Unit 4. National-income accounting

Active Vocabulary

National-income accounting облік національного доходу

Gross national product (GNP) валовий національний

Продукт (ВНП)

GNP per capita валовий національний

Продукт у розрахунку на

Душу населення

Intermediate goods проміжний продукт

Nominal GNP номінальний валовий

Національний продукт

Real GNP реальний валовий

Національний продукт

Production possibilities можливості виробництва

Depreciation амортизація

Net national product (NNP) чистий національний


Gross investment валові капіталовкладення

Net investment чисті інвестиції

Exports експортовані товари

Imports імпортовані товари

National-income accounting is the measurement of aggregate economic activity, particularly national income and its com­ponents. The measurement of aggregate economic activity by national-income accounting serves two basic functions. First, it enables us to identify economic problems. The second function of national-income accounting is to provide an objective basis for evaluating policy.

National-income accounts help us not only to measure the economy but also to understand how it functions.

Gross national product (GNP)is the total market value of all final goods and services produced in a given time period.

GNP per capita is total population: average GNP, GNP per capita relates the total value of annual output to the number of people who share that output; it refers to the average GHP per person.

Even when we focus on domestic market activity we encounter problems in calculating GNP. A very basic problem arises from the fact the production of output typically involves a series of distinct stages. Consider the production of bread, for example. For bread to reach the supermarket, the farmer must grow some wheat, the miller must convert it to flour, and the baker must make bread with it.

We must focus on the value of final goods and services and exclude intermediate goodsfrom our calculation.

Intermediate goods are goods or services purchased for use as input in the production of final goods or services.

Nominal GNP is the value of final output produced in a given period, measured in the prices of that period (current prices).

To distinguish increases in the quantity of goods and services from increases in their prices, we must construct a measure of GNP that takes into account price level changes. We do so by distinguishing between real GNP and nominal GNP. Nominal GNP is the value of final output measured in that year's prices, whereas calculating real GNP, we value goods and services at constant prices.

Inflation is an increase in the average level of prices of goods and services.

Production possibilities are the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology.

Depreciation is the consumption of capital in the production process; the wearing out of plant and equipment. This cal­culation leaves us with yet another measure of output; net na­tional product (NNP). This is the amount of output we could consume without reducing our stock of capital.

The distinction between GNP and NNP is thus mirrored in a distinction between gross investment and net investment. Gross investment is positive as long as some new plants and equipment are being produced. But our stock of capital — our total collection of plant and equipment — will not grow unless gross investment exceeds depreciation. That is, the flow of new capital must exceed depreciation, or our stock of capital will decline. Whenever gross investment exceeds depreciation, net investment is positive.

Exports are goods and services sold to foreign buyers.

Imports are goods and services purchased from foreign countries.


Exercise 1. Give the English equivalents:

облік національного доходу, чистий національний продукт, валовий національний продукт, брати до уваги зміни в рівні цін, перекручувати розуміння, можливості виробництва, вимірювати в цінах, додана вартість, виробництво готових товарів та послуг, валовий національний продукт, у розрахунку на душу населення.


Exercise 2. Write an appropriate word-combination:

GNP per capita, nominal GNP, national-income accounting, intermediate goods, inflation, depreciation, imports, encounter problem.

1. ... is the measurement of aggregate economic activity, particularly natio­nal

income and its components.

2. ... is total population: average GNP.

3. When we focus on domestic market activity we ... in calculating GNP.

4. ... are goods or services purchased for use as input in the production of final

goods or services.

5. ... is the value of final output pro­duced in a given period, measured in the

prices of that period.

6. ... is an increase in the average level of prices of goods and services.

7. ... is the consumption of capital in the production process.

8. ... are goods and services purchased from foreign countries.


Exercise 3. Translate the following sentences:

1. Облік національного доходу допомагає нам не тіль­ки оцінити економіку, а й зрозуміти, як вона функціо­нує.

2. Додана вартість — це збільшення ринкової варто­сті продукції, яке відбувається на кожній стадії виробни­чого процесу.

3. Як зміни цін впливатимуть цього року на валовий національний продукт?

4. Для того щоб обчисли­ти реальний валовий національний продукт, необхідно оцінити товари та послуги за постійними цінами.

5. Для того щоб підтримати наші виробничі можливості, ми повинні повернути капітал, який ми витрачаємо.

6. Щоразу, коли валові капіталовкладення перевищують амортизацію, чисті інвестиції є позитивними.

7. Виробничі можливості зале­жать від кількості землі, праці, капіталу та наших знань, як використати нову технологію.

8. Кількість імпортних това­рів на українському ринку впродовж кількох останніх років зросла.

Exercise 4. Answer the following questions:

1. Whatare the two basic functions of national-income accounting?

2. How can we determine last year's GNP?

3. What is GNP per capita used for?

4. What is the easiest way to calculate GNP?

5. What is the difference between nominal GNP and real GNP?

6. What is inflation?

7 What do our production possibilities depend on?

8. Where is the distinction between GNP and NNP mirrored?

9. What represents net exports?


Exercise 5. Read and translate the following dialogue:

S.:As a future economist you ought to know certain things about gross national


В.:That's what I want. I hope to make my career in economics.

S.: What do you know about GNP?

B.: GNP is the total market value of all final goods and services produced in a

given time period.

S.: It is something. But you should distinguish between nominal GNP and real


B.: What do you mean by that?

S.:Nominal GNP is the value of final output produced in a given period,

measured in the prices of that period, whe­reas real GNP is the value of

output measured in constant prices.

В.:Although prices serve as a convenient measure of market value, they can

also distort our perceptions of real output.

S.:You are right. Imagine what would happen to our cal­culations of GNP if all

prices were to double from one year to the next. Suppose, for example, that

the price of oranges rose from 20 cents to 40 cents, the price of bicycles to

100 dollars and the price of airplanes to 2 million dollars each.

В.:How would such price changes affect this year's GNP?

S.:Obviously, the price increases would double the value of final output.

Measured GNP would rise from 1.400 million dollars to 2.800 million

dollars. Such a rise in GNP does not reflect an increase in the quantity of

goods and services available to us. We are still producing the same

quantities only the prices of those goods have changed.

В.:Now I understand, changes in GNP brought about by changes in the price

level can give us a distorted view of economic reality.

S.: Surely we would not want to assert that our standard of living had improved

just because price increases raised measured GNP from 1.400 million

dollars to 2.800 million dollars.

В.:Thank you very much for your help. It's very useful in­formation.

S.:Not at all. See you later.


Unit 5. Negotiating

Active Vocabulary

Reach/end win-win situation proprietors rapport parameters common ground overall досягти виграшної ситуації для обох сторін пріоритет взаємини характеристика спільна точка зору загальний


A successful negotiating is when two persons (or teams) reach agreement on something which they are both happy with. There shouldn’t be a winner and loser. The negotiating should end win-win situation. To be a good negotiator takes a lot of skills and preparation. You need to:

§ be well prepared;

§ have a strategy – a plan of what you are going to do say and say;

§ have a clear idea of your objectives;

§ be sure what your proprietorsare – what is the most important to you.

§ listen carefully to other people – what they say, and how they say.

§ be willing to compromise on your objectives;

§ be patient.

Exercise 1. Give the English for:

досягти взаємної згоди для обох сторін, взаємини, стратегія, мати чітку ціль, бути готовим, спільна точка зору, бути добре підготовленим, бути терплячим.

Exercise 2. Match words from list A with words from list B that have a similar meaning:


rapport general

end win-win situation plan

overall relationship

common ground factor

strategy to reach mutual interest

parameters common point of view

Exercise 3. Describe the negotiating according to this scheme below:


Planning to be well-prepared
Objectives to take a long term view to have a range of objectives to want to achieve a win-win outcome
Rapport to establish a good rapport
Parameters to identify areas of conflict / common ground
Listening to listen well
Attitude to be constructive not destructive to show respect, tact and sensitivity to try to avoid conflict
Approach to stay cool-headed to stick to a minimum number of arguments
Flexibility to consider alternatives to make creative suggestions to be willing to compromise
Language to use language effectively; to be fluent, articulate and persuasive.
Overall competent, effective, skilful successful
Other comments  

Exercise 4. Answer the following questions:

1. What is the main object of negotiating?

2. What are the main elements of negotiating?

3. Is it necessary to be well prepared and why?

4. What makes a good negotiator?

5. What mistakes is it necessary to avoid?

6. Have you ever been involved in formal or informal business negotiations?

Preparing a presentation

Here are some 'rules' for preparing a presentation:

- decide what you want to say to your audience;

- choose the right equipment to help make your talk interesting;

- find out who you are talking to;

- practice your presentation in advance;

- make sure your presentation has a clear structure;

- find out about the room you are talking in.


It's important to know your audience. How many people are there? Where are they from? What do they want to learn? How much do they already know?

The place is important too. If possible, visit it before your presentation. Where will the audience sit? Where will you stand? Where will you put your equipment?

Make sure your objectives are clear. This will help you to prepare material that is interesting and informative. Remember, you want your audience to learn something they don't know. You also want them to enjoy your presentation.

A well-organized presentation is easier to understand. Give it a beginning, a middle and an end. Make separate points and number them. This structure will help your audience to follow what you are saying.

There are many different kinds of AV (audiovisual) aids. You can use a simple flip chart or show slides on an overhead projector. There is also computer software, like Microsoft Powerpoin, which can make your presentation look professional. Choose AV aids that are appropriate for your audience. And make sure you know how they work.

Make notes of the most important points. Make sure you speak to your audience they have never read before. Practice giving your talk loud and check how much time it takes. Ask a friend to listen and give you feedback.

Giving a presentation

Exercise 1. In order to carry out successful presentation you should:

· introduce the main points one by one;

· welcome the audience;

· introduce the first point;

· tell the audience the subject of the presentation.


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