Economic systems

Pre-reading tasks

Task 1

Practice the reading of the following words:

property ['prɒpətɪ] allocation [̗ælə'keɪʃn] desirable [dɪ'za(ɪ)ərəbl] hierarchy ['haɪrɑ:kɪ]

argue ['ɑ:ɡju:] entity ['entətɪ] service ['sɜ:vɪs] benefit ['benɪfɪt]

genetic [dʒə'netɪk] guarantee [̗ɡærǝn'ti:] monetary ['mʌnɪtǝrɪ sacrifice ['sækrɪfaɪs]

Task 2

Make sure you can read these words correctly and say what words in the Russian language help you (to) guess their meaning:

ideology; exclusive; individual; mixed; infrastructures; recession; polyculturalism; credit; identity; conception; respective

Task 3

Give the initial forms of the following words:

given; mixed; seller; might; motivating; best; involves; resources; encourages; more; wages

Task 4

Learn to recognize the following international words:

center; stereo; electronic; system; result; directives; effective; machines; systemic; method; social

Task 5

Read and translate the following words paying attention to the stress displacement:

produce - production - productivity; equal - equality; considered - consideration; decide - decision; industry - industrial; apply - application; possible - possibility

Text A

ECONOMIC SYSTEMS

Task 6

Read the text and be ready to do the exercises.

An economic system is a system that involves the production, distribution and consumption of goods and services between the entities in a particular society. The economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property.

Overview

An economic system is a set of methods and standards by which a society decides and organizes the ownership and allocation of economic resources. Many economic systems overlap each other in various areas. Basic and general economic systems are:

*Market economy (the basis for several "hands off" systems, such as capitalism). *Mixed economy (a compromise economic system that incorporates some aspects of the market approach as well as some aspects of the planned approach).

*Planned economy (the basis for several "hands on" systems, such as socialism).

*Command Economy (a complete "hands on" system, such as the Soviet economic model).

*Traditional economy (a generic term for the oldest and traditional economic systems)

*Participatory economics (a recent proposal for a new economic system)

A market economy is the type of economy that the United States has and these questions are answered in the marketplace by the interaction of buyers and sellers. 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 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.

A mixed economy is an economic system that answers the three questions both in the marketplace and in the government. The economic system a country has is based on what is best for the country.

In a Command Economy or Planned Economy, the central or state government regulates various factors of production. In fact, the government is the final authority to take decisions regarding production, utilization of the finished industrial products and the allocation of the revenues earned from their distribution.

The government-certified planners come second in the hierarchy. They distribute the works among the labor class, who actually undergo the toiling part of the entire process. In case of a Command Economy, both state-owned and private enterprises receive guidance and directives from the government regarding production capacity, volume, modes of production and course of their actions. Planned economic system is broadly segregated into two groups – Centralized and Decentralized. Command Economy is more stable, guaranteeing constant exploitation of the existing resources. It is least affected by financial downturns and inflations. In a carefully planned Command Economic system, both surplus production and unemployment rates remain at a reasonable level.

The steady nature of Planned Economy encourages investments in long-standing project-related infrastructures without any possibility of financial recessions.

Command Economy is just opposite to the concept of Market Economy, with respect to the basic money-making approaches. Command Economic system prefers deliberate planning of the entire money-making process for better results.

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.

Participatory economics, often abbreviated parecon, is an economic system proposed by activist and political theorist Michael Albert and radical economist Robin Hahnel. It uses participatory decision making as an economic mechanism to guide the production, consumption and allocation of resources in a given society. It is described as "an anarchistic economic vision", and it could be considered a form of socialism as under parecon, the means of production are owned by the workers.

What is the difference between macro- and microeconomics?

Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy.

Macroeconomics is the field of economics that studies the behavior of the economy as a whole and not just on specific companies, but entire industries and economies. While these two studies of economics appear to be different, they are actually interdependent and complement one another since there are many overlapping issues between the two fields.

Both micro- and macroeconomics provide fundamental tools for any finance professional and should be studied together in order to fully understand how companies operate and earn revenues and thus, how an entire economy is managed and sustained.

Task 7

Choose the correct preposition

1. _____ a way, we're happy that we didn't get the contract.

a) On

b) In

c) At

2. Are you satisfied ______this quarter's profits?

a) in

b) of

c) with

3. We have three marketing specialists _____ staff

a) on

b) at

c) in

4. Which company do you work _____?

a) no preposition

b) A or C

c) for

5. We have to bring this ______ his attention

a) to

b) towards

6. I think you should invest ______this company.

a) in

b) for

c) on

7. I knew _____the beginning that this wouldn't work.

a) of

b) from

c) no preposition

8. We're looking for a partner we can rely _______.

a) with

b) on

c) at

9. It’s best to take care of such issues ____an early stage, before they become bigger problems.

a) in

b) on

c) at

10. What we like ____ them, is that they always deliver on their promises.

a) of

b) about

c) around

11. He always comes ______time.

a) in

b) at

c) on

Task 8

Match a line in A with a line in B (as in the text)

A	B
mixed productive productive increased price neighboring social financial amount various	objectives recessions countries levels areas goods resources inflation economy sources

Task 9

Match the definitions:

system benefit citizen revenue undergo to sustain

an inhabitant of a city or town something that promotes or enhances well-being the income of a government from taxation a group of interacting, interrelated, or interdependent elements forming a complex whole to endure; sustain; suffer to keep in a condition of good repair, efficiency, or use

Task 10

Find the Russian equivalents to the following English words and word combinations

financial downturn neighboring country labor costs entire economy entire country to take decisions interaction to suit finite resources same amount of goods in various areas

взаимодействие принимать решения одинаковое количество товара соответствовать, подходить ограниченные ресурсы финансовый спад экономика в целом вся страна соседняя страна конвенция о собственности в различных областях

Task 11

Match up the words which have an opposite meaning

to compete to know exactly deduction to eradicate to increase to segregate to create to earn surplus 10 to overlap

a) to spend b) to create c) to unite d) to cope e) needing f) to divide, to separate g) confusion h) to have a vague idea i) decrease j) to damage

Task 12

Match up the words which have a similar meaning

to encourage to know exactly to affect entity to implement scarce customs to argue to suit 10 publicly owned

to quarrel to correspond to make possible deficient privately owned being to act on to cheer to know precisely j) traditions

Task 13

Give the Russian equivalents to the following:

to have a say; decision-making principle; owned by; broadly segregated; under such circumstances; joint rendering of services; to save on labor costs; extra work; convention of property; alternative visions; end product’s price; privately owned; the toiling part of the process

Task 14

Form the necessary parts of speech

NOUN	VERB			NOUN	ADJECTIVE
----	compose			policy	----
arrangement	----			product	----
----	decide			----	possible
interact	----			benefit	----
distribution	----			reason	----
----	refer			----	equal
----	verify			----	specific
----	attempt		----		different
			tradition		----

Task 15

Form the new words by using the following suffixes and prefixes:

-tion; -ly; -rent; -ment; -ic; -able; -er; im-; inter-; -cial; un-;-ful

economy; buy; produce; public; arrange; mutual; govern; profit; possible; connected; benefit; use; employment; differ

Task 16

Read and translate the following sentences paying attention to the meaning of the words and word combinations given below:

a) to mean - значить, означать, подразумевать

mean- средство, состояние, способ, метод; посредственный, средний, плохой

by means of - посредством

means- средства (богатство, состояние)

1. No one means all he says, and yet very few say all they mean, for words are slippery and thought is viscous. (Adams, Henry Brooks)

2. Don't report what he says, report what he means. (Anonymous)

3. You promised eight years ago that you would reduce means testing.

4. They succeeded by means of patience and sacrifice.

5. The most effective means for dealing with the drug problem have generally been those suggested by the affected communities.

6. This remark by no means should be taken lightly.

7. You ought to live within your means.

8. Any replication by any means without prior permission is illegal and action may be taken.

9. Without this, 30 % means nothing at all in absolute terms.

10. With the syrup, mean peak plasma concentrations are attained within 2 hours.

b) only - только, единственно, исключительно

the only - единственный

1. You will only regret your harsh words to me.

2. This is the only pencil I can find.

3. If there were only one more ticket!

4. He left only moments ago.

5. We are the only one to actually offer 5 times more exposure than you do.

c) suit - набор, комплект, одежда, костюм

to suit - быть полезным, соответствовать, подходить

1. Nick hired a navy-blue suit for the wedding.

2. The arrangements suit me.

3. Blue suits you very well.

4. We offer all styles of filming to suit personal tastes.

5. He looks like a homeless man in a thousand dollar suit.

d) to seek - искать, разыскивать, разузнавать

1. I seek wisdom.

2. But persecution sought the lives of men of this character.

3. I can no longer seek fame or glory, nor can I help trying to get rid of my riches, which separate me from my fellow-creatures.

4. Graduates in the physical sciences are most sought after by employers these days.

5. If you wish to seek permission to use material from this site, contact the Webmaster at the address given below.

6. A non-executive director will be appointed shortly and the Company is also seeking to recruit key personnel at both management and operational levels.

e) flow - течение, поток, процесс, плавность( линий)

to flow - течь, протекать, происходить

1. The room was small, but it had good symmetry and flow.

2. The writing is grammatically correct, but it just doesn't flow.

3. Melody flowed from the violin.

4. Oil flow of the well was 500 barrels a day.

5. Contributions flowed in from all parts of the country.

6. “One of the real keys to success is developing a system where you can flow traffic to yourselves" (Marc Klee)

7. "An athlete must learn to forget the details of his or her training to achieve the instinctive sense of flow that characterizes a champion" (Frederick Turner).

Task 17

Translate into English

1. Современные экономические системы промышленно- развитых стран представляют собой смешанный тип экономики, при котором производство, потребление и обмен товарами и услугами полагается, главным образом, на рыночные механизмы спроса и предложения, но со значительной долей государственного вмешательства.

2. Решение вопроса о распределении ограниченных ресурсов в экономике (обществе) зависит оттого, что именно, каким способом и для кого данное общество намерено производить.

3. Рыночная экономика характеризуется частной собственностью на ресурсы и использованием системы рынков и цен для управления экономической деятельностью.

4. Макроэкономика - это один из основных разделов экономической теории, которая изучает поведение экономики как единого целого. Она анализирует взаимодействие факторов, влияющих на рост национального производства, а также такие процессы, как безработица, инфляция и т.д.

5. Микроэкономика _ это один из основных разделов экономической теории, изучающей поведение отдельных экономических единиц, их взаимодействие на рынках, в результате которого формируются цены на производимые товары и услуги и т.д.

6. Микроэкономика стремится к детальному рассмотрению поведения какой-либо экономической единицы, при этом не уделяя достаточного внимания косвенному воздействию этого показателя на другие экономические единицы и на экономику в целом.

7. Существует множество критериев, на основе которых выделяют различные виды благ. Блага можно классифицировать на:

1) материальные, включающие естественные дары природы (землю, воздух, воду, климат); продукты производства (продукты питания, здания, сооружения, машины, инструменты);

2) нематериальные, имеющие форму полезной людям деятельности и воздействующие на развитие способностей человека. Они создаются в непроизводственной сфере: здравоохранение, образование, культура и др. К ним относятся внутренние блага, данные человеку природой – способности к науке, голос, музыкальный слух и т.п., а также внешние блага – то, что дает внешний мир для удовлетворения потребностей (репутация, деловые связи, протекция и т.д.).

Жизнедеятельность человека в процессе хозяйствования проявляется, с одной стороны, в трате энергии, ресурсов и т.д., а с другой – в соответствующем пополнении жизненного расхода. При этом экономический субъект (т.е. человек в хозяйственной деятельности) стремится действовать рационально – путем сопоставления затрат и выгод.

8. Общей исходной предпосылкой при постановке и решении экономических задач является выбор вариантов поведения в условиях ограниченности ресурсов. Этот выбор осуществляют все: потребители, предприятия и правительство. Экономисты исходят в своих рассуждениях об экономическом выборе из гипотезы о рациональном поведении людей.

9. Рыночная экономика в своем чистом виде предполагает наличие ответственных и самостоятельных производителей и потребителей. Производители производят те товары, от продажи которых они рассчитывают получить прибыль. Следовательно, еще до начала производственной деятельности они должны знать, для кого производят продукцию, какими потребительскими свойствами она должна обладать, когда ее нужно произвести и сколько.

10. Система всегда находится в развитии. Современный мир характеризуется наличием самых разных экономических систем, которые, возникая в тот или иной исторический период, не оставались неизменными, а постоянно развивались. Чтобы лучше понять то или иное явление в жизни общества, необходимо наблюдать его не у одного какого-либо народа и не в одну какую-либо эпоху, а рассматривать его в процессе исторического развития.

Task 17

Answer the following questions:

1. Give the definition of an economic system.

2. Is economic system a part of a social system?

3. How many economic systems are there?

4. What do economic systems have in common and what is different?

5. What matters in defining whether a certain system is based on the market approach or the socialist approach?

6. What are/were the strength and weakness in each economic system?

7. What is/are the main difference(s) between macro- and microeconomics?

8. Are macro- and microeconomics interdependent? Prove it.

9. What economic system(s) is/are particular for developed and developing countries?

10. What are the main objectives of economic policy?

Text B

Gross domestic product

Task 19

Read the text to yourself and be ready for a comprehension check-up

The gross domestic product (GDP) or gross domestic income (GDI), a basic measure of an economy's economic performance, is the market value of all final goods and services made within the borders of a nation in a year. GDP can be defined in three ways, all of which are conceptually identical. First, it is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time (usually a 365-day year). Second, it is equal to the sum of the value added at every stage of production (the intermediate stages) by all the industries within a country, plus taxes less subsidies on products, in the period. Third, it is equal to the sum of the income generated by production in the country in the period—that is, compensation of employees, taxes on production and imports less subsidies, and gross operating surplus (or profits).

The most common approach to measuring and quantifying GDP is the expenditure method:

GDP = private consumption + gross investment + government spending + (exports − imports), or,

GDP = C + I + G + (X − M).

"Gross" means that depreciation of capital stock is not subtracted out of GDP. If net investment (which is gross investment minus depreciation) is substituted for gross investment in the equation above, then the formula for net domestic product is obtained. Consumption and investment in this equation are expenditure on final goods and services. Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending. Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.

Components of GDP

Each of the variables C (Consumption), I (Investment), G (Government spending) and X − M (Net Exports) (where GDP = C + I + G + (X − M) as above)

(Note: * GDP is sometimes also referred to as Y in reference to a GDP graph)

• C (consumption) is private consumption in the economy. This includes most personal expenditures of households such as food, rent, medical expenses and so on but does not include new housing.

• I (investment) is defined as investments by business or households in capital.

• G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government.

• X (exports) represents gross exports. GDP captures the amount a country produces, including goods and services produced for other nations' consumption, therefore exports are added.

• M (imports) represents gross imports.

Types of GDP and GDP growth

GDP income account

The formula for GDP measured using the income approach, called GDP(I), is:

GDP = compensation of employees + gross operating surplus + gross mixed income + taxes, less subsidies on production and imports

• Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such programs.

• Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses.

• Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses.

The sum of COE, GOS and GMI is called total factor income. The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production.

GDP vs GNP

GDP can be contrasted with gross national product (GNP, or gross national income, GNI), which the United States used in its national accounts until 1992. The difference is that GNP includes net foreign income (the current account) rather than net exports and imports (the balance of trade). Put simply, GNP adds net foreign investment income, unlike GDP.

Task 20

Copy out the dominant noun/verb/adjective for each part and find the words associated with them in meaning.

Task 21

Read each paragraph and find the sentence(s) that reveal(s) the idea of the title

Task 22

Copy out the topic sentence in each paragraph

Task 23

By comparing the Modal Verbs used, state which of the possibilities discussed is considered to be more realistic.

Task 24

a) State the type of Conditional in the sentences beginning with if

b) State the idea of the sentences beginning with -ing words and state the function of -ing words

Task25

Answer the questions:

1. What does the word ‘gross’ mean?

2. What is the central concern of welfare economics?

3. What is the difference between GDP and GDI?

4. How is GDP calculated?

5. What is Gross National Income?

6. State the difference between GDP and GNI?

7. What is saving and spending?

8. What is the difference between basic prices and final prices?

9. What is investment?

10. What are the two parts of consumption?

Task 26

Make a plan to retell the text.

Task 27

Write a brief summary of the text. Use the following key-patterns:

1. As the title implies the article describes…	b) Согласно названию, в статье описывается
2. It is spoken in detail....	c). Подробно описывается…
3 .The text gives valuable information about	d). В тексте дается информация о…
4. . Great importance is also attached to	e) Большое внимание уделяется…
5 It is clear from the text that	f) Из содержания текста очевидно, что…

Task 28

Points for discussion

1. GDP as a good indicator of improvements in welfare of a society.

2. The importance of GDP on determining economic growth.

3. Effects of personal income tax policy on GDP.

4. Who produces the nation’s goods and services?

5. Who purchases the goods and services produced?

6. What is the difference between GDP and each of the following:

1. Gross National Product

2. National Income

3. Personal Income

UNIT 3

If you focus on results, you will never change.

If you focus on change, you will get results.(Unknown)