Economics as an academic discipline

МИНИСТЕРСТВО ОБРАЗОВАНИЯ РЕСПУБЛИКИ БЕЛАРУСЬ

УО «Белорусский государственный экономический университет»

Мальчевская О.В.

 

 

What is Economics

 

Электронное учебно-методическое пособие

по дисциплине «Иностранный язык (английский)»

 

 

Минск 2010

 

Рецензент: старший преподаватель кафедры теории и практики английской речи БГЭУ Виршиц Н.И.

 

 

Рекомендовано кафедрой теории и практики английской речи БГЭУ

 

 

Мальчевская О.В.

Экономика как наука. = What is Economics: Электронное учебно-методическое пособие /О.В.Мальчевская – Минск: БГЭУ, 2010. – 18 с.

 

Учебно-методическое пособие содержит тексты для изучающего и ознакомительного чтения, лексический материал, комплекс упражнений и заданий для формирования англоязычных коммуникативных навыков студентов в рамках темы «Экономика как наука» по дисциплине «Иностранный язык (английский)». Предназначено для студентов БГЭУ дневной формы обучения.

 

 

What is Economics

GETTING STARTED

 

1. Discuss the following in pairs or in small groups:

 

• What is the current economic situation in your country? Why?
• Are most of the people you know currently optimistic or pessimistic about the future?
• Would you say that they are saving money for bad times ahead, or spending and borrowing without worrying too much about the future?

2. Read the passage below and comment on the use of the following words

economy, economics, economic, economical, economize.

 

1. A country's economy is the organization of its wealth-producing commerce and industry: Britain's economy is increasingly based on services. The economies of many developing countries are based on cash crops.

1.1 Economy can also mean 'the deliberate saving of money through carefully-controlled spending':

We use recycled paper for reasons of economy. The budget has been cut so we'll have to make economies[1].

1.2 We can refer to something as a false economy when an apparent saving of money in fact results in inefficiency and/or unforeseen extra costs:

Buying second-hand equipment can be a false economy.

1.3 We refer to an economy of scale when there is a reduction in unit cost owing to an increasing the volume of production:

The doubling of output can lead to economies of scale of up to 30%.

2. Economics is the scientific study of a society's money, industry and trade:
She studied economics at the London Business School.

Note that economics is a singular noun (like other subjects, Maths, Physics, Business Studies, etc.) therefore Economics is…

3. Economic means 'related to the economy':

The 1970s and 1980s were a period of political and economic crisis. Economic growth leads to a per capita improvement in living standards.

3.1 Economic can also mean 'cost-effective':

We have to keep wage costs low to make it economic for us to continue production.

4. If something is economical it does not require a great deal of money to operate:

I have a small car because it's more economical to run.

The word can also be used to refer to an efficient way of doing things:

Holding business meetings at an airport can be an economical use of time.

5. The verb is to economize and means 'to save money':

We need to economize in order to keep costs at an acceptable level. It is unwise in the long run to economize on quality.

 

3. Complete the blanks with the words from the text.

 

1. She majored in...at Harvard.

2. What’s the…situation like in your country?

3. Many countries tried to…on fuel in the 1970s.

4….of scale arise when costs do not rise in direct proportion to output.

5. The electric car is more…in its use of energy than an ordinary one.

6. Employing too many part-time staff can be a false…

7. Some people think that floating exchange rates can restrict...growth.

 

USEFUL VOCABULARY

acquire - овладевать

assemble - собирать, созывать

apply – применять, использовать

be concerned with... - быть озабоченным, обеспокоенным

completely -полностью

concept - понятие, концепция

connotation - побочное значение, ассоци­ация, коннотация

compete - конкурировать

competition - конкуренция

concern - касаться

definition - определение

distribute -распределять

demand - спрос

deprived - обездоленный

economics - экономика

economy - экономика, хозяйство

evaluate - оценивать

effort - усилие

examine - рассматривать, исследовать

goods - товар, товар

item - пункт, номер

inflation -инфляция

ingredient - составная часть, ингредиент, компонент

increase - увеличивать

merchandise - товар

means - средство

output - выпуск товаров

per capita - на душу населения

poverty - бедность

realize - осознавать

reduction - уменьшение

resource - pl. запасы, ресурсы

scarcity - недостаток, нехватка, дефицит

scarce - недостаточный, скудный

society - общество

stock - pl. акции, акционерный капитал, фонд

standard of living – уровень жизни

supply - предложение

use - употребление, пользование

wealth - богатство

welfare - благосостояние

vital - жизненный

READING

Text A

1. Read the text to get the gist of it. Sum up what the text says about

- the history of economics

- the choice in economics

- the importance of awareness of economics

Text B

1. Read the text below and do the tasks that follow.

 

Economic Business Cycles

The business cycle or trade cycle is a permanent feature of market economies: gross domestic product (GDP) fluctuates as booms and recessions succeed each other. During a boom, an economy (or at least parts of it) expands to the point where it is working at full capacity, so that production, employment, prices, profits, investment and interest rates all tend to rise. During a recession, the demand for goods and services declines and the economy begins to work at below its potential. Investment, output, employment, profits, commodity and share prices, and interest rates generally fall. A serious, long-lasting recession is called a depression or a slump.

The highest point on the business cycle is called a peak, which is followed by a downturn or downswing or a period of contraction. The lowest point on the business cycle is called a trough, which is followed by a recovery or an upturn or upswing or a period of expansion. Economists sometimes describe contraction as 'negative growth'.

There are various theories as to the cause of the business cycle. Internal (or endogenous) theories consider it to be self-generating, regular, and indefinitely repeating. A peak is reached when (or just before) people begin to consume less, for whatever reason. As far back as the mid-nineteenth century, it was suggested that the business cycle results from people infecting one another with optimistic or pessimistic expectations. When economic times are good or when people feel good about the future, they spend, and run up debts. If interest rates rise too high, a lot of people find themselves paying more than they anticipated on their mortgage or rent, and so have to consume less. If people are worried about the possibility of losing their jobs in the near future they tend to save more. A country's output, investment, unemployment, balance of payments, and so on, all depend on millions of decisions by consumers and industrialists on whether to spend, borrow or save.

Investment is closely linked to consumption, and only takes place when demand and output are growing. Consequently, as soon as demand stops growing at the same rate, even at a very high level, investment will drop, probably leading to a downturn. Another theory is that sooner or later during every period of economic growth - when demand is strong, and prices can easily be put up, and profits are increasing employees will begin to demand higher wages or salaries. As a result, employers will either reduce investment, or start to lay off workers, and a downswing will begin.

External (or exogenous) theories, on the contrary, look for causes outside economic activity: scientific advances, natural disasters, elections or political shocks, demographic changes, and so on. Joseph Schumpeter believed that the business cycle is caused by major technological inventions(the steam engine, railways, automobiles, electricity, microchips, and so on), which lead to periods of ‘creative governments beginning their periods of office with a couple of years of austerity programmes followed by tax cuts and monetary expansion in the two years before the next election.

 

 

2. Complete the sentences using the words given below.

1. Recurrent rises and falls in real GDP over a period of years is called the ­­­­­­­­­___________.

2. A (an)________ is officially defined as two consecutive quarters of real GDP decline.

3.________is measured by the annual percentage change in real GDP in a nation.

4. The_________is the difference between full-employment or potential real GDP and actual real GDP.

5. The phase of the business cycle during which real GDP reaches its maximum after rising during a recovery is called a________.

6. A _______ is a phase of the business cycle during which real GDP reaches its minimum after falling during a recession.

7. An upturn in the business cycle during which real GDP rises is called a______.

Words for reference: recovery; peak; trough; economic growth; GDP gap, business cycle; recession.

 

3. Choose the right answer.

1) The_______phase of the business cycle follows a recession.

a. recovery;

b. recession;

c. peak;

d. tough.

2) The GDP gap is the difference between:

a. frictional unemployment and actual real GDP;

b. unemployment rate and real GDP deflator;

c. full-employment real GDP and actual real GDP;

d. full-employment real GDP and real GGDP deflator.

3) A recession is a business contraction lasting at least:

a. one years;

b. six months;

c. three months;

d. one month.

4) When is the GDP gap largest?

a. During peak periods in the business cycle;

b. During tough periods in thee business cycle;

c. When unemployment rates are relatively low;

d. When cyclical unemployment is close to zero.

 

4. Answer the questions on the text.

 

1. What is a business cycle?

2. Which of the various theories of the business cycle mentioned in the text do you find the most convincing?

 

DEVELOPING VOCABULARY

1. Read and translate the following words. Mind the stress: a) on the first syllable; b) on the second syllable; c) on two syllables

.

a) concept, item, scarcity, scarce, vital, realize;

b) economy, ingredient, resource, society, deprived, assemble, compete, concern, increase;

c) connotation, economics

 

2. Using a dictionary add as many words as possible into the table.

 

Verbs	Adjectives	Nouns
1.		definition
2.		economics
3.		item
4.		society
5.		stock
6.		use
7. to compete
8. to distribute
9.	vital

3. Make adjectives from the followings nouns.

 

scarcity

concept

goods

resource

wealth

 

4. Make nouns from the following verbs.

 

To select

To develope

to assemble

to concern

to evaluate

to increase

to realize

to produce

to distribute

 

5. Match the words with the definitions below.

 

DISCOVERING LANGUAGE

 

1. Complete the sentences. Put the verbs into the correct form:

.

1. Most thing we want … …free in nature. (not/ be)

2. She... a lot of different jobs in the firm. (do)

3. At the moment the director... the problem and the secretary... the telephone. (discuss, answer)

4. As our knowledge... we... more and more opportunities. (grow, exploit)

5. The growth of civilization... largely the development of new wants. (be)

6. They... at five o'clock most days but they... late today. (finish, work)

7. Professional corporations... more common now. (become)

8. We... a meeting next week. (plan)

 

2. Complete the sentences using one of these verbs and verbal phrases in the present simple or the present continuous tenses: a) be, have, appear, mean, do, be going to have, be; b) involve, be going to take, go, mean, change, attempt, should/look, use. Mind the use of the active or passive voice.

 

a)

1. Economics... the first art which man acquired.

2. We... limited resources both in rich countries and poor countries.

3. By wealth the economist... all the real assets which make up our standard of living.

4.... there any justification for protecting certain industries from foreign competition?

5. More and more economists... on the payrolls of large corporations now.

6. They... the skills they need to teach economists.

7. What economists...?

b)

8. It is the directors who determine the direction the business...

9. It... planning to ensure that the business first survives and then flourishes.

10. What it... to be a manager?

11. Every business has to decide where it....

12. Speculators... always to the future and... to anticipate events.

13. Technological innovations and increased competition... the face of British banking now.

14. Banks and other financial institutions... computer technology now.

 

3. Fill in the gaps with the prepositions.

 

1. Graduate schools are principally interested... what they call "theoretical" research.

2. Economic education is not succeeding, because the content... what is being taught is flawed.

3. The tasks of dealing with real-world data, gaining access... existing knowledge are not taught.

4. What is currently taught is connected... criteria for advancement and promotion.

5. Material resources of the world are limited and our ability to make use... these resources is even more limited... our ignorance.

6. The price you pay consists... all the other alternatives you have thereby given up.

7. This fact has nothing to do... any particular form of economic and social organization.

8. Most introductory textbooks … Economics begin … posing the question, “What is Economics…?”

9. Goods can be produced … a variety … methods.

10. Any definition should take account … the guiding idea … eco­nomics which is scarcity.

 

4. Use the words in the brackets in the corresponding forms.

 

1. They (should/ not) tell the manager about their difficulties.

2. We (have) with a lot of difficulties last year.

3. The company (have) reduce prices for its goods if the demand falls.

4. The economist (be) finish the analysis before the manager makes a decision.

5. The seller (be) deliver as soon as the buyer paid for them.

6. He (ought) follow their advice?

7. The firm (have) buy new equipment or it can use old machines?

8. He (have/ not) pay any tax last year.

 

 

5. Insert must, should, have to, be to to complete the sentences.

 

1. The building firm … finish the construction of the new plant this year.

2. There are no parking facilities for manufactured cars, so the company … buy some lend.

3. The workers … produce the first 100 cars by the end of the year.

4. African countries … buy a large part of machinery and equipment for their plants from developed countries.

5. The engineers … follow the instructions how to use new equipment.

6. Last year the local government … (not) spend much on transport facilities as they were well maintained.

7. Companies trading in the world market … ensure high standards.

8. When most countries of Central Europe exhausted there coal resources they … import large quantities gas and oil from abroad.

9. The government … spend more money to involve more children in sports.

10. Such large countries as the USA and Canada … (not) import wheat because they produce this crop on large areas in there countries.

 

 

6. Translate the words in the brackets into the modal verbs.

 

1.Today they (должны будут) prepare the document for tomorrow’s meeting.

2.In the late 1940s, the Japanese government (могло) maintain only a very low level of living for the most part of population. However, the country (смогла) develop its industry by introduction of new technologies.

3.The country did not harvest enough crops last year, so it (была вынуждена) import additional foodstuffs.

4.Some small European industrialized countries (могут) provide large credits for the developing countries.

5.Some economists think that such rapidly developing Asian countries as China and Taiwan (смогут) overtake the USA in high-tech in future.

6.Nowadays some goods manufactured in developing countries (могут) compete successfully in the world market.

7.The scientists (следует) study better how people’s activities influence the earth’s climate and ecology.

8.Belgium (вынуждена была) specialize only in some manufactured goods, for example, in cars.

9.Early in 20th century, developing countries (не могли) as there were strong trade barriers.

10. A small nation (не должна) produce all manufactured goods as it (может) import them at a lower price from other countries.

 

LISTENING

1. Listen to the lecture about different types of Economics. Choose the appropriate endings of the sentences.

 

1. Markets are arrangements through which prices influence how we allocate …

a) resources

b) goods

c) services

 

2. Let’s have a quick look at a 3 kinds of….

a) economics

b) society

c) economy

 

3.This kind of economy is a society where the government …

a) solves problems

b) takes all the decisions

c) sets the goals

 

4.The government decides production and …

a) distribution

b) consumption

c) allocation

 

5. The state owns factories, and it also owns …

a) buildings

b) equipment

c) lands

 

6.In a free market individual people, as yourselves, are free pursue there own ….

a) interests

b) goals

c) targets

 

7.Let’s say you invent a new kind of …

a) TV set

b) mobile phone

c) car

 

8.The government controls a share of

a) output

b) stock

c) benefit

 

9.Most countries are ….

a) mixed economies

b) command economies

c) market economies

 

2. Listen to the lecture again and complete the following statements with the words the lecturer uses.

 

1.Markets are … through which prices influence how we … ….

2.Planing of this kind is obviously very difficult and … to do.

3.The state makes the most important decisions about what … should ….

4.Markets in which governments do not intervene are called … …

5.You do it without any … … or invention.

6.Between this two extremes lies the … economy.

7.It does this through … transfer payments and providing … such as police.

8.Others are … to free market economy.

SPEAKING

1. Speak about economics using key words, phrases and the topic sentences.

 

2. Speak about economics education in the USA and that in our country. Discuss the ques­tions given below the text. You may use the following clichés:

 

What about...?

I think.... If you ask me....

Well, I must say... (for strong opinion).

Don't you think...? (very polite).

Yes, but look.... You don't really think...?

 

3. In groups of two or three discuss the following problems and report back to the class on your major conclusions.

 

1. A large percentage of the human race still lives in very small self-sufficient peasant communities.

2. The inhabitants of cities are totally incapable for themselves, directly, the means of their survival.

3. In industrialized societies a high standard of living is possible only if the organized cooperation of large numbers of people can be guaranteed.

4. Neither people’s wants nor their ability to produce goods and services are constant.

5. The problems of choice are essentially problems of allocation.

6. To an economist, economic society presents itself as a mechanism for survival – a means whereby people are able to carry out the tasks of production and distribution.

 

 

WRITING

1. Write an essay on the following topic: “Whatever the reason the fact is we find ourselves in a situation of scarcity.”

 

 

SUPPLEMENTARY READING

 

 

Text 1

1. Read the text and share your opinions on the problems of primary and secondary job of econo­mists.

 

In the United States, academic economists' primary job is teaching economics. The majority of AEA members do so; the majority of the job listings in the Journal of Economics are for teaching jobs, and such jobs pay the salaries of most academic economists. Since most teaching of econom­ics is the teaching of undergraduates, it would follow that one task of graduate schools is to prepare people to do so.

A second important job of economists is to apply economic analysis to the real world. Economists working for government, business, and consulting firms are supposed to do such applied work. Thus, a second task of graduate schools would be to teach people how to do sound applied work.

But preparing people either to teach economics or to do applied economics is not a primary concern to most graduate economics departments today; in most schools, teaching and applied economics are viewed with derision. Graduate schools are principally interested in what they call "theoretical" research. Graduate professors' research interests guide what is taught; the needs of the students and the world out­side of academia are frequently forgotten.

Economics education is not succeeding, not because of any problems with methods of teaching, but because the content of what is being taught is flawed. Students are taught how to publish in academic eco­nomic journals. The mundane tasks of dealing with real-world data; gaining access to existing knowledge; and critically examining issues, models, and data are not taught. Unless professors acquire, on their own, the skills they need to teach economics, they are not going to have those skills. We believe that the teach­ing of economics is pulled in two separate directions: one reflects what academic economists actually do their technical research, which in turn reflects what they are taught in graduate school; and the other reflects what most economists believe they should do.

What is currently taught is deeply connected with criteria for advancement and promotion. Almost from the start of an economist's training, the economist is directed toward technique, toward arriving at definite answers even when only fuzzy answers exist, toward becoming expert at modeling and game playing, but not recognizing the limitations of models- a lack of imagination that has dire conse­quences when the models influence policy-making. Because of this influence, our concern about the teaching of economics must also reflect a broader concern about economics research — what econo­mists do and why they do it.

Thus we believe that the current situation in graduate economics education is perverse and that the perversity affects everything that economists do.

 

2. Answer to the following questions.

 

1. What is the primary job of economists in the United States?

2. What is the second important job of economists?

3. What is a primary concern to most graduate economics departments?

4. Why is economics education not succeeding?

5. What are the two separate directions of economics teaching?

 

 

Text 2

 

 

1. Read the text and translate it into Russian.

Text 3

 

1. Read the text for general comprehension.

 

METHODOLOGY

 

What do economists do? What are their goals? What procedures do they employ? Economists derive economic principles which are useful in the formulation of policies designed to solve economic problems. The procedure employed by the economist is summarized in Figure 1-1. The economist must first ascertain and gather the facts which are relevant to consideration of a specific economic problem. This task is sometimes called descriptive economics. The economist then puts this collection of facts in order and summarizes them by "distilling out" a principle, that is, by generalizing about the way indi­viduals and institutions actually behave. Deriving principles from facts is called economic theory or "economic analysis." Finally, the general knowledge of economic behavior which economic principles provide can then be used in formulating policies, that is, remedies or solutions, for correcting or avoid­ing the problem under scrutiny. This final aspect of the field is sometimes called "applied economics" or policy economics.

 

POLICIES Policy economics is concerned with controlling or Influencing economic behavior or its consequence.

 

 

PRINCIPLES OR THEORIES Theoretical economics involves generalizing about economics behavior.

 

 

FACTS Descriptive economics is concerned with gathering The facts relevant to a specific problem or aspect of the economy.

 

FIGURE 1-1

 

The relationship between facts, principles, and policies in economics. In studying any problem or segment of the economy, the economist must first gather the relevant facts. These facts must then be systematically arranged, interpreted, and generalized upon. These generalizations are useful not only in explaining econom­ic behavior, but also in predicting and therefore controlling future events.Continuing to use Figure 1-1 as a point of reference, let us now examine this three-step proce­dure in more detail.

Descriptive economics

All sciences are empirical. All sciences are based upon facts, that is, upon observable and verifiable behavior of certain data or subject matter. In the physical sciences the factual data are inorganic. As a social science, economics is concerned with the behavior of individuals and institutions engaged in the production, exchange, and consumption of goods and services.

The first major step, then, in investigating a given problem or a specific segment of the economy is to gather the facts. This can be an infinitely complex task. The world of reality is cluttered with a myr­iad of interrelated facts. The economist therefore must use discretion in fact gathering. One must dis­tinguish economic from noneconomic facts and then determine which economic facts are relevant and which are irrelevant for the particular problem under consideration. But even when this sorting process has been completed, the relevant economic facts may appear diverse and unrelated.

Economic theory

A conglomeration of facts is relatively useless; mere description is not enough. To be meaningful, facts must be systematically arranged, interpreted, and generalized upon. This is the task of economic theory or analysis. Principles and theories — the end result of economic analysis - bring order and meaning to a number of facts, by tying these facts together, putting them in correct relationship to one another, and gen­eralizing upon them: "Theories without facts may be barren, but facts without theories are meaningless."

The interplay between the levels of fact and theory is more complex than Figure 1-1 indicates. Principles and theories are meaningful statements drawn from facts but facts, in turn, serve as a con­stant check on the validity of principles already established. Facts - how individuals and institutions actually behave in producing exchanging, and consuming goods and services change with time. This makes it essential that economists continuously check existing principles and theories against the changing economic environment. The history of economic ideas is strewn with once valid generaliza­tions about economic behavior which were rendered obsolete by the changing course of events.

Text 4

 

1. Read the text and translate it into English.

 

Ресурсы — это факторы, используемые для производства экономических благ. Под эконо­мическими ресурсами понимаются все природные, людские и произведенные человеком ре­сурсы, которые используются для производства товаров и услуг.

Все разнообразие ресурсов можно классифицировать в соответствии с различными под­ходами. Ресурсы подразделяются на следующие виды:

1) материальные ресурсы — земля, или сырьевые материалы, и капитал;

2) людские ресурсы — труд и предпринимательская де­ятельность.

К этому понятию "земля" относятся все естественные ресурсы: пахотные земли, леса, мес­торождения полезных ископаемых, водные ресурсы (ресурсы рек, морей и океанов).

Понятие "капитал, или инвестиционные ресурсы", охватывает все произведенные сред­ства производства, используемые в производстве товаров и услуг и доставке их конечному по­требителю (здания, сооружения, оборудование и т. п.). Процесс производства и накопления средств производства называется инвестированием.

Термином "труд" обозначают все физические и умственные способности людей, применя­емые в производстве товаров и услуг.

Под предпринимательской способностью или, проще, предприимчивостью понимается особый вид человеческих ресурсов, заключающийся в способности наиболее эффективно ис­пользовать все другие факторы производства.

Все экономические ресурсы, или факторы производства, обладают одним общим свой­ством: они редки или имеются в ограниченном количестве. Эта редкость относительна и озна­чает, что ресурсов, как правило, меньше, чем необходимо для удовлетворения всех потребнос­тей при данном уровне экономического развития. Ограничены определенным пределом и па­хотные земли, и полезные ископаемые, и средства производства, и рабочая сила (рабочее вре­мя). Вследствие редкости ресурсов объем производства ограничен. Общественное производ­ство не способно произвести, а следовательно, и потребить весь объем товаров и услуг, кото­рый общество хотело бы получить.

 

 

МИНИСТЕРСТВО ОБРАЗОВАНИЯ РЕСПУБЛИКИ БЕЛАРУСЬ

УО «Белорусский государственный экономический университет»

Мальчевская О.В.

 

 

What is Economics

 

Электронное учебно-методическое пособие

по дисциплине «Иностранный язык (английский)»

 

 

Минск 2010

 

Рецензент: старший преподаватель кафедры теории и практики английской речи БГЭУ Виршиц Н.И.

 

 

Рекомендовано кафедрой теории и практики английской речи БГЭУ

 

 

Мальчевская О.В.

Экономика как наука. = What is Economics: Электронное учебно-методическое пособие /О.В.Мальчевская – Минск: БГЭУ, 2010. – 18 с.

 

Учебно-методическое пособие содержит тексты для изучающего и ознакомительного чтения, лексический материал, комплекс упражнений и заданий для формирования англоязычных коммуникативных навыков студентов в рамках темы «Экономика как наука» по дисциплине «Иностранный язык (английский)». Предназначено для студентов БГЭУ дневной формы обучения.

 

 

What is Economics

GETTING STARTED

 

1. Discuss the following in pairs or in small groups:

 

• What is the current economic situation in your country? Why?
• Are most of the people you know currently optimistic or pessimistic about the future?
• Would you say that they are saving money for bad times ahead, or spending and borrowing without worrying too much about the future?

2. Read the passage below and comment on the use of the following words

economy, economics, economic, economical, economize.

 

1. A country's economy is the organization of its wealth-producing commerce and industry: Britain's economy is increasingly based on services. The economies of many developing countries are based on cash crops.

1.1 Economy can also mean 'the deliberate saving of money through carefully-controlled spending':

We use recycled paper for reasons of economy. The budget has been cut so we'll have to make economies[1].

1.2 We can refer to something as a false economy when an apparent saving of money in fact results in inefficiency and/or unforeseen extra costs:

Buying second-hand equipment can be a false economy.

1.3 We refer to an economy of scale when there is a reduction in unit cost owing to an increasing the volume of production:

The doubling of output can lead to economies of scale of up to 30%.

2. Economics is the scientific study of a society's money, industry and trade:
She studied economics at the London Business School.

Note that economics is a singular noun (like other subjects, Maths, Physics, Business Studies, etc.) therefore Economics is…

3. Economic means 'related to the economy':

The 1970s and 1980s were a period of political and economic crisis. Economic growth leads to a per capita improvement in living standards.

3.1 Economic can also mean 'cost-effective':

We have to keep wage costs low to make it economic for us to continue production.

4. If something is economical it does not require a great deal of money to operate:

I have a small car because it's more economical to run.

The word can also be used to refer to an efficient way of doing things:

Holding business meetings at an airport can be an economical use of time.

5. The verb is to economize and means 'to save money':

We need to economize in order to keep costs at an acceptable level. It is unwise in the long run to economize on quality.

 

3. Complete the blanks with the words from the text.

 

1. She majored in...at Harvard.

2. What’s the…situation like in your country?

3. Many countries tried to…on fuel in the 1970s.

4….of scale arise when costs do not rise in direct proportion to output.

5. The electric car is more…in its use of energy than an ordinary one.

6. Employing too many part-time staff can be a false…

7. Some people think that floating exchange rates can restrict...growth.

 

USEFUL VOCABULARY

acquire - овладевать

assemble - собирать, созывать

apply – применять, использовать

be concerned with... - быть озабоченным, обеспокоенным

completely -полностью

concept - понятие, концепция

connotation - побочное значение, ассоци­ация, коннотация

compete - конкурировать

competition - конкуренция

concern - касаться

definition - определение

distribute -распределять

demand - спрос

deprived - обездоленный

economics - экономика

economy - экономика, хозяйство

evaluate - оценивать

effort - усилие

examine - рассматривать, исследовать

goods - товар, товар

item - пункт, номер

inflation -инфляция

ingredient - составная часть, ингредиент, компонент

increase - увеличивать

merchandise - товар

means - средство

output - выпуск товаров

per capita - на душу населения

poverty - бедность

realize - осознавать

reduction - уменьшение

resource - pl. запасы, ресурсы

scarcity - недостаток, нехватка, дефицит

scarce - недостаточный, скудный

society - общество

stock - pl. акции, акционерный капитал, фонд

standard of living – уровень жизни

supply - предложение

use - употребление, пользование

wealth - богатство

welfare - благосостояние

vital - жизненный

READING

Text A

1. Read the text to get the gist of it. Sum up what the text says about

- the history of economics

- the choice in economics

- the importance of awareness of economics

ECONOMICS AS AN ACADEMIC DISCIPLINE

Most introductory textbooks on economics begin by posing the question, “What is Economics about?” Although economics is a vast subject and precise definitions are usually very complex, it is not a difficult matter to give a simple and sensible answer to this basic question.

Economics is as old as the human race: it is probably the first art which man acquired. When some cavemen went out to hunt while others remained to defend the fire or when skins were traded for flint axes we had economics. But economics as an academic discipline is relatively new: the first major book on economics Adam Smith's "The Wealth of Nations" was published in 1776. Since that time the sub­ject has developed rapidly and there are now many branches of the subjects such as microeconomics, international economics and econometrics as well as many competing schools of thought.

Economics is essentially a study of the ways in which people apply their knowledge, skills, and efforts to the gifts of nature in order to satisfy their material wants. There is an economic aspect to almost any topic we care to mention of education. Economics is a comprehensive theory of how society works. The great classical economist Alfred Marshall defined economics as "the study of a man in the everyday business of life». This is rather too vague a definition.

Economics, then, is about the satisfaction of material wants. It is necessary to be quite clear about this; it is people’s wants rather than their needs which provide the motive for economic activity. We go to work in order to obtain income which will buy us the things we want rather than the things we need. If the resources available to people are insufficient to satisfy all their wants, we say that such resources are scarce. Any definition should take account of the guiding idea in eco­nomics which is scarcity. Virtually everything is scarce; not just diamonds or oil but also bread and water. How can we say this? The answer is that one only has to look around the world to realize that there are not enough resources to give people all they want. It is not only the very poor who feel deprived, even the relatively well-off seem to want more. Thus when we use the word 'scarcity' we mean that:

All resources are scarce in the sense that there are not enough to fill everyone's wants to the point of satiety. We therefore have limited resources both in rich countries and poor countries. The economist's job is to evaluate the choices that exist for the use of these resources. Thus we have another characteristic of economics: it is concerned with choice.

Another aspect of the problem is people themselves; they do not just want more food or clothing, but specific items of clothing and so on.

We have now assembled the three vital ingredients in our definition, people, scarcity and choice. Thus we could define economics as:

The human science which studies the relationship between scarce resources and the various uses which compete for these resources.

The great American economist Paul said that every economic society has to answer three funda­mental questions, What, How and For whom.

What? Which goods shall be produced and in what quantities? What goods are to be produced with the scarce resources: clothes, food, cars, submarines, tele­vision sets? This problem concerns the composition of total output. Having decided the range of goods to be produced, the community must then decide how much of each good should be produced.

How? Most goods can be produced by a variety of methods. The total output of the community depends not only on the total supply of resources available but on the ways in which the resources are combined together. Given that we have basic resources of labor, land, how should we combine them to produce the goods and services which we want?

For whom? This is the third function which an economic system has to perform. The total output has to be shared out among the members of the community. Once we have produced goods and services we then have to decide how to distribute them among the people in the economy. These basic problems are common to all societies no matter the level of economic development they have reached. The methods of solving them will be different from one society to another but the problems are common.

One alternative definition of economics is that it is the study of wealth. By wealth the economist means all the real physical assets which make up our standard of living: clothes, houses, food, roads, schools, hos­pitals, cars, oil tankers, etc. One of the primary concerns of economics is to increase the wealth of a soci­ety, i.e. to increase the stock of economic goods. However, in addition to wealth we must also consider wel­fare. The concept of welfare is concerned with the whole state of well-being. Thus it is not only concerned with more economic goods but also with public health, hours of work, with law and order, and so on. Modern economics has tried to take account not only of the output of economic goods but also of economic such as pollution. The wealth and welfare connotation is thus a complex aspect of the subject.

A basic understanding of economics is essential if we are to be well-informed citizens. Most of the specific problems of the day have important economic aspects, and as voters we can influence the deci­sions of our political leaders in coping with these problems. Should America adopt mandatory price and wage controls to restrain inflation? Should we pass a constitutional amendment requiring the Federal government to balance its budget? Should we attempt to break up the huge corporations which seem to dominate certain segments of our economy? What can be done to reduce unemployment? Are existing welfare programs effective and justifiable? Should we continue to subsidize farmers? Is there any justification for protecting certain industries from foreign competition? Should income be distrib­uted more equally? Since the answers to such questions are determined in large measure by our elect­ed officials, intelligence at the polls requires that we have a basic working knowledge of economics. Needless to say, a sound grasp of economics is more than helpful to politicians themselves!

Economics is also a vital discipline for somewhat more mundane and immediate reasons. Economics is of practical value in business. An understanding of the overall operation of the econom­ic system puts the business executives in a better position to formulate policies. The executive who understands the causes and consequences of inflation is better equipped during inflationary periods to make more intelligent decisions than otherwise. Indeed, more and more economists are appearing on the payrolls of large corporations. To gather and interpret economic information upon which economics gives the individual as a worker and income receiver some insights as how to become more secure in facing the effects of inflation and unemployment.

How can one "hedge" against the reduction in the purchasing power of the dollar which accom­panies inflation? What occupations are the most immune to unemployment?

In spite of its practical benefits, however, economics is an academic, not a vocational, subject. Unlike accounting, advertising, corporation finance, and marketing, economics is not primarily a how-to-make-money area of study. Knowledge of economics may be helpful in running a business or in managing one's personal finances, but this is not its primary objective. In economics, problems are usually examined from the social, not from the personal, point of view. The production, exchange, and consumption of goods and services are discussed from the view point of society as a whole.

2. Choose the best endings to the following statements.

 

1. The first major book on economics Adam Smith's "The Wealth of Nations" was published
a) 1876

b)1776
c) 1676

2. Economics as an academic discipline is relatively....
a) new

b) old

c) dull

3. The guiding idea in economics is....

a) production

b) planning

c) scarcity

4. The economist's job is to evaluate the choices that exist for the use of....

a) resources

b) food

c) machines

5. One alternative definition of economics is that it is the study of....

a) needs

b) wealth

c) services

6. The concept of welfare is concerned with the whole state of....

a) health

b) law

c) well-being

7. The great American economist Paul said that every economic society has to

answer...

a) three fundamental questions

b) two fundamental questions

c) four fundamental questions

 

3. Read the text and decide which of the following statements are correct.

 

1. A basic understanding of economics is essential for citizens.

2. A sound grasp of economics isn't essential for politicians.

3. Economics is a vital discipline for business.

4. The businessman who understands operation of the economic system is better equipped.

5. Economists can't help businessmen to become more secure in facing the effects of inflation.

6. Economics is a vocational subject.

7. Discussing the problems from the personal point of view is the main objective of economics.

 

4. Answer the following questions.

 

1. Can we influence the decisions of our political leaders by voting?

2. Does life require that we have a basic knowledge of economics?

3. Why is economics of practical value in business?

4. Why is economics an academic subject?

5. How does economics as an academic discipline serve society?

6. Why is economics a vital discipline?

7. Is economics a how-to-make money area of study?

8. What is an underlying problem of Economics?

 

5. Make questions using the below information and answer them.

 

1. if economics is as old as the human race;

2. what branches of economics there are;

3. what economics is;

4. what the definition of Alfred Marshall is;

5. what the guiding idea is;

6. who feels deprived;

7. if we have limited resources both in rich countries and poor countries;

8. what people want;

9. how we could define economics;

10. about one of the primary concerns of economics.

 

6. Identify the paragraph in the text that talks specifically about wealth and welfare.

 

7. Find key words, phrases and the topic sentences which best express the general meaning of each paragraph.

 

8. Using the information obtained from the paragraphs make an outline of the text.

 

9. Which of the following expresses the main idea of the text best of all?

 

· Different economics applications.

· Economics for citizens.

· Economics as an academic subject.

 

10. Give the main points of the text in 4 — 7 sentences. Use the following cliches:

 

The text deals with.... The author points out that.... Attention is drawn to the fact that.... It is point­ed out that.... It should be noted that.... The author comes to the conclusion that.... I find the text rather /very....

Text B

1. Read the text below and do the tasks that follow.

 

Economic Business Cycles

The business cycle or trade cycle is a permanent feature of market economies: gross domestic product (GDP) fluctuates as booms and recessions succeed each other. During a boom, an economy (or at least parts of it) expands to the point where it is working at full capacity, so that production, employment, prices, profits, investment and interest rates all tend to rise. During a recession, the demand for goods and services declines and the economy begins to work at below its potential. Investment, output, employment, profits, commodity and share prices, and interest rates generally fall. A serious, long-lasting recession is called a depression or a slump.

The highest point on the business cycle is called a peak, which is followed by a downturn or downswing or a period of contraction. The lowest point on the business cycle is called a trough, which is followed by a recovery or an upturn or upswing or a period of expansion. Economists sometimes describe contraction as 'negative growth'.

There are various theories as to the cause of the business cycle. Internal (or endogenous) theories consider it to be self-generating, regular, and indefinitely repeating. A peak is reached when (or just before) people begin to consume less, for whatever reason. As far back as the mid-nineteenth century, it was suggested that the business cycle results from people infecting one another with optimistic or pessimistic expectations. When economic times are good or when people feel good about the future, they spend, and run up debts. If interest rates rise too high, a lot of people find themselves paying more than they anticipated on their mortgage or rent, and so have to consume less. If people are worried about the possibility of losing their jobs in the near future they tend to save more. A country's output, investment, unemployment, balance of payments, and so on, all depend on millions of decisions by consumers and industrialists on whether to spend, borrow or save.

Investment is closely linked to consumption, and only takes place when demand and output are growing. Consequently, as soon as demand stops growing at the same rate, even at a very high level, investment will drop, probably leading to a downturn. Another theory is that sooner or later during every period of economic growth - when demand is strong, and prices can easily be put up, and profits are increasing employees will begin to demand higher wages or salaries. As a result, employers will either reduce investment, or start to lay off workers, and a downswing will begin.

External (or exogenous) theories, on the contrary, look for causes outside economic activity: scientific advances, natural disasters, elections or political shocks, demographic changes, and so on. Joseph Schumpeter believed that the business cycle is caused by major technological inventions(the steam engine, railways, automobiles, electricity, microchips, and so on), which lead to periods of ‘creative governments beginning their periods of office with a couple of years of austerity programmes followed by tax cuts and monetary expansion in the two years before the next election.

 

 

2. Complete the sentences using the words given below.

1. Recurrent rises and falls in real GDP over a period of years is called the ­­­­­­­­­___________.

2. A (an)________ is officially defined as two consecutive quarters of real GDP decline.

3.________is measured by the annual percentage change in real GDP in a nation.

4. The_________is the difference between full-employment or potential real GDP and actual real GDP.

5. The phase of the business cycle during which real GDP reaches its maximum after rising during a recovery is called a________.

6. A _______ is a phase of the business cycle during which real GDP reaches its minimum after falling during a recession.

7. An upturn in the business cycle during which real GDP rises is called a______.

Words for reference: recovery; peak; trough; economic growth; GDP gap, business cycle; recession.

 

3. Choose the right answer.

1) The_______phase of the business cycle follows a recession.

a. recovery;

b. recession;

c. peak;

d. tough.

2) The GDP gap is the difference between:

a. frictional unemployment and actual real GDP;

b. unemployment rate and real GDP deflator;

c. full-employment real GDP and actual real GDP;

d. full-employment real GDP and real GGDP deflator.

3) A recession is a business contraction lasting at least:

a. one years;

b. six months;

c. three months;

d. one month.

4) When is the GDP gap largest?

a. During peak periods in the business cycle;

b. During tough periods in thee business cycle;

c. When unemployment rates are relatively low;

d. When cyclical unemployment is close to zero.

 

4. Answer the questions on the text.

 

1. What is a business cycle?

2. Which of the various theories of the business cycle mentioned in the text do you find the most convincing?

 

DEVELOPING VOCABULARY

1. Read and translate the