5. The production possibility frontier represents __.

6. More of one __, food or film, means __ of the other, and this is because of__.

7. It states that if, in __, one __ is increased __ while the other factors are kept __, the stage will be reached where __ to the increasing factor will produce __.

8. The number of workers in the film industry __, and so does the film __, but on the whole each __ worker produces __ additional film.

9. Each transfer __ in the film industry.

10. That's why a society faces the problem of __ between __, as ___ does not allow it __ the production of one good without __ the production of the other.

III. Draw a figure, complete it, mark all the points (from A to G) and explain it in English making use of the following phrases

a vertical axis (line), a horizontal axis (a bottom line), to label, to enter in the units in 5s, to draw a line

IV. Find English equivalents

прямая линия; вогнутая (выпуклая) кривая; именно эта кривая называется границей производственных возможностей; альтернатива, выбор;

закон сокращающейся доходности; увеличивать (уменьшать) выработку на одного человека; вертикальная ось; обозначить; горизонтальная ось;

провести линию, соединяющую все эти точки; производственный фактор, фактор производства; включать в себя, подразумевать перемещение;

дополнительный объем производства

V. Explain in English

a trade-off; the law of diminishing returns

VI. Answer the question

What does the production possibility frontier show?

VII. Translate into English using all the active possible

1. Граница производственных возможностей — это предел в потном использовании ресурсов общества при существующем уровне развития технологии, когда увеличение производства одного блага требует сокращения производства другого.

2. Такое состояние экономики может быть отражено на графике в виде кривой, представляющей различные комбинации производства благ при максимальном использовании имеющихся ресурсов и существующем уровне технологии.

3. На графике изображена кривая, каждая точка которой показывает количество одного блага, производимого при полном использовании всех ресурсов, взамен другого блага.

4. Точки за пределами границы производственных возможностей показывают уровень производства, недостижимый при данном количестве ресурсов и имеющейся технологии.

5. Точки внутри границы показывают, что производство организовано неэффективно и есть неиспользованные ресурсы, например, рабочая сила.

6. Отсюда следует естественный вывод, что в современной экономике, когда неограниченных ресурсов практически нет, развитие технологии играет значительную роль и имеет огромное значение для экономики в целом.

ECONOMIC SYSTEMS (ЭКОНОМИЧЕСКИЕ СИСТЕМЫ)

There are a number of ways in which a government can organize its economy and the type of system chosen is critical in shaping environment in which businesses operate.

An economic system is quite simply the way in which a country uses its available resources (land, workers, natural resources, machinery etc.) to satisfy the demands of its inhabitants for goods and services. The more goods and services that can be produced from these limited resources, the higher the standard of living enjoyed by the country's citizens.

There are three main economic systems:

Planned economics (Плановая экономика)

Planned economies are sometimes called "command economies" because the state commands the use of resources (such as labour and factories) that are used to produce goods and services as it owns factories, land and natural resources. Planned economies are economies with a large amount of central planning and direction, when the government takes all the decisions, the government decides production and consumption. Planning of this kind is obviously very difficult, very complicated to do, and the result is that there is no society, which is completely a command economy. The actual system employed varies from state to state, but command or planned economies have a number of common features.

Firstly, the state decides precisely what the nation is to produce. It usually plans five years ahead. It is the intention of the planners that there should be enough goods and services for all.

Secondly, industries are asked to comply -with these plans and each industry and factory is set a production target to meet. If each factory and farm meets its target, then the state will meet its targets as set out in the five-year plans. You could think of the factory and farm targets to be objectives which, if met, allow the nation's overall aim to be reached.

A planned economy is simple to understand but not simple to operate. It does, however, have a number of advantages:

· Everyone in society receives enough goods and services to enjoy a basic standard of living.

· Nations do not waste resources duplicating production.

· The state can use its control of the economy to divert resources to wherever it wants. As a result, it can ensure that everyone receives a good education, proper health care or that transport is available.

Several disadvantages also exist. It is these disadvantages that have led to many nations abandoning planned economies over recent years:

· There is no incentive for individuals to work hard in planned economies.

· Any profits that are made are paid to the government.

· Citizens cannot start their own businesses and so new ideas rarely come forward.

· As a result, industries in planned economies can be very inefficient. A major problem faced by command or planned economies is that of deciding what to produce. Command economies tend to be slow when responding to changes in people's tastes and fashions. Planners are likely to underproduce some items as they cannot predict changes in demand. Equally, some products, which consumers regard as obsolete and unattractive, may be overproduced. Planners are afraid to produce goods and services unless they are sure substantial amounts will be purchased. This leads to delays and queues for some products.

VOCABULARY NOTES

inhabitants – жители, население

to own – владеть

natural resources – природные ресурсы

a large amount – большой объем

central planning and direction – центральное планирование и руководство

consumption – потребление

obviously – очевидно

complicated – сложный

to have a number of common features – иметь ряд общих черт

intention – намерение

to comply with – подчиняться

a production target to meet – производственная задача (задание), которую надо выполнить

an objective – цель, задача

an overall aim – общая цель

to enjoy a basic standard of living – иметь основной уровень жизни

to duplicate production – дублировать производство

to divert – отвлекать (напр., ресурсы на другие цели)

to abandon – отказываться от чего-либо

a major problem faced by command or planned economies – основная проблема, стоящая перед командной или плановой экономикой

changes in tastes and fashions – изменения вкусов и моды

to underproduce – недопроизводить

to regard smth as – воспринимать что-либо, относиться к чему-либо как...

obsolete (syn. out of date) – устарелый, вышедший из употребления

to overproduce – перепроизводить

delays and queues – зд. перебои (с товарами) и очереди

Assignments

I. Suggest the Russian equivalents

each factory is set a production target to meet; to divert resources to wherever it wants; new ideas rarely come forward; tend to be slow when responding to changes

II. Replace the parts in italics by synonyms

obsolete products; it can ensure that...; it can be very inefficient

There is no incentive for individuals to work hard in planned economies.

It led to many nations abandoning planned economies over recent years.

III. Fill in the gaps with the words and expressions from the text

1. The type of system chosen is __ in __, in which businesses operate.

2. An economic system is the way in which a country uses its __ to satisfy the demands of__for goods and services.

3. The more goods and services that can be produced, the higher the standard of living __ by the country's citizens.

4. The state __ factories, land and __.

5. Planned economies are economies with __ of __, when the government __ all __, decides __ and __.

6. The actual system employed __ from state to state, but command or planned economies have __.

7. It is __ that there should be enough goods and services for all.

8. Industries are asked __ these plans and each industry and factory is set __.

9. The factory and farm targets are __ which, if met, allow the nation's __ to be reached.

10. Nations do not waste resources __.

11. The state can use its control of the economy __ to wherever it wants.

12. It is __ that have led to many nations __ planned economies over recent years.

13. There is no __ for individuals to work hard in planned economies.

14. Industries in planned economies can be very __.

15. Command economies tend to __ when __ to changes in people's tastes and fashions.

16. Planners are likely __ some items as they cannot __ changes in demand.

17. Some __ and unattractive products may be __.

18. This leads to __ for some products.

IV. Find in the text English equivalents/or the following

имеющиеся в распоряжении ресурсы; управлять использованием ресурсов; управление экономикой; отказываться от плановой экономики;

иметь высокий жизненный уровень; иметь общие черты; подчиняться 5-летнему плану; значительное количество; ставить производственные задачи; полученная прибыль; стимул к эффективной работе; перебои и очереди; реагировать на изменения спроса; предсказывать изменения спроса; основная проблема, стоящая перед...

V. Answer the questions

1. What's an economic system?

2. What does a standard of living depend on?

3. What's a planned economy? What are its main features?

4. Give the advantages of a planned economy.

5. Give the disadvantages of a planned economy.

6. What causes delays and queues for some products?

7. What can you add to the list of advantages and disadvantages of a planned economy?

VI. Translate using the active possible

1. Если хозяйство плановое, то работа промышленности подчиняется плану, в котором государство определяет производственные задачи и планирует развитие на 5 лет вперед.

2. В плановой экономике покупатели лишены возможности влиять на производство товаров.

3. Поскольку значительная доля полученной прибыли должна быть выплачена государству, то в условиях плановой экономики стимулы работать эффективно невелики.

4. Промышленность часто выпускает непривлекательные и старомодные товары, поскольку невозможно предсказать изменения моды на 5 лет вперед.

5. Государство в условиях плановой экономики может гарантировать своим гражданам образование и медицинское обслуживание.

6. Все крупные решения, касающиеся объема используемых ресурсов, структуры и распределения продукции, производства и потребления, принимаются центральным плановым органом.

Market economics (Рыночная экономика)

The best examples of this type of economy are to be found in small South-East Asian states like Hong Kong and Singapore, though even they are not pure examples of market economies. Even they contain some businesses owned and run by the state.

In a true market economy the government plays no role in the management of the economy, the government does not intervene in it. The system is based on private enterprise with private ownership of the means of production and private supplies of capital, which can be defined as surplus income available for investment in new business activities. Workers arc paid wages by employers according to how skilled they are and how many firms wish to employ them. They spend their wages on the products and services they need. Consumers are willing to spend more on products and services, which are favoured. Firms producing these goods will make more profits and this will persuade more firms to produce these particular goods rather than less favoured ones.

Thus, we can see that in a market economy it is consumers who decide what is to be produced. Consumers will be willing to pay high prices for products they particularly desire. Firms, which are privately owned, see the opportunity of increased profits and produce the new fashionable and favoured products.

Such a system is, at first view, very attractive. The economy adjusts automatically to meet changing demands. No planners have to be employed, which allows more resources to be available for production. Firms tend to be highly competitive in such an environment. New advanced products and low prices are good ways to increase sales and profits. Since all firms are privately owned they try to make the largest profits possible. In a free market individual people are free to pursue their own interests. They can become millionaires, for example. Suppose you invent a new tend of car. You want to make money out of it in your own interests. But when you have that car produced, you are in fact moving the production possibility frontier outwards. You actually make the society better-off by creating new jobs and opportunities, even though you become a millionaire in the process, and you do it without any government help or intervention.

Not surprisingly there are also problems. Some goods would be underpurchased if the government did not provide free or subsidised supplies. Examples of this type of good and service are health and education. There are other goods and services, such as defence and policing, that are impossible to supply individually in response to consumer spending. Once defence or a police force is supplied to a country then everyone in this country benefits.

A cornerstone of the market system is that production alters swiftly to meet changing demands. These swift changes can, however, have serious consequences. Imagine a firm, which switches from labour-intensive production to one where new technology is employed in the factory. The resulting unemployment could lead to social as well as economic problems.

In a market economy there might be minimal control on working conditions and safety standards concerning products and services. It is necessary to have large-scale government intervention to pass laws to protect consumers and workers.

Some firms produce goods and then advertise heavily to gain sufficient sales. Besides wasting resources on advertising, firms may also duplicate one another's services. Rival firms, providing rail services, for example, could mean that two or more systems of rail are laid.

Finally, firms have to have confidence in future sales if they are to produce new goods and services. At certain times they tend to lack confidence and cut back on production and the development of new ideas. This decision, when taken by many firms, can lead to a recession. A recession means less spending, fewer jobs and a decline in the prosperity of the nation.

VOCABULARY NOTES

to own and run (syn. to manage, to operate) businesses – владеть и управлять бизнесом

to intervene – вмешиваться

private enterprise (syn. entrepreneurship) – частное предпринимательство

private ownership (syn. property) of the means of production – частная собственность на средства производства

public property, common ownership – общественная собственность

personal property – личная собственность

state-owned property, state ownership – государственная собственность

private supplies of capital – частный капитал

surplus income available for investment in new business activities – допол- ] нительный доход (излишек дохода), который можно вложить (инвестировать) в новое дело (бизнес)

to employ – использовать; предоставлять работу, нанимать

employer – работодатель

employee – служащий

employment – занятость

unemployment – безработица

to persuade – убеждать

at first view (syn. at first sight) – на первый взгляд

to adjust automatically – автоматически приспосабливаться; приводиться в соответствие

competitive – конкурентоспособный

to make the largest profits possible – получить наибольшую возможную прибыль

to pursue one's own interests – преследовать свои интересы

to make money out of it – заработать деньги на этом

to move the production possibility frontier outwards – продвинуть вперед предел производственных возможностей

to make the society better-off – сделать общество более состоятельным

to create new jobs and opportunities – создать новые рабочие места, но-

!С ВОЗМОЖНОСТИ

to underpurchase (ant. to overpurchase) – недостаточно раскупать

to provide free or subsidized supplies – обеспечить бесплатное или субсидированное (дотированное) предоставление (товаров, услуг)

in response to (syn. in answer to) – в ответ на

a cornerstone – краеугольный камень

to alter swiftly – быстро меняться

consequences – последствия

labour- intensive production – трудоемкое производство

working conditions – условия работы

safety standards – нормы техники безопасности

large- scale intervention – широкомасштабное вмешательство

to pass laws – принимать законы

to gain sufficient sales – добиться достаточного объема продаж

rival firms – фирмы-конкуренты, соперники

to have confidence – иметь уверенность

to lack confidence – не хватать уверенности

Assignments

I. Suggest the Russian equivalents

new advanced products; products which are favoured; they try to make the

largest profits possible; provide free or subsidized supplies; produce goods and

then advertise heavily; a firm which switches from labour- intensive production a new one; a decline in the prosperity of the nation 77. Replace the parts in italics by synonyms

businesses owned and run by the state; products and services, which are favoured; at first view; production alters swiftly ill. Fill in the gaps -with the words and expressions from the text

1. Small South-East Asian states like Hong Kong and Singapore contain some businesses __ by the state.

2. The system is based on __ with __ of __.

3. Private supplies of capital can be defined as __ available for __ in __.

4. Consumers are willing to spend more on products and services, which __.

5. More profits will __ more firms to produce those particular goods that are favoured.

6. In a market economy it is __ who decide what is to be produced.

5. __ firms see the opportunity of __ and produce the new fashionable and favoured products.

6. The economy __ automatically to meet changing demands.

7. Finns tend to be highly __in such an environment.

7. In a free market individual people are free __.

8. But when you have that car produced, you are moving __.

9. You actually make __ by __, even though you become a millionaire in the process, and you do it without __ or __.

10. Some goods would be __ if the government did not provide __ supplies.

11. Some other goods and services, such as defence and policing, are impossible to __ in response to consumer spending.

12. __ of the market system is that production __ to meet changing demands.

13. If a firm switches from __ to one where new technology __ in the factory, it can lead to __ and __ problems.

14. It is necessary to have __ to pass laws __ consumers and workers.

15. Firms have __ in future sales if they are to produce new goods and services.

16. A recession means __ spending, __jobs and __ of the nation

IV. Find in the text English equivalents for the following

управление экономикой; процветание нации; широкомасштабное вмешательство правительства; принимать законы; быстро меняться; конкурирующие фирмы; автоматически изменяться (приспосабливаться); быть конкурентоспособным; частные фирмы; фирмы, принадлежащие государству и управляемые им; краеугольный камень; иметь серьезные последствия для...;

трудоемкое производство; сокращать производство; быть уверенным в...; не хватает уверенности в...; дорого платить за что-либо

V. Answer the questions

1. What's a market economy?

2. What's the main difference between a market economy and a planned economy?

3. Do changing demands affect production? In what way?

4. What's the mechanism of producing goods and services in a market economy?

5. Give the advantages of a market economy.

6. Give the disadvantages of a market economy.

VI. Translate using all the active possible

1. В рыночной экономике невелика или очень мала необходимость в планировании, контроле и широкомасштабном вмешательстве со стороны государства (правительства) в экономический процесс.

2. В условиях рыночной экономики изменения потребительского спроса играют заметную роль в формировании политики фирм.

3. Чтобы быть конкурентоспособными и увеличивать доходы, фирмы должны постоянно изучать спрос и менять свою деятельность в ответ на его изменения.

4. Чем более модный товар, тем более высокую цену надо за него платить.

5. Некоторые виды услуг, например здравоохранение и образование, не могут быть полностью обеспечены только частными фирмами.

6. Рыночная экономика характеризуется частной собственностью на ресурсы и использованием системы рынков и цен для управления экономической деятельностью.

7. В такой системе каждый ее участник волен преследовать свои собственные интересы; каждая экономическая единица стремится получить наибольший возможный доход на основе индивидуального принятия решений.

Mixed economics (Смешанная экономика)

Command and market economies both have significant faults. Partly because of this, an intermediate system has developed, known as mixed economies.

A mixed economy means very much what it says as it contains elements of both market and planned economies. At one extreme we have a command economy, which does not allow individuals to make economic decisions, at the other extreme we have a free market, where individuals exercise considerable economic freedom of choice without any government restrictions. Between these two extremes lies a mixed economy. In mixed economies some resources are controlled by the government whilst others are used in response to the demands of consumers.

Technically, all the economies of the world arc mixed: it is just the balance elements between market and planned elements that alters. Some countries are nearer to command economies, while others are closer to free market economies. So, for example, Hong Kong has some state-controlled industry, while Cuba has some privately owned and controlled firms.

The aim of mixed economies is to avoid the disadvantages of both systems while enjoying the benefits that they both offer. So, in a mixed economy the government and the private sector interact in solving economic problems. The state controls the share of the output through taxation and transfer payments and intervenes to supply essential items such as health, education and defence, while private firms produce cars, furniture, electrical items and similar, less essential products.

The UK is a mixed economy: some services arc provided by the state (for example, health care and defence) whilst a range of privately owned businesses offer other goods and services. The Conservative government under Margaret Thatcher switched many businesses from being state-owned and controlled to being privately owned as part of its privatization programme. This has taken the UK economy further away from the planned system.

VOCABULARY NOTES

significant faults – значительные недостатки

at one extreme... at the other extreme – на одном полюсе... на другом

to exercise considerable economic freedom of choice – иметь значительную экономическую свободу выбора

restriction – ограничение

whilst [wailst] (syn. while) – в то время как, пока

state- controlled industry – промышленность, контролируемая государством

to avoid disadvantages – избегать недостатков

to enjoy the benefits – иметь преимущества, пользоваться преимуществами

to interact – взаимодействовать

to solve economic problems – решать экономические проблемы

a share of the output – доля в объеме производства

essential items – товары и услуги первой необходимости

a range of businesses – зд. ряд компаний, фирм

Assignments

I. Suggest the Russian equivalents

an intermediate system has developed; to supply essential items; the government controls a share of the output

II. Replace the parts in italics by synonyms

significant faults; a range of products; whilst others are used in response to the demands of consumers

III. Fill in the gaps with the words and expressions from the text

1. Command and market economies both have __.

2. __ contains elements of both market and planned economies.

3. __ we have a command economy, which does not __, __ we have a free market, where individuals __ without __.

4. Some countries are __ to command economies, while others are __ to free market economies.

5. It is just __ between market and planned element that __ in all the economies of the world.

6. The aim of mixed economies is __ the disadvantages of both systems while __ the benefits that they both offer.

7. In a mixed economy the government and the private sector __ in ___.

8. The state controls __ through __, and __, and intervenes to supply

9. The Conservative government switched many state-owned businesses to being privately owned as part of its __.

IV. Find in the text English equivalents for the following

избегать недостатков; частный сектор; налогообложение; централизованно принимать экономические решения; на одном полюсе – на другом...; без ограничений; взаимодействовать в решении проблем; пользоваться благами; правительство, возглавляемое...

V. Increase your vocabulary

to enjoy (syn. — to have as an advantage — иметь, пользоваться)

to enjoy a boom

to enjoy a high standard of living

to enjoy a basic standard of living

to enjoy the benefits

Make some sentences of your own with the above expressions.

Translate:

1. Иметь хорошее здоровье.

2. Все граждане государства должны иметь равные права.

3. Эта пьеса очень популярна.

VI. Check your grammar

It is (was) ... that (who) – именно

It is the Intention of the planners that there should be enough goods and services for all.

It is these disadvantages that have led to many countries abandoning planned economies.

It is consumers who decide what is to be produced.

It is just the balance between market and planned elements that alters.

Rewrite the following sentences using the emphatic construction

1. Television was invented in this century.

1. Mathematicians have solved complicated problems with the help of computers.

3. I first saw this play on TV.

4. Two doctors made this discovery.

5. Owing to the rain we couldn't come.

VII. Answer the questions

1. Are there really pure examples of planned and market economies in the world?

2. What's a mixed economy? What's its aim?

3. What type of economy is the UK? is Russia now?

VIII. Translate into English using all the active possible

1. В реальной действительности экономические системы располагаются где-то между чисто рыночной и плановой экономикой.

2. Смешанная экономика — это система, при которой частная собственность и рынок, а также правительство и общественные институты, энергично участвующие в обеспечении экономической стабильности и перераспределении доходов, взаимодействуют в решении экономических проблем.

MARKETS (рынки)

The Role of Market (Роль рынка)

Reports in the press tend to say "the market did this" or "the market expected good news on the economic front", as if the market were a single living entity with a single conscious mind. This is not, of course, the case. To understand reports of market behaviour you have to bear in mind the way the market works.

A market is simply a mechanism, which allows individuals or organizations to trade with each other. Markets bring together buyers and sellers of goods and services. In some cases, such as a local fruit stall, buyers and sellers meet physically. In other cases, such as the stock market, business can be transacted over the telephone, almost by remote control. There's no need to go into these details. Instead, we use a general definition of markets.

A market is a shorthand expression for the process by which households' decisions about consumption of alternative goods, firms' decisions about what and how to produce, and workers' decisions about how much and for whom to work are all reconciled by adjustment of prices.

Prices of goods and of resources, such as labour, machinery and land, adjust to ensure that scarce resources are used to produce those goods and services that society demands.

Much of economics is devoted to the study of how markets and prices enable society to solve the problems of what, how and for whom to produce. Suppose you buy a hamburger for your lunch. What does this have to do with markets and prices? You chose the cafe because it was fast, convenient and cheap. Given your desire to eat, and your limited resources, the low hamburger price told you that this was a good way to satisfy your appetite. You probably prefer steak but that is more expensive. The price of steak is high enough to ensure that society answers the "for whom" question about lunchtime steaks in favour of someone

else.

Now think about the seller's viewpoint. The cafe owner is in business because, given the price of hamburger meat, the rent and the wages that must be paid, it is still possible to sell hamburgers at a profit. If rents were higher, it might be more profitable to sell hamburgers in a cheaper area or to switch to luxury lunches for rich executives on expense accounts. The student behind the counter is working there because it is a suitable part-time job, which pays a bit of money. If the wage were much lower it would hardly be worth working at all. Conversely, the job is unskilled and there are plenty of students looking for such work, so owners of cafes do not have to offer very high wages.

Prices are guiding your decision to buy a hamburger, the owner's decision to sell hamburgers, and the student's decision to take the job. Society is allocating resources – meat, buildings, and labour – into hamburger production through the price system. If nobody liked hamburgers, the owner could not sell enough at a price that covered the cost of running the cafe and society would devote no resources to hamburger production. People's desire to eat hamburgers guides resources into hamburger production. However, if cattle contracted a disease, thereby reducing the economy's ability to produce meat products, competition to purchase more scarce supplies of beef would bid up the price of beef, hamburger producers would be forced to raise prices, and consumers would buy more cheese sandwiches for lunch. Adjustments in prices would encourage society to reallocate resources to reflect the increased scarcity of cattle.

There were several markets involved in your purchase of a hamburger. You and the cafe owner were part of the market for lunches. The student behind the counter was part of the local labour market. The cafe owner was part of the local wholesale meat market and the local market for rented buildings. These descriptions of markets are not very precise. Were you part of the market for lunches, the market for prepared food or the market for sandwiches to which you would have turned if hamburgers had been more expensive? That is why we have adopted a very general definition of markets, which emphasizes that they are arrangements through, which prices influence the allocation of scarce resources.

VOCABULARY NOTES

to bear in mind (syn. to keep in mind) – иметь в виду

a local fruit stall – фруктовый ларек

stock market – фондовая биржа, рынок акций

to transact business (syn. to make a deal) – совершать сделку

by remote control – при помощи дистанционного управления

to go into details – вдаваться в подробности

a general definition – общее определение

a shorthand expression – краткое, рабочее выражение (определение) households' decisions – решения домохозяйств

to reconcile – приводить в соответствие, согласовывать

by adjustment of prices – посредством корректировки цен

to demand – требовать

given (syn. taking into account, consideration) – при условии, что..., учитывая limited resources – ограниченные ресурсы

to satisfy one's appetite – удовлетворять аппетит

to answer the question in favour of smb else – решать вопрос в пользу кого-либо другого

the seller's viewpoint – точка зрения продавца

the cafe owner – владелец кафе

the rent – арендная плата

to switch to luxury lunches – переключиться на дорогие обеды

rich executives – состоятельные служащие

behind the counter – за прилавком

suitable – подходящий

to suit – подходить

part-time job (ant. full-time job) – работа с неполной занятостью

a bit of money (ant. scads of money) – немного денег

it would hardly be worth working at all – вряд ли вообще имеет смысл работать

conversely (syn. on the opposite, on the contrary) – наоборот, напротив

unskilled job – неквалифицированная работа

to guide one's decision – влиять на чье-либо решение

through the price system – через систему цен

to cover the cost – покрывать расходы

to run the cafe – содержать кафе

to devote resources – выделять ресурсы

to guide resources into hamburger production – направить ресурсы на производство гамбургеров

cattle – крупный рогатый скот

to contract a disease – подхватить болезнь

thereby – следовательно, таким образом

to reduce the economy's ability – снижать возможности экономики

competition – состязание, конкуренция

to purchase scarce supplies – скупать дефицитные ресурсы

to reallocate resources – перераспределять ресурсы

to reflect the scarcity – отражать дефицит

to be involved in – быть задействованным в

the local labour market – локальный рынок труда

the local wholesale market – локальный оптовый рынок

the local market for rented buildings – локальный рынок аренды помещений

precise descriptions of markets – точные описания рынков

to adopt a definition – принять определение

to adopt a child in a family – принять ребенка в семью, усыновить

to emphasize – подчеркнуть, выделить

arrangements through, which prices influence smth – структуры (механизмы), посредством которых цены влияют на что-либо

Assignments

I. Suggest the Russian equivalents

a single living entity with a single conscious mind; a shorthand expression;

to be reconciled by adjustment of smth; a suitable part-time job; to offer high wages; to guide smb's decision; to cover the cost of smth

II. Replace the parts in italics by synonyms

at a distance, of the neighbourhood, carried out, done; ask for, make certain that; buy, illness, managing, put up; rareness

III. Increase your vocabulary

Using words from paragraph 5 ("Much of economics ..."), complete the following statements:

1. I quite like lamb but really I __ beef.

2. He was a very keen student. He __ most of the time to his studies.

3. I don't like the canteen, but it's more __ than going out to a cafe.

4. I'm not in __of long and expensive lunches.

5. Please __that your essays reach me on time.

6. A good degree should __ you to get a job.

IV. Fill in the gaps with the -words and expressions from the text

1. To understand reports of market behaviour you have to __ the way the market works.

2. On the stock market, business can be transacted over the telephone, almost by __.

3. A market is a __ expression for the process by which households' decisions about consumption of alternative goods, firms' decisions about what and how to produce, and workers' decisions about how much and for whom to work are all __ by __.

4. Much of economics is devoted to the study of how markets and prices __ society to solve the problems.

5. __ your desire to eat, and your limited resources, the low hamburger price told you that this was a good way to __ your appetite.

6. Society answers the "for whom" question about lunchtime steaks __ someone else.

7. The cafe owner is in business because it is still possible to sell hamburgers __.

8. If rents were higher, it might be more profitable to sell hamburgers in a cheaper area or __ to __ lunches.

9. The student is working there because it is a suitable __, which pays a bit of money.

10. Society is allocating resources into hamburger production __ the price system.

11. If nobody liked hamburgers, the owner could not sell enough at a price that __ of running the cafe and society would __ no resources to hamburger production.

12. If cattle __, competition to purchase more scarce supplies of beef would __ the price of beef.

13. Adjustments in prices would encourage society __ resources to reflect the increased scarcity of cattle.

14. There were several markets __ your purchase of a hamburger.

15. The student behind the counter was part of the local __ market.

16. The cafe owner was part of the local __ meat market and the local market for __ buildings.

17. We __ a very general definition of markets, which emphasizes that they are __ through, which prices influence the allocation of scarce resources.

V. Check your grammar

verb + infinitive (want to do)

verb + ing (enjoy playing)

verb + infinitive or ing (the meaning sometimes changes):

He remembered (= did not forget) to book a table. I remember (= recall) seeing that film 5 years ago.

Open the brackets:

1. He suggested (go) into the country on Sunday.

2. I'm sorry I forgot (return) your book yesterday.

3. Stop (make) that noise! I can't work!

4. Which definition would you use (describe) markets?

5. You must avoid (make) unnecessary mistakes.

6. Try (understand) the difference between microeconomics and macroeconomics.

7. Try (pay) more attention to what I say.

8. Would you mind (lend) me your notes?

9. Tomorrow I intend (discuss) the matter with you.

10. Serious illness prevented him from (take) the exam.

11. I am looking forward to (study) economics.

VI. Find in the text English equivalents for the following

поведение рынка; рынок ценных бумаг; проводить сделку, операцию;

иметь что-то общее с чем-либо; с учетом чего-либо (принимая во внимание); в пользу кого-либо другого; прибыльно продавать; переключиться на что-либо; неквалифицированная работа; распределять ресурсы посредством системы цен; сокращать возможности экономики; набавлять цену; перераспределять расходы; оптовый рынок; механизмы (структуры), посредством которых цены влияют на распределение.

VII. Explain in English

rent; profit; expense account; part-time job; labour market; wholesale (meat) market

VIII. Answer the questions

1. What example is given of a market where sellers and buyers actually meet?

2. How are households' decisions on what to buy reconciled?

3. Why do prices adjust?

4. What problems do markets and prices solve for society?

5. Why is the cafe owner in business?

6. Why don't cafe owners have to pay high wages?

7. What makes society put resources into hamburger production?

8. What would consumers do if hamburger prices rose?

9. How many markets are you involved in if you buy a hamburger? What are those markets?

10. Enumerate all the components comprising the concept of "Market".

11. What does the term "resources" comprise?

12. In what way can prices guide your decision to buy some goods?

13. In what way can prices guide a person's decision to take a job?

IX. Translate using all the active possible

1. Рынок ценных бумаг, как и любой рынок вообще, где совершаются сделки, представляет собой механизм (структуру), посредством которого цены регулируют (2 варианта) распределение ограниченных ресурсов в обществе.

2. Потребности различных групп общества приводятся в соответствие путем изменения (регулирования) цен на товары и ресурсы – труд, капитал (оборудование), землю.

3. Ваше решение о покупке на ленч гамбургера имеет непосредственное отношение к вопросу о рынках и ценах, поскольку, к примеру, повышение цен на мясо и, соответственно, переключение продавцов – владельцев кафе на более дорогие обеды может привести к тому, что вопрос "для кого производить" будет решаться в пользу других, более богатых потребителей.

4. Многие студенты ищут работу в кафе, поскольку она занимает у них лишь часть времени и не требует квалификации, несмотря на то, что владельцы кафе предлагают невысокую плату за такой труд.

5. Если бы возможности экономики по производству мясопродуктов сократились, цена на мясо возросла бы, и покупатели стали бы покупать сандвичи с сыром, то есть корректировка цен побудила бы общество к перераспределению ресурсов.

POSITIVE AND NORMATIVE ECONOMICS (ПОЗИТИВНАЯ И НОРМАТИВНАЯ ЭКОНОМИЧЕСКИЕ ТЕОРИИ)

In studying economics it is important to distinguish two branches of the subject. The first is known as "positive economics", the second as "normative economics".

Positive economics deals with objective or scientific explanations of the working of the economy. The aim of positive economics is to explain how society makes decisions about consumption, production, and exchange of goods. The purpose of this investigation is twofold: to satisfy our curiosity about why the economy works as it does, and to have some basis for predicting how the economy will respond to changes in circumstances.

Normative economics is very different. Normative economics offers prescriptions or recommendations based on personal value judgements.

In positive economics, we hope to act as detached scientists. Whatever our political persuasion, whatever our view about what we would like to happen or what we would regard as "a good thing", in the first instance we have to be concerned with how the world actually works. At this stage, there is no scope for personal value judgements. We are concerned with propositions of the form: if this is changed then that will happen. In this regard, positive economics is similar to the natural sciences such as physics, geology or astronomy.

Here are some examples of positive economics in action. Economists of widely differing political persuasions would agree that, when the government imposes a tax on a good, the price of that good will rise. The normative question of whether this price rise is desirable is entirely distinct. Similarly, there would be substantial agreement that the following proposition of positive economics is correct: favourable weather conditions will increase wheat output, reduce the price of wheat, and increase the consumption of wheat. Many propositions in positive economics would command widespread agreement among professional economists.

Of course, as in any other science, there are unresolved questions where disagreement remains. These disagreements are at the frontiers of economics. Research in progress will resolve some of the issues but new issues will arise and provide scope for further research.

Although competent and comprehensive research can in principle resolve many of the outstanding issues in positive economics, no corresponding claim can be made about the resolution of disagreement in normative economics.

Normative economics is based on subjective value judgements, not on the search for any objective truth. The following statement combines positive and normative economics: "The elderly have very high medical expenses compared with the rest of the population, and the government should subsidize health bills of the aged." The first part of the proposition – the claim that the aged have relatively high medical bills – is a statement in positive economics, it is a statement about how the world works, and we can imagine a research programme that could determine whether or not it is correct. Broadly speaking, this assertion happens to be correct.

The second part of the proposition – the recommendation about what the government should do – could never be "proved" to be correct or false by any scientific research investigation. It is simply a subjective value judgement based on the feelings of the person making the statement. Many people might happen to share this subjective judgement, for example those people who believe that all citizens alive today should be able to purchase roughly equal amounts of luxury and recreational goods after paying for the necessities of life. But other people might reasonably disagree. You might believe that it is more important to devote society's scarce resources to improving the environment.

There is no way that economics can be used to show that one of these normative judgements is correct and the other is wrong. It all depends on the preferences or priorities of the individual or the society that has to make this choice. But that does not mean that economics can throw no light on normative issues. We can use positive economics to spell out the detailed implications of making the choice one way or the other. For example, we might be able to show that failure to subsidize the medical bills of the elderly leads middle-aged people to seek a lot of unnecessary medical check-ups in an attempt to detect diseases before their treatment becomes expensive. Society might have to devote a great deal of resources to providing check-up facilities, leaving less resources available than had been supposed to devote to improving the environment. Positive economics can be used to clarify the menu of options from which society must eventually make its normative choice.

VOCABULARY NOTES

to distinguish two branches of the subject – разграничивать два аспекта предмета

positive economics deals with objective explanations – позитивная экономическая теория предлагает объективные объяснения

the working of the economy – действие экономики

exchange of goods – обмен товаров

the purpose of the investigation is twofold – цель исследования двояка

to satisfy curiosity – удовлетворять любопытство

circumstances – обстоятельства

prescriptions or recommendations – предписания или рекомендации

based on – основанный на

personal value judgements – субъективные оценки ценностей

detached scientists – беспристрастные, независимые ученые

whatever our political persuasion – независимо от политических убеждений

whoever – кто бы ни

whenever – когда бы ни

wherever – где бы ни

in the first instance – прежде всего

actually – в действительности

at this stage – на этом этапе

there is no scope for – нет места

on a large scope – широкомасштабно

to be concerned with – интересоваться чем-либо, заботиться о чем-либо

propositions of the form – формальные утверждения, суждения

in this regard – в этом отношении

to be similar to – быть похожим на

natural sciences – естественные науки

liberal arts, humanities – гуманитарные науки

in action – в действии

to be desirable – быть желательным

to be entirely distinct – быть совершенно несхожим

substantial agreement – принципиальное единомыслие

favourable weather conditions – благоприятные погодные условия

wheat output – производство пшеницы

to command widespread agreement – привести к общей согласованности во взглядах

unresolved questions – неразрешенные вопросы

where disagreement remains – где разногласия продолжают существовать

research in progress – исследования, проводимые в настоящее время

new issues will arise (arose, arisen) – возникнут новые проблемы

to provide scope for further research – создать фундамент, базу, основу для дальнейших исследований

competent and comprehensive research – квалифицированная и всеобъемлющая исследовательская работа

outstanding issues – спорные, остающиеся неразрешенными вопросы

corresponding claim – аналогичное заявление

to claim – притязать на что-либо

search for objective truth – поиск объективной истины

in search of smth – в поисках чего-либо

the elderly (syn. aged) – пожилые люди

medical expenses – расходы на здравоохранение

to subsidize health bills – субсидировать расходы на здравоохранение

statement (syn. assertion) – заявление

to determine whether or not it's correct- определить, правильно ли это

broadly speaking – в широком значении, в общем понимании

assertion (syn. statement) – утверждение, заявление

to assert – утверждать, заявлять

to share one's judgement (view) – разделять чьи-либо суждения, взгляды

roughly equal amounts – приблизительно равные количества

luxury and recreational goods – предметы роскоши и товары для отдыха

to disagree reasonably – приводить разумные возражения

to improve the environment – охранять окружающую среду

the preferences or priorities of the individual or the society – предпочтения или приоритеты отдельных лиц или общества в целом

to make a choice – делать выбор

to throw light on – пролить свет на

to spell out – точно, обстоятельно объяснить

the detailed implications – скрытый смысл, значение

failure – провал, неудача

to fail smth – терпеть неудачу в чем-либо

to fail an exam – провалиться на экзамене

to seek (sought, sought) – искать что-либо

medical check-ups – медицинские осмотры

an attempt – попытка

to attempt (syn. to try) – пытаться

to detect smth – выявить, обнаружить

check-up facilities – оборудование для медосмотров

to suppose to do smth – предполагать сделать что-либо

to clarify smth (syn. to clear up) – пояснить что-либо

the menu of options – набор вариантов

Assignments

I. Suggest the Russian equivalents

twofold; to respond to changes in circumstances; to command widespread agreement among smb; a corresponding claim; disagreement in positive economics; to be proved correct or false; to devote a great deal of resources to providing smth; to clarify the menu of options

II. Replace the parts in italics by synonyms

the price of the goods will rise; favourable conditions will increase output; the new issues will arise; medical check-ups; to devote resources to smth; when the government places the tax on the goods; there would be considerable agreement

III. Find in the text the opposites to the following

subjective; lack of interest; treat as the same; involved; not to notice or see;

success; confuse; general; things with no claim to consideration

IV. Fill in the gaps with the words and expressions from the text

1. In studying economics it is important to __ two branches of the subject.

2. Positive economics deals with __ or scientific explanations of __ the economy. ,

3. Normative economics offers prescriptions based on personal __.

4. Whatever our __ in the first instance we have to be concerned with how the world __ works.

5. __, positive economics is similar to the natural sciences.

6. There would be __ that the following __ of positive economics is correct: favourable weather conditions will increase __, reduce the price of wheat, and increase the consumption of wheat.

7. There are __ questions where disagreement remains.

8. New __ will arise and provide __ for further research.

9. __ and __ research can in principle resolve many of the outstanding issues in positive economics.

10. The government should __ health bills of the aged.

11. Many people might happen __ this subjective judgement.

12. Some people believe that all citizens alive today should be able to purchase roughly equal amounts of luxury goods after paying for __ of life, but other people might __.

13. It all depends on __ of the individual or the society that has to make this choice.

14. We can use positive economics __ the detailed implications of making the choice one way or the other.

15. Society might have to devote a great deal of resources to providing _.

16. Positive economics can be used __ the menu of options from which society must eventually make its normative choice.

V. Find in the text English equivalents for the following

каковы бы ни были политические убеждения; в этом отношении; облагать товары налогом; согласованность во взглядах, единогласие в принципах;

неразрешимые вопросы; исследования, проводимые в настоящее время;

квалифицированная и всеобъемлющая исследовательская работа; разделять взгляды; в широком значении, в общем понимании; приблизительно равные количества; привести разумные возражения; то, чему отдается предпочтение в обществе; пролить свет на...

VI. Explain in English

predicting; personal value judgement; proposition

VII. Answer the questions

1. What are two branches of economics?

2. What does the positive economics deal with?

3. What is the aim of normative economics?

4. What is the difference between positive and normative economics in regard to the role of research?

5. What are the global consequences of the government's failure to subsidize the medical bills of the elderly?

VIII. Translate using all the active possible

\. При изучении экономики необходимо различать (2 варианта) позитивную и нормативную экономические теории. Если в позитивной теории мы можем оставаться беспристрастными, независимо от наших политических убеждений, то нормативная теория основывается на личной системе ценностей. В этом отношении различие между двумя теориями очень наглядно.

2. Квалифицированная и всесторонняя исследовательская работа может в некоторой степени исправить положение (3 варианта) в области нерешенных вопросов, порождающих (2 варианта) разногласия среди экономистов. В широком понимании никакая рекомендация правительству не может оказаться правильной или ложной, поскольку она основана на субъективных оценках.

3. Позитивная теория может предложить ряд возможных альтернатив, из которых индивид или общество в целом выбирают наиболее приоритетные.

MICROECONOMICS AND MACROECONOMICS (ТЕОРИЯ МИКРОЭКОНОМИКИ И МАКРОЭКОНОМИКИ)

Many economists specialize in a particular branch of the subject. For example, there are labour economists, energy economists, monetary economists, and international economists. What distinguishes these economists is the segment of economic life in which they are interested. Labour economics deals with problems of the labour market as viewed by firms, workers, and society as a whole. Urban economics deals with city problems: land use, transport, congestion, and housing. However, we need not classify branches of economics according to the area of economic life in which we ask the standard questions what, how and for whom. We can also classify branches of economics according to the approach or methodology that is used. The very broad division of approaches into microeconomic and macroeconomic cuts across the large number of subject groupings cited above.

Microeconomic analysis offers a detailed treatment of individual decisions about particular commodities.

For example, we might study why individual households prefer cars to bicycles and how producers decide whether to produce cars or bicycles. We can then aggregate the behaviour of all households and all firms to discuss total car purchases and total car production. Within a market economy we can discuss the market for cars. Comparing this with the market for bicycles, we may be able to explain the relative output of these two goods. The sophisticated branch of microeconomics known as general equilibrium theory extends this approach to its logical conclusion. It studies simultaneously every market for every commodity. From this it is hoped that we can understand the complete pattern of consumption, production, and exchange in the whole economy at a point in time.

If you think this sounds very complicated you are correct. It is. For many purposes, the analysis becomes so complicated that we tend to lose track of the phenomena in which we were interested. The interesting task for economics, a task that retains an element of art in economic science, is to devise judicious simplifications, which keep the analysis manageable without distorting reality too much. It is here that microeconomists and macroeconomists proceed down different avenues.

Microeconomists tend to offer a detailed treatment of one aspect of economic behaviour, but ignore interactions with the rest of the economy in order to preserve the simplicity of the analysis. A microeconomic analysis of miners' wages would emphasize the characteristics of miners and the ability of mine owners to pay. It would largely neglect the chain of indirect effects to which a rise in miners' wages might give rise. For example, car workers might use the precedent of the miners' pay increase to secure higher wages in the car industry, thus being able to afford larger houses, which burned more coal in heating systems. When microeconomic analysis ignores such indirectly induced effects it is said to be partial analysis.

In some instances, indirect effects may not be too important and it will make sense for economists to devote their effort to very detailed analyses of particular industries or activities. In other circumstances, the indirect effects are too important to be swept under the carpet and an alternative simplification must be found.

Macroeconomics emphasizes the interactions in the economy as a whole. It deliberately simplifies the individual building blocks of the analysis in order to retain a manageable analysis of the complete interaction of the economy.

For example, macroeconomists typically do not worry about the breakdown of consumer goods into cars, bicycles, televisions, and calculators. They prefer to treat them all as a single bundle called "consumer goods" because they arc more interested in studying the interaction between households' purchases of consumer goods and firms' decisions about purchases of machinery and buildings.

VOCABULARY NOTES

a labour economist – специалист по экономике труда

an energy economist – специалист по экономике (электро) энергии

a monetary economist – специалист по монетарной экономике

an international economist – специалист по мировой экономике

congestion – перенаселенность

to cut across – не соответствовать

a detailed treatment – детальный, подробный анализ

an individual household – отдельное домашнее хозяйство

to aggregate, v – собирать в одно целое

aggregate, n – совокупность

in the aggregate – в совокупности

aggregate, adj – совокупный

the relative output – относительный объем производства

general equilibrium theory – теория общего равновесия

to study simultaneously – одновременно изучать

the complete pattern – полная структура, система, схема

to lose track of the phenomena – потерять след явлений

to devise judicious simplifications – выработать разумные упрощения

to keep the analysis manageable – позволять проводить анализ

to distort reality – искажать реальность

to preserve the simplicity of the analysis – сохранить простоту анализа

to neglect the chain of indirect effects – пренебрегать косвенным воздействием, совокупностью (цепочкой) косвенных результатов, эффектов

to secure higher wages – получить более высокую заработную плату

indirectly induced effects – воздействие, вызванное косвенными причинами

partial analysis – частичный (неполный) анализ

to sweep under the carpet – прятать, маскировать {доел. замести под ковер)

to simplify deliberately – намеренно упрощать

to retain a manageable analysis – сохранить возможность анализа (выполнимый, поддающийся выполнению анализ)

the breakdown of consumer goods – классификация (подразделение) товаров потребления

a single bundle – отдельная единица, величина (доел. набор)

Assignments

I. Suggest the Russian equivalents

cuts across the large number of subject groupings cited above; the sophisticated branch of microeconomics; the complete pattern of consumption, production, and exchange; to devise judicious simplifications; keep the analysis manageable; to retain a manageable analysis; indirectly induced effects

II. Replace the parts in italics by synonyms

pulling out of shape, pay not enough attention; pay no attention; think out, plan;

keep safe, brought about, showing good sense; keep; make less complicated; as a rule, characteristically, be sensible

III. Fill in the gaps with the words and expressions from the text

1. What distinguishes different economists is __ in which they are interested.

2. Urban economics deals with city problems: .land use, transport, __, and housing.

3. We can also classify branches of economics according to__ that is used.

4. The very broad division of approaches into microeconomic and macroeconomic __ the large number of subject groupings.

5. To discuss total car purchases and total car production we can __ the behaviour of all households and all firms.

6. The sophisticated branch of microeconomics known as __ studies __ every market for every commodity.

7. The task for economics is to devise __ simplifications, which keep the analysis __ without __.

8. Microeconomists tend to offer __ of one aspect of economic behaviour but __ with the rest of the economy in order to __ of the analysis, largely __ the chain of __.

9. When microeconomic analysis ignores such indirectly induced effects it is said to be __.

10. Macroeconomics __ the individual building blocks of the analysis in order to ____ a manageable analysis of __ of the economy.

11. Macroeconomists prefer to treat cars, bicycles, televisions, and calculators as a single __ called "consumer goods".

IV. Check your grammar

Define each of the words given below, using the pronouns who and which:

· an energy economist is...who...

· microeconomics is...which...

· international economics is...

· a monetary economist is...

· consumer goods arc...

· macroeconomics is...

· a worker is...

· a miner is...

· coal is...

Complete the following sentences using adjectives or/and adverbs:

e.g.: a relatively difficult branch (adverb and adjective) an expensive cassette player (adjective) to buy something cheaply (adverb)

1. This is a __ book to read. (comparative, easy)

2. __ car production is not always __to estimate __. (total, easy, general)

3. Even some __ tools of __ analysis are not __ known, (common, economic, general)

4. Some microeconomic analyses offer __detailed treatments of __ decisions, (extreme, individual)

5. If we compare the market for cars and bicycles __, we may be able to offer a __ explanation for their __ prices, (careful, good, relative)

6. __ she managed to pass her __ exams __. (fortunate, final, easy)

7. My tutor emphasized the __ importance of putting ideas in a __ order. (great, logical)

8. __analysis ignores __induced effects, (partial, indirect)

9. The __economist keeps his analysis __ without __ distorting reality. (sensible, manageable, undue)

10. She's an __ novelist — something __ and __ happens_in her stories. (excellent, unusual, exciting, constant)

V. Find in me text English equivalents for the following

перенаселенность; собирать в одно целое; теория общего равновесия;

искажать реальность; подробный анализ (рассмотрение); сохранить простоту анализа; косвенное (непрямое) воздействие (эффект); взаимодействие внутри экономики

VI. Explain in English

consumption; exchange; partial analysis; simplification; indirect effect

VII. Answer the questions

1. What distinguishes an energy economist from an urban economist?

2. Are the same questions asked in each area of economic life?

3. What is needed before total car purchases and production can be discussed?

4. What does the general equilibrium theory examine?

5. What can be understood from such a study?

6. What happens when an analysis becomes too complicated?

7. What can keep an analysis manageable?

8. What do most microeconomists leave out of their analysis?

9. What does partial analysis ignore?

10. Why wouldn't most macroeconomists make a breakdown of consumer

goods?

VIII. Translate using all the active possible

1. Макроэкономика – это один из основных разделов экономической теории, который изучает поведение экономики как единого целого. Она анализирует взаимодействие факторов, влияющих на рост национального производства, а также такие процессы, как безработица, инфляция, и т п. Объектом макроэкономики является именно взаимодействие этих величин внутри экономики, при этом сами эти величины рассматриваются упрощенно, абстрактно.

2. Микроэкономика – это один из основных разделов экономической теории, изучающий поведение отдельных экономических единиц, их взаимодействие на рынках, в результате которого формируются цены на производимые товары и услуга и т. д. Микроэкономика стремится к детальному рассмотрению поведения какой-либо экономической единицы, при этом не уделяя достаточного внимания косвенному воздействию этого поведения на другие экономические единицы и на экономику в целом.

РRIСЕ AND DEMAND (ЦЕНА И СПРОС)

The following text will introduce you to the topic of the effect of price and Income on demand quantities.

The Price Responsiveness of Demand

Tabl. 3 presents some hypothetical numbers for the relation between ticket price and quantity demanded, other things equal.

Tabl. 3. The Demand for Football Tickets

PRICE (£/ ticket)	Quantity of tickets demanded (thousands/game)
12,50 10,00 7,50 5,00 2,50 0	0 20 40 60 80 100

Fig. 2 plots the demand curve, which happens to be a straight line in this example.

Ticket price (£)

Quantity of tickets

Figure 2. The Demand for Football Tickets

For given prices of related goods and consumer incomes, higher ticket prices reduce the quantity of tickets demanded.

How should we measure the responsiveness of the quantity of tickets demanded to the price of tickets? One obvious measure is the slope of the demand curve. The downward slope of the demand curve shows that quantity demanded increases as the price of a good falls. Each price cut of £ 1 leads to 8000 extra ticket sales per game.

Suppose, however, that we wish to compare the price responsive ness of football ticket sales with the price responsiveness of the quantity of care demanded: clearly, £ 1 is a trivial cut in the price of a car and will have a negligible effect on the quantity of cars demanded.

When commodities arc measured in different units it is often best to examine the percentage change, which is unit-free. This suggests that we think about the effect of a 1 per cent price cut on the quantity of care and football tickets demanded. Similarly, it is not the absolute number of cars or tickets we should examine but the percentage change in quantity demanded. Not only does this solve the problem of comparing things measured in different quantity units, it also takes account of the size of the market. Presumably an extra sale of 8000 tickets is more important when ticket sales arc 4000 than when they number 40000.

Thus we reach the definition of the price elasticity of demand, which economists use to measure responsiveness to price changes.

The price elasticity of demand is the percentage change in the quantity of a good demanded divided by the corresponding percentage change in its price.

Although we shall shortly introduce other demand elasticities – the cross price elasticity and the income elasticity — the (own) price elasticity is perhaps the most frequently used of the three. Whenever economists speak of the demand elasticity they mean the price elasticity of demand as it has been defined above.

If a 1 per cent price increase reduces the quantity demanded by 2 per cent, the demand elasticity is – 2. Because the quantity falls 2 per cent, we express this as a change of — 2 per cent, then divide by the price change of 1 per cent (a price rise) to obtain —2. If a price fall of 4 per cent increases the quantity demanded by 2 per cent, then the demand elasticity is — 1/2, since the quantity change of 2 per cent is divided by the price change of – 4 per cent. Since demand curve slopes down, we arc either dividing a positive percentage change in quantity (a quantity rise) by a negative percentage change in price (a price fall) or dividing a negative percentage change in quantity (a quantity fall) by a positive percentage change in price (a price rise). The price elasticity of demand tells us about movements along a demand curve and the demand elasticity must be a negative number.

For further brevity, economists sometimes omit the minus sign. It is easier to say the demand elasticity is 2 than to say it is -2. Whenever the price elasticity of demand is expressed as a positive number, it should be understood (unless there is an explicit warning to the contrary) that a minus sign should be added. Otherwise, we should be implying that demand curves slope upwards, a rare but not unknown phenomenon.

VOCABULARY NOTES

to introduce smb to the topic of – познакомить кого-либо с темой the effects of smth on smth – воздействие чего-либо на что-либо

hypothetical numbers – вымышленные, гипотетические числа

the relation between – соотношение между

quantity demanded – требуемое количество

to plot the demand curve – вычерчивать кривую спроса

for given price – для данной (приведенной) цены

to measure the responsiveness of smth to smth – измерять способность, реагировать (реакция) на

obvious measure – очевидная, наглядная мера

the slope of the curve – покатость кривой

the downward slope – движение кривой вниз

ticket sales per game – продажа билетов на игру

trivial (syn. minor, slight) – незначительный

a negligible effect – мелкий, незначительный эффект

to examine smth – рассмотреть, проанализировать

the percentage change – процентное изменение

unit-free – независящий от характера единиц (<? которых измеряются товары)

this suggests (syn. to imply) – это предполагает

similarly – подобным образом

to take account of (syn. to take into account, consideration) – учитывать, принимать во внимание

presumably (syn. probably) – возможно, вероятно

extra sale – дополнительные продажи

to number – насчитывать

to reach the definition – подвести к определению

the price elasticity of demand – ценовая эластичность спроса

to divide by – разделить на

shortly – зд. вскоре

cross price elasticity – перекрестная эластичность цен

income elasticity – эластичность но доходу

the (own) price elasticity – собственно ценовая эластичность

the most frequently used – наиболее часто используемый

as it has been defined above – согласно определению, приведенному выше

to express smth – выражать что-либо

to obtain (syn. to get) – получить, e.g. to obtain a diploma

a positive percentage change – положительное (плюсовое) процентное изменение

a negative percentage change – отрицательное (минусовое) процентное изменение

movements along a demand curve – движения вдоль кривой спроса

for further brevity – для краткости

to omit the minus sign – опускать знак минуса

it's easier to say – легче сказать

unless there is an explicit warning to the contrary – если только не имеется точного указания на обратное

to add – добавить, сложить

adding, addition – сложение, дополнение

addendum – дополнение, приложение

to imply (syn. to suggest) – предполагать, подразумевать

a rare but not unknown phenomenon – редкое, но встречающееся явление

Assignments

I. Suggest the Russian equivalents

the effect of price and income on demand quantities; the downward slope of the demand curve; movements along a demand curve

II. Replace the parts in italics by synonyms

a minor cut; a slight effect; to consider the size of the market; probably; a clear warning

III. Fill in the gaps with the words and expressions from the text

1. How should we measure __ of the quantity of tickets demanded to the price of tickets?

2. Clearly, £ 1 is a __ cut in the price of a car and will have a negligible effect on the quantity of cars demanded.

3. It is not the absolute number of cars or tickets we should examine but __ in quantity demanded.

4. ___ of demand is the percentage change in the quantity of a good demanded divided by the corresponding percentage change in its price.

5. The price elasticity of demand tells us about movements along __ and the demand elasticity must be a negative number.

6. For further brevity, economists sometimes __ the minus sign.

IV. Check your grammar

Shorten the following sentences without changing their meaning, like this:

Nobody likes prices, which are constantly rising. Nobody likes constantly rising prices.

· A demand curve, which slopes.

· John is a person who works very hard.

· We must develop a policy, which fixes prices better.

· Interest rates, which rise will damp down demand.

· An economy, which is rapidly expanding can get out of control.

· Let's look at the information, which corresponds to this in tabular form. Shorten the following sentences without changing their meaning, like this:

The quantity, which we require is 5000 units. The required quantity is 5000 units.