Text 1. What is Economics?

What do you think of when you hear the word economics? Money? Certainly, and perhaps more complicated things like business, inflation and unemployment. Knowledge of economics will help you run a business or manage your personal finances. Very simply, economics studies the decisions people make every day. Every decision we make is a trade-off. If you spend more time working, you earn more money. However, you will have less time to relax. Economists study the trade-offs people make, the reasons for their decisions. They look at the effects these decisions have on our lives and society.

Economics is a social science that seeks to analyze and describe the production, distribution, and consumption of wealth. It is characteristic of any society that while wants of people are growing constantly, the economic resources required to satisfy these wants are limited and scarce. Scarcity of resources makes it necessary to save them. As a result any economic system is trying to find most effective and efficient ways of utilizing resources for the production of goods and services. The rational solution of the problem brings about the maximum economic growth, full employment, stable prices, equitable distribution of revenues, and social security of the needy.

There are different economic systems in the world today. Many economists argue that free enterprise, or the market economy is the most effective system, because businesses are free to choose whom to buy from and sell to and on what terms, and free to choose whom to compete with. It is done through a market, which is a set of arrangements through which buyers and sellers make contact and do business. In the market individual consumers and producers act on their own behalf.

The market functions as a rationing device with the price mechanism as its principal instrument. In free markets, prices direct allocations of inputs of firms that make the most profitable use of them. The market mechanism brings about an allocation of resources that reflect two basic factors: consumer preferences and production costs. The prices which play the coordinating role of the market mechanism are determined through the interaction of demand and supply.

All businesses produce goods and services and seek profits. They all compete with other businesses for inputs of labour, capital and natural resources.

Freedom of enterprise is not total in the market economy. Businesses are subject to laws and government regulations.

Economic machines do not always run smoothly. They are subject to a business cycle that alternates between periods of rapid expansion and periods of recession in which outputs fall and unemployment rises.

Economic environment is determined by the economic policies of the government, fiscal and monetary policies being the major factors. So, if an economic system is to perform well it must deal with many economic challenges.

Task 1. Find in the text English equivalents for the Russian phrases:

Вести бизнес; управлять личными средствами; принимать компромиссные решения; оказывать влияние на нашу жизнь и общество; производство, распределение и потребление материальных благ; ресурсы, необходимые для удовлетворения потребностей людей, ограниченны; нехватка ресурсов делает необходимой их экономию; использовать ресурсы наиболее эффективным образом; производство товаров и услуг; вызывать максимальный экономический рост; справедливое распределение доходов; социальное обеспечение нуждающихся; свободное предпринимательство – наиболее эффективная экономическая система; устанавливать контакты; действовать от своего имени; распределение ресурсов; взаимодействие спроса и предложения; подчиняться законам.

Task 2. Match the verbs from (a) with the nouns from (b) below:

a) to satisfy b) wants

to distribute factors of production

to save goods

to produce services

to utilize policy

to perform enterprise

to run allocation of inputs

to conduct functions

to choose resources

to pursue needs

Task 3. Make sentences putting the words in the correct order:

1. are, different, today, in, world, there, systems, economic, the

2. demand, if, price, exceeds, tends, rise, to, the, supply

3. wants, constantly, people, are, of, growing

4. is, competition, force, the, market, of, an, important

5. producers, must, scarce, economically, and, suppliers, utilize, resources

6. figures, dropped, according, production, to, official, oil, of

7. service, of, consists, the, transport, banking, sector, insurance, and

8. smoothly, run, always, machines, not, economic, do

9. between, rapid, business, and, periods, alternates, recession, cycle, periods, of, expansion, of

10. to, businesses, regulations, government, subject, laws, are, and

Task 4. Complete each sentence with the correct form of the word in italics. In some cases you will have to make a negative:

1. Economy

1) What sort of … system do you have in your country?

2) Strict financial controls ensure that an organization’s resources are used ….

3) Some countries have a mixed … while others have a high degree of state control.

2. engage

1) The line is … so I’ll have to try again later.

2) Cancel all my … for the rest of the day, please.

3. finance

1) Her … adviser says the project will be a success.

2) If the company is … sound we might consider taking it over.

4. grow

1) There is a …awareness of the need to improve productivity.

2) The government is worried about the … in public expenditure.

5. legal

1) It’s … to sell such goods without a proper permit.

2) They questioned the … of the company’s action.

6. possess

1) I had in my … a portion of money.

2) I am a proud …of two kiosks in Plekhanov Street.

3) A small business is one which … at least two characteristics.

7. own

1) The … is held by an individual or a small group.

2) Julie’s father … a business that deals with bulk orders.

3) The … of the bookstore was sitting at his desk.

8. distribute

1) British Leyland … their cars throughout the world.

2) His job is to organize the … of money to students.

9. know

1) We need somebody with a good working … of French.

2) Our company is well-… abroad.

10. establish

1) The … of legal minimum pay is one of the objectives.

2) There he had set out to … his own business.

Task 5. Match the words with their definitions:

1. budget A the people who control a country and make laws

2. business B information

3. convenience C company that sells goods or services

4. data D easiness

5. demand E the amount of money you have for something

6. government F how much people want something

7. inflation G the number of people without work

8. resources H something such as money, workers or minerals

belonging to an organization, country, etc which can be

used to function properly

9. trade-off I rising prices

10. unemployment J giving away something in exchange for something

Can you think of any examples supporting or disagreeing with this idea?