Exercise 1. Match the words and their definitions
| 1. Economics | a. a general continuous increase in prices in a country; |
| 2. Resources | b. refers to the number of people who do not have a job which provides them with money; |
| 3. To allocate | c. the study of how individuals and society choose to allocate scarce resources in order to satisfy unlimited wants; |
| 4. Income | d. factors of production classified as land, labour, and capital; |
| 5. Inflation | e. money that is earned from doing work, or received from investments; |
| 6. Unemployment | f. to give (something) to someone as their share of a total amount, for them to use in a particular way. |
Exercise 2. Match the word combinations with the Russian equivalents
| 1. Similarity | a. денежная масса; |
| 2. A descriptive flavour | b. скопление, масса; |
| 3. Decision making | c. сходство; |
| 4. Money supply | d. домашнее хозяйство; |
| 5. Household | e. описательная особенность; |
| 6. Aggregation | f. принятие решений. |
Exercise 3. Finish the sentence adding the information from the text
1. Like chemistry, economics employs … .
2. Economics is the study of how … .
3. Society makes two kinds of choices: … .
4. Macroeconomic decision making considers such “big picture” policies … .
5. Microeconomics is the branch of economics that … .
6. Because the overall economy is the sum or aggregation of its parts, … .
Exercise 4. Fill in the missing words
Encounter macroeconomics branches
allocate consumers microeconomics
1. Unlike history economics is a subject that most students only briefly sometimes not at all, before they begin college.
2. Economics is the study of how society chooses to … its scarce resources to the production of goods and services.
3. … is the branch of economics that studies decision making for the economy as a whole.
4. Examining individual trees, leaves, and pieces of bark, rather than surveying the forest, illustrates microeconomics.
5. The focus of microeconomics is on small economic units, such as economic decisions of particular groups of … and businesses.
6. Macroeconomics and microeconomics are described as two separate, but they are related.
Exercise 5. Answer the following questions
1. What does economics study?
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2. What are the common features between English and economics?
3. What are the main branches of economics? What do the prefixes “micro” and “macro” mean?
4. How do you understand the old saying “Looking at the forest rather than the trees”?
5. What economy-wide variables does macroeconomics examine?
6. What does microeconomics focus on?
ECONOMIC SYSTEMS
Economic systems are classified into four broad categories. These are traditional, command, market, and mixed economies. Each of these systems works well to some degree at different points of time and for different cultures, but some are often better for answering one of the basic economic questions, while other systems may answer other questions more successfully.
Traditional economy is an economic system using social customs to answer the basic economic questions.
Nowadays traditional economies are found primarily in the rural, non-industrial areas of the world. In such areas, there is no national economy. Instead, there are many small segmented economies, each centred
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around a family or tribal unit. Each unit produces most of its own goods and consumes what it produces. The basis economic questions of "what", "how", and "for whom" are answered directly by the people involved, and the answers are usually based on tradition.
In command economies, the basic economic questions are answered by government officials. Government leaders decide what goods and services will be produced, how they will be produced, and how they will be distributed. Individuals have little control or influence over the way the basic economic questions are answered. They are told what to produce, how to produce it, and what they will receive.
Command economies are often called planned economies, because the government engages in elaborate, detailed planning in an effort to produce and distribute goods and services in a way that is consistent with the wishes of government leaders. Command economies usually are also characterized by government ownership of the economy's natural resources and capital goods.
A market economy is the opposite of a command economy. In a command economy, the government answers the basic economic questions. In a market economy, basic economic questions are answered by individual households and businesses through a system of freely operating markets. In market economies, natural resources and capital goods are usually privately owned. In such economies, buyers and sellers have a great deal of economic freedom, and they send signals to one another as they interact through the system. For example, by purchasing more of an item than usual, buyers send a signal to producers to increase production of that item. Similarly, by reducing their purchases of an item, buyers signal producers to reduce production of that item.
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The American economy is predominantly a market economy. Other examples of predominantly market economies include the economies of Canada, Japan, and many of the countries of Western Europe.
In actual practice, there are no real economies in the world that rely solely on freely operating markets or on government decisions to answer basic economic questions. All major economies are mixed economies in the sense that some decisions are made through a system of freely operating, or free markets, by individual households and businesses, and some are made by the government. In mixed economies, a distinction is usually made between the private sector, in which decisions are made primarily by individual households and businesses, and the public sector, in which decisions are made by the government.
Mixed economy is an economic system that relies on a mixture of markets, government commands and tradition. This economic system is used in most countries. The United States is an example of this type of economy. Most decisions there are made by individuals and firms as they exchange goods, services, and resources in private markets. But some decisions are made through the political process of government.
Although several countries own most resources, especially land and large basic enterprises like steel plants, hospitals, and electric power plants, markets are allowed to play a role in certain economic activities, such as dining in restaurants, repairing shoes, selling garden produce, etc. Even China, at one time an extreme example of a command economy, has in recent years taken steps toward allowing some markets to operate.
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In the 1990s there appeared a new term transition economy to describe the countries of Eastern Europe and the former Soviet Union. Transition economies face the task of moving from a centrally-planned system of resource allocation towards a more market-oriented approach.
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