Semester 4, Lesson 2 (47)

ECONOMIC SYSTEMS

 

I. Read the following words and word combinations and learn their meanings by heart:

 

poverty [`povqti] бідність; inflation [in'fleiSn] інфляція; unemployment [Anim'plOimant] безробіття; a growth [grouT] приріст; increase [`inkri:s] зростання; to increase [In'krJs] зростати; an economic [ikq'nPmik] growth - економічне зростання; Gross Domestic Product [grous do'mestik prodAkt] валовий національний продукт; decline [di'klain] занепад, спад; laws of supply and demand – закони пропозиції і попиту, to ban an import – заборонити імпорт, merchandise [`mWCqndaIz] – товар, provision [prq`vIZqn] – резерви, запаси, забезпечення,

to earn the living – заробляти на прожиття

 

II.     1. Read and translate text 4

        2. Ask as many questions as you can to the underlined sentences.

 

        TEXT 4                                      THE FUNCTIONS OF EVERY ECONOMIC SYSTEM

There are many economic problems - poverty, inflation, unemployment, etc. People in different modern societies solve these problems in different ways.

The great American economist Paul Samuelson said that every economic society has to answer three main questions:

l. What to produce? 2. How to produce? 3. Who gets the product?

The way in which a society goes about answering these fundamental questions is known as its economic system. So a social and institutional order which is developed by people to solve major economical problems can be defined as an Economic System. Thus, these questions are universal and true for any economic system that has the three functions.

The first function is to make a right decision what goods we are going to produce with the given resources — clothes, food, cars, television sets, books, etc.

The second function is to decide how we are going to produce goods and services with the basic recourses of labour, land, etc. What methods are best and the most effective is an important question here.

Once we have produced goods and services we now have to decide how these will be divided, distributed among the people in the economy. So, it is the third function.

Economic system may be classified as traditional, command or market one. Resources are allocated (distributed) in a traditional economy in accordance with traditions and in a command economy by government planners. Resources in a market economy are allocated in accordance with the laws of supply and demand.

When we speak of economic growth we mean an increase in the GDP of a nation. The Gross Domestic Product is the total value of all production in an economy in a year. The GDP is the basic indicator of how well a country's economy performs. The main features that cause such growth are the following: 1) increases in natural resources; 2) increases in the production of goods and services; 3) improvements in technology; 4) improvements in human resource.

However, there is a difference between real and nominal increases.

For example, between 1968 and 1989 the GDP of the UK increased from $ 38 billion to 439 billion. It means an increase of 1045 per cent. But if we take into account inflation an increase is only about 60 per cent. Many examples of this kind may be given concerning Eastern European countries during their transition period.

The GDP is also affected by the indicator of population growth. They say, the GDP grows at 5 per cent and the population grows at 10 per cent. In this case the GDP is declining.

 

III.        Retell the text according to the following questions:

1. What are the main economic problems of nowadays? 2. What are three questions true for any economic system? 3. Name three functions of an economic system. 4. What is the Gross Domestic Product? 5. What does it show? 6. What causes economic growth? 7. Why is there the difference between real and nominal increases? 8. What is the GDP affected by?

 

IV.    Learn the following groups of:

a) synonyms:

Increase—growth, to take into account—to take into consideration, country—state—nation, to grow—to increase, product—goods—merchandise, percent – percentage-interest, to go about – to tackle (a problem or task), profit- income

b) antonyms:

Employment - unemployment, best - worst, universal - local, poverty- wealth, growth-decline, to lend – to borrow,

 

V.         Give 3 forms of the verbs:

to sell, to say, to produce, to develop, to define, to make, to go, to decide,
 to divide, to distribute, to classify, to speak, to buy, to provide, to face, to earn, to show, to think, to lend

 

 

VI.      Try to repeat a tongue twister several times, as quickly as possible, without stumbling or mispronouncing

1.  I can think of six thin things and of six thick things too.

2. Irish wristwatch.

 

VII.   Read and translate the meanings of the following terms. Translate the sentences with them.

 

Proprietor - is an owner, especially of a business or hotel.

1. All complaints should be made to the proprietor.

Property - 1) is a thing or things owned, whether material or abstract; 2) is land and buildings; 3) is a house, factory, etc. and the land around it.

1. Please take care of personal property. 2. The site was bought by a property developer. 3. He has bought a property in the south of France.

Loan - is something lent, usually money, on the condition it will be paid back after an agreed period with interest.

1. He asks the bank for a loan. 2. I'm only asking for a loan. - I'll pay you back. 3. We're repaying the loan over a three-year period.

Import - 1) is an item, a service, an idea or a person that is brought into one country from another; 2) is the action of importing goods.

1. The government eventually banned the import of all electrical goods. 2. An increase in food imports is obvious. 3. The country increases tariffs on the import of manufactured goods. 4. We import tea from India. 5. A provision closely connected with the taxing power is the import-export Clause. 6. Import revenues were to be the major source of revenue of the federal government and should not be reverted to the states.

Export - 1) is an item, an idea or a person that is sent from one country to another to be sold; 2) is the action of exporting goods.

1. There is a ban on the export of ivory. 2. This size is made specifically for export. 3. We export merchandise of all kinds to many countries. 4. Great Britain exports machinery in return for food stuffs. 5. Export-Import Clause prohibits both the federal and state governments from directly taxing exports.

 

VIII.  Give English equivalents of the following words:

заробляти на прожиття, заборона на експорт, за умови, у відповідності з законом, забудовник (власності), піклуватися про, cтаття експортуімпорту, «битися над відповіддю», прийняти рішення, економічні стимули, перехідний період, досягнення мети, зробити вибір, задовільняти чиїсь потреби, ресурси, витрачати гроші, cтикнутися з проблемою, виробляти товари

 

IX.      Translate the following extract in written form:

Human wants are unlimited, but the resources necessary to satisfy those wants are limited. Thus, every society is faced with the identical problem, the problem of scarcity. Since there is not enough of everything to go around, everyone - individuals, business firms, and government - needs to make choices from among the things they want. In the process they will try to economize, to get the most from what they have. With this in mind we can define economics as the social science that describes and analyzes choices from among scarce resources to satisfy its wants. The need to choose is imposed on us by our income, wealth and ability to borrow.

 

X.         Fill in the blanks using verbs in brackets:

 

1.     Although Economics ... a vast subject and precise definitions ... usually very complex, it... not a difficult matter to give a simple answer to the basic question (to be).

2.     Economics ... itself to the study of the material aspects of life (to limit).

3.     We must examine how people have solved or ... to solve this problem (to try).

4.     It... little attention from those of us fortunate enough to live in these areas (to attract).

5.     A large percentage of human race still ... in small self-sufficient communities (to live).

 

XI.    Read, translate text 5 and pay attention to the underlined words:

 

           TEXT 5                                                            ECONOMIC SYSTEMS

The way that a country handles three main questions is based on their economic system. An economic system is basically the decision making that is done to answer these questions.

There are four main types of economic systems present in the world: the traditional economy, the market economy, the command economy, and the mixed economy. But there are also unlimited amounts of variations of these systems.

A traditional economy is an economy that answers the three questions based on their social customs and how the society has dealt with these questions in the past. A country's customs can differ greatly to that of a neighboring country so traditional economies vary from one another.

A market economy is the type of economy in which these questions are answered in the marketplace by the interaction of buyers and sellers. For example, the question of what to produce may be based on what trend is popular right now. The producer would create a product that they think would sell well to the public in hopes to make a profit. The question of how to produce is usually based on the producer's choice. They might decide to produce a product with more workers or they might decide to produce it more with machines and computers to save on labor costs. The question involving for whom to produce is based on the buyer who decides what they want or need and what price they are willing to pay for it.  A market economy is great for motivating workers to work harder because they are only paid based on what they do. A worker can increase their income or profit by working harder and this chance to profit motivates them.

A command economy is an economy where these questions are all answered by the government. Rather than giving individuals the chance to decide what they want or need, the government decides these questions for the country. This type of economy is difficult for the individual because it is impossible for the government to know exactly what is best for each and every citizen. Also, command economies don't help with their workers' motivation because everyone is given the same amount of goods and the same standard of living. A hard working citizen would not be given a chance to benefit from their extra work because they cannot increase their standard of living any greater than it currently is and they will make just as much as a person who exerts little or no effort.

A mixed economy is an economic system that answers the three questions both in the marketplace and in the government. For example, although the United States government plays a role in this economy, a mixed economy usually involves producers working closer with the government than they do in the United States so the US economic system is still a market economy.

The economic system a country has is based on what is best for the country. One person might feel a market economy is best for one country but it may not suit another. Determining how an economy works can help you make better decisions as an individual and participate more in issues involving the economy as a whole.

Answer the questions:

1. What one more type of economic system is described in this text?

2. What type of economic system does Ukraine have? Prove it.

3. Why is a command economy difficult for an individual? Do you agree with the explanation in the text?

4. What is the economic system of a country based on?

5. What type of economic system does the USA have?

 

XII.   Grammar: 1. Learn what tense is used when we change a sentence from Direct into Reported Speech.

Tense

Direct Speech

Reported Speech

present simple

“I like ice cream”

She said (that) she liked ice cream.

present continuous

“I am living in London”

She said (that) she was living in London.

past simple

“I bought a car”

She said (that) she had bought a car OR She said (that) she bought a car.

past continuous

“I was walking along the street”

She said (that) she had been walking along the street.

present perfect

“I haven't seen Julie”

She said (that) she hadn't seen Julie.

past perfect*

“I had taken English lessons before”

She said (that) she had taken English lessons before.

will

“I'll see you later”

She said (that) she would see me later.

would*

“I would help, but..”

She said (that) she would help but...

can

“I can speak perfect English”

She said (that) she could speak perfect English.

could*

“I could swim when I was four”

She said (that) she could swim when she was four.

shall

“I shall come later”

She said (that) she would come later.

should*

“I should call my mother”

She said (that) she should call her mother

might*

"I might be late"

She said (that) she might be late

must

"I must study at the weekend"

She said (that) she must study at the weekend OR She said she had to study at the weekend

* doesn't change.

Occasionally, we don't need to change the present tense into the past if the information in direct speech is still true (but this is only for things which are general facts, and even then usually we like to change the tense):

 

2. Write down these sentences in reported speech. Begin with “The teacher said…..”

1. Adam Smith describes the principal elements of the economic system in his book "The Wealth of Nations".

2. Everything concerning the American economic system interests me.

3. They consider Adam Smith "the father of modern economics".

4. Economic incentives influence our decisions in the world of business.

5. Prices direct market economies.

 

XIII. Individual work: read and translate text 6.

        TEXT 6                                                               Market Economy

In a free market economy, the ‘invisible hand’ of supply-and-demand market forces defines what is produced, in what quantity, and at what price.

A market economy is a type of economic system in which the trading and exchange of goods, services and information takes place in a free market. A market economy may therefore also be known as a free market economy. The phrase is typically applied to countries or administrative regions that follow this approach.

Since free markets are governed by the law of supply and demand, the market itself will determine the price of goods and services, and this information will be made available to all participants. Businesses can decide which goods to produce and in what quantity, and consumers and businesses can decide what they want to purchase and at what price.

The opposite of a market economy is a planned economy, where the government decides what to produce, in what quantity, and to be sold at what price.

Mixed economies blend market and planned economies, meaning that the government will have some role in regulating the market, but all other activity will be driven by the decisions of buyers and sellers.

Since the government will always have some level of regulatory control, no country operates as a free market in the strict sense of the word, but we generally say that market economies are those in which governments attempt to intervene as little as possible, while mixed economies include elements of both capitalism and socialism.

The main characteristics of a market economy are its flexibility and decentralized nature. This type of economic system is more apt to cope up with ever-changing market trends, making it faster and more reactive.

The role of the national and state governments in the market economy is debatable, although it has been found that government interventions are sometimes necessary. In these cases, the government mainly deals with the formation and implementation of rules and regulations and ensures that monopolistic behavior does not obstruct competition in the marketplace.

Regardless of the government’s role, decisions made in a free market economy are primarily made by the ‘invisible hand’ of market forces - and not mandates issued by the government.

 

XIV.        The Game. Email abbreviations:

Recognizing common abbreviations used in emails.

Procedure

You have three minutes to write down the meaning of as many of the abbreviations as possible.

 

                am                   e.g.                          NB                           qty

                asap                etc.                           pcs                          re

                btw                   FYI                          Pls                           ref

                Bw                   i.e.                          pm                           RSVP

                cc                    IMO                         PS                           tbc