An introduction to economics
TOPIC 1.
Study carefully the meaning of the following phrases and word combinations to avoid any difficulty in understanding the following text.
household – дом, хозяйство
account – счет
to take into account – брать в расчет
to allocate – размещать, распределять
scarce – недостаточный, скудный
scarcity – дефицит
to satisfy unlimited wants – удовлетворять неограниченные потребности
goods and services – товары и услуги
commodity - товар, предмет широкого потребления
resource – запасы, ресурсы, средства; природные богатства
to invest – вкладывать
investment – вложение
income – доход
national income – национальный доход
personal income – личный доход
personal disposable income - личный доход после уплаты налогов
facet – аспект
to recur – повторяться, возвращаться
fraction - доля, порция, часть
total production – общая производительность
total employment – общая занятость
the rate of change of overall prices – коэффициент изменений предельных цен
rate of economic growth – темпы экономического роста
layoff – увольнение
economic activity – экономическая активность
determinants – показатели, определители
values – ценности
meaningful totals – значительные итоги
gross domestic product (GDP) – валовой внутренний продукт (ВВП)
attainment – достижения
price stability – стабильность цен
COMPREHENSION CHECK
I. Give English equivalents to the following:
Экономика, экономическая теория, производство, потребление, распределение, обмен, дефицит, доход, уровень жизни, изучение поведения в сферах производства, физические лица, ограниченность ресурсов, безграничные потребности, удовлетворение своих желаний и потребностей, предмет экономической теории, малые экономические единицы, крупномасштабные экономические явления, экономический анализ, занятость населения, товары и услуги, национальный доход, стабильность, оптимизация, нехватка рабочей силы.
II. Read the international words and guess their meanings:
Economic activity, economic system, macroeconomics, microeconomics, to produce, to operate, to protect, to analyze, to finance, to manufacture, to specialize, to focus, to affect, service, school, hospital, garage, fact, base, production, material, industry, radio, strategy, status, export, import, institution, distribution, division, investment, history, organization, period, spectrum, agriculture, essential, basic, industrialized, oriented (policy), national, financial, social, major, fact, base, total, primarily, public.
III. Are the following statements true or false?
1. There is no brief description of the content and character of economics.
2. Economics is only a theoretical science.
3. Economics deals with the problem of income, employment and interest rates.
4. Economics also deals with weather forecasting, psychology and fantasy writing.
5. In recent years economists switched to the new fields, such as political science and sociology.
6. Macroeconomics deals with global questions only.
7. Macroeconomics means economics in the large because it asks more questions than microeconomics.
8. Macroeconomist analyses activities of families and large firms.
9. Such concepts as gross domestic product, national income and personal disposable income serve as meaningful totals.
10. Macroeconomic analysis shows the development of the economic theory.
IV. Fill in the gaps using the words given:
Scarcity, income, interact, society, trends, management, economics, economy
1) The word ______ comes from the Greek word for "one who manages a household.''
2) Like a household, a _____ faces many decisions.
3) The _____ of society's resources is important because resources are scarce.
4) _____ means that society has less to offer than people wish to have.
5) _____ is the study of how society manages its scarce resources.
6) Economists also study how people _____ with one another.
7) Economists analyze forces and _____ that affect the economy as a whole, including the growth in average _____, the fraction of the population that cannot find work, and the rate at which prices are rising.
V. Translate into English
1. Мировая экономика – это наука, которая изучает состояние экономики в разных странах мира.
2. Экономика - общественная наука, изучающая поведение в сферах производства, потребления, распределения и обмена. Экономисты анализируют происходящие в этих сферах процессы и исследуют их последствия для физических лиц, организаций, например фирм, и общества в целом.
3. Состояние экономики (экономической среды) имеет большое значение для успешной деятельности фирм.
4. При изучении экономики необходимо различать позитивную и нормативную экономические теории. Если в позитивной теории мы можем оставаться беспристрастными, независимо от наших политических убеждений, то нормативная теория основывается на личной системе ценностей.
5. Позитивная теория может предложить ряд возможных альтернатив, из которых индивид или общество в целом выбирают наиболее приоритетные.
6. Макроэкономика – это один из основных разделов экономической теории, которая изучает поведение экономики как единого целого.
7. Макроэкономика анализирует взаимодействие факторов, влияющих на рост национального производства, а также такие процессы, как безработица, инфляция и т.п.
8. Объектом макроэкономики является именно взаимодействие этих величин внутри экономики, при этом сами эти величины рассматриваются упрощенно, абстрактно.
9. 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.
10. Микроэкономика стремится к детальному рассмотрению поведения какой-либо экономической единицы.
TOPIC 2.
THE BASIC ECONOMIC PROBLEM
The central problem of economics is to determine the most efficient ways to allocate the factors of production and solve the problem of scarcity created by society’s unlimited wants and limited resources. In doing so, every society must provide answers to the following three questions:
1. What goods and services are to be produced, and in what quantities are they to be produced?
2. How are those goods and services to be produced?
3. Who will receive and consume (get to use) those goods and services?
The solution of these questions depends on the economic system of each particular society.
The economic system determines how the nation's resources of land, labour, machinery and raw materials are allocated and used. The problem of allocating resources is a central theme of economics, because most resources are scarce. The allocation of scarce resources and the distribution of the product of those resources are a major part of the subject matter of economics.
In Western economies many resources are allocated to whoever is willing and able to pay the most for them. The distribution is determined by the amounts of money paid as wages, rent and other forms of income.
A country's economic system is its way of organizing economic activities, including the ways in which people come to specialize in particular tasks they do best. The more goods and services can be produced from limited resources, the higher the standard of living enjoyed by the country’s citizens.
Different economic systems answer the “what”, “how” and “for whom” questions differently. There is a variety of economic systems, which can be divided into three groups:
a) Market or decentralized economic systems.
In a true market economy the government plays no role in the management of the economy, the government does not intervene in it. The system is based on private enterprise with private ownership of the means of production and private supplies of capital.
b) Planned or centralized economic systems, in which economic decisions are taken by government planners.
Planned economies are economies with a large amount of central planning and direction, when the government takes all the decisions, the government decides production and consumption. A planned economy is simple to understand but not simple to operate.
c) Mixed economic systems, in which many economic activities are organized in a decentralized way, but in which the government takes some of the most important economic decisions. In mixed economies some resources are controlled by the government whilst others are used in response to the demands of consumers. In a mixed economy the government and the private sector interact in solving economic problems.
In practice, every economic system is mixed to some extent.
COMPREHENSION CHECK
I. Give English equivalents to the following:
Распределять ресурсы, удовлетворять неограниченные потребности, владеть и управлять бизнесом, вмешиваться, частное предпринимательство, частная собственность на средства производства, частный капитал, распределение доходов, правительственные власти, основные экономические проблемы, состояние экономики, уровень занятости, распределять ресурсы, имеющиеся в распоряжении ресурсы, иметь высокий жизненный уровень, факторы производства, зависеть от, размещение и распределение ресурсов, быть конкурентоспособным, большой объем, центральное планирование и руководство, частный сектор, взаимодействовать в решении проблем.
II. Read the words and guess their meanings:
Factors of production, production and consumption, natural resources, capital and entrepreneurship, competitive, state ownership, public property/common ownership, large-scale intervention, state-controlled industry, considerable economic freedom of choice, the government controls a share of the output, labour-intensive production, to allocate the factors of production, the problem of allocating resources, the subject matter of economics, money paid as wages, rent and other forms of income, to specialize in particular tasks, the standard of living, in a decentralized way, in response to the demands of consumers, in solving economic problems.
TOPIC 3.
FACTORS OF PRODUCTION
In economic theory, factors of production (or productive inputs) are the resources employed to produce goods and services. The factors of production include natural resources, human resources, capital and entrepreneurship. Each factor of production has a place in economic system, and each has a particular function. People who own or use a factor of production are expecting a “return or reward”. This generates income which, as it is spent, becomes a kind of fuel that drives the economy.
Natural Resources or «Land»
Natural resources are the things provided by nature that go into the creation of goods and services. They include such things as minerals, wildlife and timber resources. Economists also use the term «land» when they speak of natural resources as a factor of production. The price paid for the use of land is called rent. Rent becomes income to the owner of the land.
Human Resources or «Labor»
Economists call the physical and mental effort that people put into the creation of goods and services labor. The price paid for the use of labor is called wages. Wages represent income to workers, who own their labor. Human labour produces both goods and services. The national labour force are those people who are available for work within the nation, i.e. the working population.
Capital
To the economist, physical capital (or «capital» as it is commonly called) is something created by people to produce other goods and services. A factory, tools and machines are capital resources because they can be used to produce other goods and services. The term capital is often used by business people to refer to money they can use to buy factories, machinery and other similar productive resources. Payment for the use of someone else's money, or capital, is called interest. But money, as such, produces nothing: hence, it is not to be considered as an economic resource. Real capital— tools, machinery, and other productive equipment - is an economic resource; money or financial capital is not. The process of producing and accumulating capital goods is known as investment.
Entrepreneurship
Closely associated with labor is the concept of entrepreneurship, the managerial or organizational skills needed by most firms to produce goods and services. The entrepreneur brings together the other three factors of production. When they are successful, entrepreneurs earn profits. When they are not successful, they suffer losses. The reward to entrepreneurs for the risks, innovative ideas and efforts that they have put into the business, they obtain the money that remains after the owners of land, labor and capital have received their payments.
COMPREHENSION CHECK
I. Give Russian equivalents to the following:
А means of exchange, a means of measuring, in return for a fixed payment, in the strict economic sense, financial reward, in terms of money, human labour, distinctions of social class, payment of wages, national labour force, it should be noted, self-employed, fixed wage, to receive surplus, reward of private enterprise, a negotiated rate, a result of productive work, to share the surplus, to pay for, other items, to bear risk, the risk has been justified, as a return on the investment, previous business activities, a deliberate policy of saving surpluses, to create capital, the assets possessed by a person.
II. Give English equivalents to the following:
Производительные силы, производственные отношения, производство материальных благ, оказывать воздействие, взаимосвязь производительных сил и производственных отношений, форма собственности на средства производства, формы распределения материальных благ, жизненные интересы, взаимоотношения людей, способность человека к труду, количество и качество, квалифицированная рабочая сила, создавать прибавочную стоимость, постоянный капитал, переменный капитал, оборотный капитал, готовый продукт.
III. Make sentences by adding a suitable beginning to the following:
1. …. but with the payment of wages in return of work.
2. ….. is not labour in the strict economic sense.
3. ……is known as profit.
4. ……in return for a fixed payment.
5. ……the working population.
6. ……also a means of measuring the value of men’s labour.
IV. Agree or disagree with the following statements:
1. There is always an element of risk in starting a business.
2. If the business is not successful, the risk has been justified.
3. All railways, houses, land, airports shares are capital.
4. Profit is the surplus which accumulates as a result of productive work.
5. The employees, the employers and the providers of capital bear the risk.
6. A deliberate policy of saving surpluses may be only collective.
7. The employer obtains the surplus after he pays the wages of his employees.
VI. Translate into English
1. Для удобства производительные ресурсы обычно делят на четыре основные категории, которые называются факторами производства.
2. Труд — деятельность людей, направленная на удовлетворение потребностей индивида и общества.
3. Как экономическая категория, труд представляет собой один из факторов производства.
4. Процесс труда включает в себя три основных фактора:
- целесообразную деятельность человека;
- предмет, на который направлен труд;
- средства труда, с помощью которых человек воздействует на предмет труда.
5. Капитал — это совокупность отношений и предметов, выраженных в виде стоимости, способной приносить прибавочную стоимость или убыток.
6. Капитал включает в себя все те производительные ресурсы, которые созданы людьми: инструменты, машины, инфраструктуру, а также нематериальные вещи, например, компьютерные программы.
7. Распределение любого данного количества блага может быть улучшено посредством обмена.
8. Предпринимательская способность - в экономической науке - способность человека:
- использовать определенное сочетание ресурсов для производства товара;
- принимать разумные последовательные решения;
- применять новшества; и
- идти на (оправданный) риск.
9. Предпринимательством можно заниматься в разных сферах. Помимо общего предпринимательства, выделяют социальное и технологическое предпринимательство.
10. Земля - один из четырех основных факторов производства, который для того, чтобы стать производительным, обычно должен соединяться с трудом и капиталом.
TOPIC 1.
AN INTRODUCTION TO ECONOMICS
Economics is a social science that seeks to analyze and describe the production, distribution, and consumption of goods and services. Economics studies how individuals and societies seek to satisfy needs and wants through incentives, choices, and allocation of scarce resources. As a social science economics studies the social relationship of individuals. But unlike other social sciences, economics concentrates its study on the economy.
The word "economics" is from the Greek words οἶκος [oikos], meaning "family, household, estate," and νόμος [nomos], or "custom, law," and hence literally means "household management" or "management of the state." The management of society's resources is important because resources are scarce. Scarcity means that society has less to offer than people wish to have. Just as a household cannot give every member everything he or she wants, a society cannot give every individual the highest standard of living to which he or she might aspire.
Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by a single central planner but through the combined actions of millions of households and firms.
The major divisions of economics include microeconomics, which deals with the behaviour of individual consumers, companies, traders, and farmers; and macroeconomics, which focuses on aggregates such as the level of income in an economy, the volume of total employment, and the flow of investment.
Macroeconomics is the study of entire economy. The word macroeconomics meanseconomics in the large. Macroeconomists measure overall economic activity, analyse the determinants of such activity by the use of macroeconomic theory: forecast future economic activity and attempt to formulate policy responses designed to reconcile forecasts with target values of production, employment and prices. An important task of macroeconomics is to develop ways of aggregating the values of the economic activities of individuals and firms into meaningful totals. To this end such concepts as gross domestic product (GDP), national income, personal income, and personal disposable incomehave been developed. Macroeconomics is concerned with such major policy issues as the attainment and maintenance of full employment and price stability.
Microeconomics is the study of parts of the economy. The word ”micro” means small and microeconomics means economics in the small. The optimising behavior of individual units such as households and the firms provides the foundation for microeconomics.
Microeconomists may investigate individual markets or even the economy as a whole, but their analyses are derived from the aggregation of the behavior of individual units. Microeconomic theory is used extensively in many areas of applied economics. It is used, for example, in industrial organization, labor economics, international trade, cost-benefit analysis and many other economic subfields.
While microeconomics and macroeconomics view the economy from different perspectives, both are important. Scientific theories are used to explain economic activity in the world. The theories consist of sets of economic principles that abstract from the real world, similar to the way a road map abstracts from the world. A principle is obtained by continuously testing a hypothesis to see if it corresponds to activity in the world. Positive economics describes the way the world actually operates, and normative economics suggests how the world should operate. Positive economics is based on testable hypothesis, which can be proved false. Normative economics is based on an individual’s values, which cannot be proved either right or wrong.
The areas of investigation in economics overlap with other social sciences, particularly political science, but economics is primarily concerned with relations between buyer and seller. The economist seeks to identify the benefits and costs of any activity. Since marginal changes in benefits and costs from an activity are the basis for most choices, such changes tend to attract the economist’s attention. Economists also use economic theories to recommend policies to the government.