Ex.19. Read the text. Choose the best sentence A-G to fill in each of the gaps 1-7. Do not use any letter more than once. There is an example at the beginning

0 There are several reasons that economists have identified.

A Another example of externalities but in the form of external benefits is public education.

B Then, with less money in the economy to spend and higher interest rates, both spending and prices will tend to fall, or at least increase less quickly.

C This kind of good is called a public good because no private business could sell such goods and services to citizens of a nation and stay in business.

D Over the last 40 years these social programs have been rapidly growing parts of government spending and taxation programs in most industrialized economies.

E By intervening, government can force the producers and consumers of the product to pay the cleanup costs. In essence, this economic role of government is simply to make those who enjoy the benefits of selling and consuming a product pay all of the costs of producing and consuming it.

F Without such assurances, few people are going to risk their time and money in enterprises whose rewards may possibly go to the state or some other group.

G One such role is to provide a widely accepted, stable currency that eliminates the need for cumbersome and inefficient systems of barter, and to maintain the value of that currency through policies that limit inflation (an increase in the overall level of prices of goods and services).

Ex.20. Answer the following questions. Refer to the text if needed.

1. Why are private companies unable to provide such public services as national defense?

2. What are externalities?

3. Providing examples, explain the difference between external costs and external benefits.

4. What is intellectual property? How can it be protected by the government?

5. What is a social safety net?

6. Supporters of wealth redistribution argue that this role of government limits the concentration of wealth and maintains a wider diffusion of economic power among households. Those who oppose major redistribution programs counter that additional taxes on high-income families decrease the incentives of these groups to work, save, and invest, which adversely affects the overall economy. Which opinion do you support?

7. What policies does the government use to stabilize the economy in periods of inflation and unemployment?

8. There is one more role of governments in market economies not discussed in the above text, namely maintaining an effective degree of competition in the economic system. Explain how this can be done.

TEXT C: INVISIBLE HAND

Before reading

What do you think Adam Smith meant by the “invisible hand” of the market? What does the “invisible hand” do?

Reading

Read the text and do the tasks following the text.

(1) By following their own self-interest in open and competitive markets, consumers, producers and workers are led to use their economic resources in ways that have the greatest value to the national economy – at least in terms of satisfying more of people’s wants. The first person to point out this fact in a systematic way was the Scottish philosopher Adam Smith, who published his most famous book, An Inquiry Into the Nature and Causes of the Wealth of Nations, in 1776. Smith was the first great classical economist, and among the first described how an economy based on a system of markets could promote economic efficiency and individual freedom, regardless of whether people were particularly industrious or lazy.

(2) Smith argued that if people are naturally good and kind, a market economy offers them a great deal of freedom to carry out their good deeds, backed up by an efficient system of production, which generates more material goods and services for them to use in doing those good works. But what if people are selfish, greedy, or lazy?

(3) Anyone who wants to enjoy more of the material goods and services produced in a market economy faces strong economic incentives to work hard, spend carefully, and save and invest. And most successful businesses have to produce good products, sell them at market prices, pay their employees market wages, and treat their customers courteously – even if that isn’t their natural way of doing things.

(4) The basic reason for that kind of change in some people’s behaviour is competition. As Adam Smith pointed out, when there are several butcher shops in a community, any butcher who is rude or tries to sell inferior meat at unreasonable prices soon loses business and income to other butcher shops. If your neighbourhood butcher is naturally friendly and benevolent, so much the better.

(5) But even customers who do not know a butcher personally don’t have to depend on such altruistic characteristics to get good service and products. The more a greedy, selfish, or lazy person wants to enjoy a higher standard of living, the more he or she will try to meet the competition and build up a large base of satisfied customers. Or as Smith described this feature of market economies, people are led “as if by an invisible hand” to work and behave in ways that use resources efficiently, in terms of producing things that other people want and are willing to pay for, even though that may have been “no part of their original intentions”.

(6)Another factor must be at work for Smith’s invisible hand to function properly: the butcher must own or rent the shop, so that he or she has the rights to its profits. Without this right to private property, and to the profits it brings, the invisible hand of competition will not motivate businesses to offer the best and most varied products at reasonable prices. Butchers who are employees of the state will view their jobs very differently than those who are in business for themselves. This fact holds true throughout the economy, whether one considers a butcher, a carpenter, a restaurant chain, or a multinational insurance company.

Task 1. Discuss how the example of a butcher’s character and behaviour illustrates the functioning of a free market. (paras.4 and 5)

Task 2. According to Adam Smith, what factor determines the difference between

“butchers who are employees of the state” and “butchers who are in business for themselves”? (para.6.)

Task 3. If somebody treats you courteously, is their attitude showing

a) politeness and respect;

b) caution and fear;

c) courage and bravery? (para.3)

Task 4. Having read the above text, how can you define the “invisible hand” with one or two words?

BUSINESS COMMUNICATION

AT THE AIRPORT

Look at the picture. What do you think the phrase Live out of a suitcase mean?

John works for a major airline. He complains about his job:

When I applied to work in this position, I had no idea that I'll be living out of a suitcase six to seven months of the year.

Here is some vocabulary about airports and air travel.

Beginning and ending your journey:

a departures board- a notice board in an airport that tells passengers information about their flight

a boarding pass- a piece of paper or card that is given to a passenger at check-in. A passenger must have one to be allowed to go onto the plane

passport control- the place in the airport where your passport and boarding card are checked before you go to the departure lounge

a final call- an announcement that's made over the airport's loudspeaker system to let passengers know that the flight is almost ready to go

baggage reclaim- part of the airport where you go to collect your luggage after you arrive at your destination airport. Usually there is a 'carousel' - a continuous moving strip of material that goes round in a circle with passengers' bags on it

Types of flights:

a short-haul flight- a flight that takes a short time (up to about three hours), compared to a long-haul flight

a long-haul flight- a flight that takes a long time (over seven hours), compared to a short-haul flight

a domestic flight- a flight between two airports in the same country

an international flight- a flight between two airports in the different countries

a red-eye (flight)- a flight that leaves late at night and arrives early the next morning

Types of seats on a plane:

a window seat- a seat next to the window

an aisle seat- a seat next to the aisle (the walkway between rows of seats)

an economy seat- a seat in the economy class part of the plane (in the back part of the plane, where the seats are smaller and closer together than in other parts of the plane)

a first-class seat- a seat in the first-class part of the plane (in the front part of the plane, where the seats are bigger and spaced further than in other parts of the plane)

Ex.1. If you take a flight from an airport in an English-speaking country, you're likely to hear some of these dialogues. In pairs read the dialogues and be ready to act them out later.

Dialogue 1. Check in.

A: Good morning. Can I have your ticket, please?

B: Here you are.

A: Thank you. Would you like a window or an aisle seat?

B: An aisle seat, please.

A: Do you have any baggage?

B: Yes, this suitcase and this carry-on bag.

A: OK, please place your bag on the scale.

B: I have a stopover in Frankfurt – do I need to pick up my luggage there?

A: No, it’ll go straight through to Los Angeles. Here is your boarding pass – your flight leaves from gate 15A and it’ll begin boarding at 3:20. Your seat number is 26E.

B. Thank you.