8. Economic growth. Costs of economic growth.

Economic growth is a mixed blessing. It has both advantages and disadvantages. The advantages of growth are clear. As people produce more goods and services, the average standard of living goes up. Growth also keeps people employed and earning income.

Costs of economic growth are also very different. Some of them are: a)use of natural resources cannot be replaced; b)generation of waste products; c)destruction of natural environment; d)uneven growth among different groups in society. When people tries to control these problems it takes money to cover the costs.

To survive, every economy needs people, capital and natural resources, that depend on one another. If these resources are overused to promote economic growth now, future growth may be much slower. Growth, however, sometimes provides solution to the problems.

9. The nation’s economy. Gnp. Economic indicators.

Countries try to measure the success of their national economies. Analyzing a national economy involves many factors, some of which cannot be measured by data. One measure on an economy’s success is gross national product.

Gross national product is the value of all goods and services produced for sale during one year. It is a standard by which the economy can be judged. There are two methods to determine GNP: flow-of-product method and earning-and-cost approach. But GNP gives no indication of future growth. So, economists develop special economic indicators

Business and government planners, investors and consumers make decisions based on their expectation of future economic performance. To help predict expansion or contraction of the economy, government economists identified a number of indicators. They fall into three categories: leading, coincident and lagging. Leading indicators rise or fall just before a major change in economic activity. Coincident indicators change at about the same time that shifts occur in general economic activity. Lagging indicators rise or fall after a change in economic activity.

10. Money. Banking and monetary policy. Money: role, forms, functions.

Money is necessary in most economies. Is serves as a means of exchange and a store and standard of value. Currency, used in modern societies, fulfills these functions. In addition to currency, people may use checks and credit cards to purchase goods and services. All of these forms of money and near money help the economy run smoothly.

The familiar paper bills and metal coins are only two of the forms money can take. In the past many things were used as the means of exchange — beads, shells, cattle, stones etc.

In most modern economies money serves several functions. As a means of exchange money is used to trade for goods and services. As a store of value people use money to save their wealth for the future. Money can be kept in a bank or a safe or a pocketbook until it needed. As a standard of value money is used to compare the worth of one product with that of another. The value of all goods and services the economy produces can be determined by adding up their prices.

Money is very important in our society. The market system determines how much money everything is worth.

There are two mail types of bank:

Central banks control the banking of the whole country and work together with the government to supervise the country’s economy. The main functions of the central banks are the following: to issue banknotes and coins, to look after the nation’s gold reserves, to make sure that the national currency keeps its value, to act as bankers for the national government and the other banks in the country, and to keep inflation under control.

Commercial banks are the public or private banking institutions which people use for their everyday money matters.