Ex. 8. Put the questions to the words in italics.

1. Every society must provide answers to the same three questions.

2. The central problem of economics is to solve the problem of scarcity created by society’s

Unlimited wants and limited resources.

3. There are three main economic systems.

4. Traditional economy systems are usually found in the more remote areas of the world.

5. People’s main activities are agriculture, fishing or hunting.

6. Goods and services have been produced in a way they have always been produced.

7. In some years some people are not able to survive and either leave the society or die.

8. When such a surplus exists, it is distributed traditionally.

9. The most part of the product may go to a tribal chief or large landowner.

 

Ex. 9. Translate into Russian.

 

1. Since considerable trouble and expense may be involved in changing prices, firms prefer to set

and maintain a price for a given period.

2. Since the price of shares change from day to day, a seller might receive more or less than he

or she paid for them.

3. Since the 1960s there has been an increasing tendency to move from densely populated city

centres to the outer suburbs and the country.

4. The years since the Second World War have seen a very substantial reduction in the trade

barriers.

5. Since it came into being, the EEC has made substantial progress.

 

 

Text 2

COMMAND OR PLANNED ECONOMY

 

 

VOCABULARY

 

to own – владеть

amount – количество

direction – руководство

to take decision – принимать решение

private property – частная собственность

to pass orders – отдавать приказы

to expand - расширять

complicated – сложный

a number of common features – ряд

общих черт

five years ahead – на пять лет вперед

to set a plan – устанавливать план

production target – производственное

задание

advantages – преимущества

disadvantages – недостатки

to ensure – гарантировать

to meet the needs – удовлетворять

потребности

incentive – побудительный мотив

to fix wages – устанавливать зарплату

profits – прибыль, доход

to respond to changes – реагировать на

изменения

to underproduce - недопроизводить

to predict – предсказывать, предвидеть

delays and queues - перебои (с

товарами) и очереди

to overproduce – перепроизводить

 

 

 

Planned economy is sometimes called “command economy” because the state plans and controls the use of resources (such as labour and factories) that are used to produce goods and services as a state owns factories, land and natural resources. Planned economy is an economy with a large amount of central planning and direction, when the government takes all the decisions. There might be no private property at all. For example, in the former Soviet Union state planners decided what was to be produced and in what quantities. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. Factories were then told how much they should produce with these resources and where they should be sent. The workers are told where to work and what work to perform.

Planning of this kind is very difficult, very complicated to do, and the result is that there is no society, which is completely a command economy. The actual system varies from state to state, but command or planned economies have a number of common features. In such a system the state decides what the nation is to produce. It usually plans five years ahead. The planners set the plan and each industry and factory is set a production target.

A planned economy is simple to understand but not simple to operate. It does, however, have a number of advantages and disadvantages.

Advantages:

• Everyone in society receives enough goods and services to enjoy a basic standard of living.
• There should be work for everybody.
• The state can use its control of the economy. It can ensure that everyone receives a good education and proper health care.
• The needs of the population are met, but there is little production of luxury goods for the wealthy.

Disadvantages:

• There is no incentive for individuals to work hard in planned economies as the government fixes wages and private property is not allowed.
• Any profits that are made are paid to the government.
• Citizens cannot start their own businesses and so new ideas seldom come forward and this leads to low efficiency.
• The government may not produce goods which people want to buy.

A major problem faced by command or planned economies is that of deciding what to produce. Command economies are slow when responding to changes in people’s tastes and fashions. Consumers have little choice because planners sometimes underproduce some items as they cannot predict changes in demand. This leads to delays and queues for some products. Conversely, some products, which are out of fashion and unattractive, may be overproduced.

The clearest example of command economies is the communist systems which exist in China and existed in Eastern European countries before 1989. Even China is now introducing economic changes which involve less state control. There is now much more freedom of choice than before and some private property and trading are allowed.

 

WORD STUDY

 

Ex. 10. Study the different meaning of the word “item” and use it to translate the

sentences.

 

item n - 1. предмет, товар, изделие

2. пункт, статья

3. сообщение (в газете)

4. вопрос

5. название, номер

 

1. Let us know what items of the equipment are most liable to damage (подвержены повреждениям).

2. Another large item of expenditure in that country is defence.

3. Some items were supplied in increased quantities.

4. They proceeded with the tests of the above-mentioned item in accordance with the terms of the contract.

5. We disagree on several items.

 

 

Ex. 11. Match the words with their definitions.

 

____ private property a) an economic model that calls for government control of

all important economic activities.

____ profit b) land or belongings owned by a person or group and kept

for exclusive use.

____ an order c) an economy in which business activities and the

allocation of resources are determined by government

order rather than market forces.

____ raw materials d) style in clothes, cosmetics, behaviour, etc

____ central planning e)a motivating influence; stimulus

f) the income held to be the motivating factor of all economic

____ command economy activity in a capitalist economy

____ fashion g) basic natural materials before any manufacturing

____ incentive h) an instruction that must be obeyed; command

 

 

Ex. 12. Give English equivalents to the following words and phrases.

 

владеть фабриками, землей и природными ресурсами__________________________

отдавать приказы_________________________________________________________

издавать приказы _________________________________________________________

планирование ____________________________________________________________

планировать на пять лет вперед _____________________________________________

преимущества и недостатки ________________________________________________

гарантировать ____________________________________________________________

предметы роскоши ________________________________________________________

побудительный мотив _____________________________________________________

личная собственность ______________________________________________________

стоять перед проблемой ____________________________________________________

очередь___________________________________________________________________

 

 

Ex. 13. Study these pairs of words:

advantages - dis advantages

order – dis order

to agree – to dis agree

What does prefix dis- mean in the English word-building? Can you give some more examples of this rule?

 

Ex. 14. Define what parts of speech these words are.

 

1. to differ, different, difference

2. to vary, various, variety

3. efficient, efficiency, efficiently.

 

Ex. 15. Fill in the blanks with the words from Ex. 14.

 

1. The enterprise is working _____________________.

2. There is a _______________ of reasons for high unemployment in this region.

3. Prices of the same agricultural products ____________________ from region to region.

4. There is not any _____________ between these two methods, only the names ___________.

5. These two economists are interested in ___________________ fields of economics.

6. They have raised _____________________ of their work by means of new machinery.

Ex. 16. What are the synonyms from the text of the following words?

 

1. a large quantity of central planning ____________________________

2. to distribute raw materials ___________________________________

3. what work to do ___________________________________________

4. Planning of this kind is very hard and very complex to do. _________________________

5. planned economies have a number of common characteristics ______________________

6. the state can guarantee ______________________________________

7. luxury goods for the rich ____________________________________

8. the planners cannot forecast changes in demand __________________

9. There is no motive for individuals to work hard. __________________

COMPREHENSION

 

Ex. 17. Multiple choice. In the space provided, write the letter of the item that best

answers the question.

 

____ 1. Who decided in the former Soviet Union what was to be produced and in what

quantities?

a) workers and employees

b) state planners

c) businesses

 

____ 2. For how many years ahead does the state decide what the nation is to produce?

a) the state doesn’t set any plans at all

b) ten years ahead

c) five years ahead

 

____ 3. What is a major problem faced by command economies?

a) responding to changes in people’s tastes and fashions

b) deciding what to produce

c) predicting changes in demand

 

____ 4. Who are the profits made in command economy paid to?

a) to the government

b) to workers

c) to top managers

 

____ 5. What does the state ensure to everyone in command economy?

a) production of as many luxury goods as people want to buy

b) purchasing of land

c) a good education and proper health care

 

 

Ex. 18. Match the beginnings of the sentences to their ends using information from the

text.

 

1. In command economy the workers are told …

2. In such a system the state decides …

3. However, the command economy has …

4. A planned economy can ensure …

5. Any profits that are made in command economy …

6. Command economies are slow …

 

A. … that everyone receives a good education and proper health service.

B. … when responding to changes in people’s tastes and fashions.

C. … what the nation is to produce.

D. … where to work and what work to perform.

E. … a number of advantages and disadvantages.

F. … are paid to the government.

 

 

Text 3

FREE MARKET ECONOMY

VOCABULARY

to interfere – вмешиваться

private enterprise – частное предпринимательство

private ownership – частная собственность

means of production – средства производства

are publicly-owned - принадлежат государству

employer – работодатель

are favoured - привлекательны

profitable goods – прибыльный товар

tax –налог

to compete - конкурировать

boom – бум; быстрый подъём (деловой активности)

recession – спад

 

In a true market economy the government plays no role in the management of the economy, the government does not interfere in it. The system is based on private enterprise with private ownership of the means of production. Although markets exist in traditional and command economies, all major means of production (companies, farms, factories, etc) are usually publicly owned. That is, they are owned by groups of people or by the government. In a market economy the means of production are owned by private individuals. There is no government control over land, capital and labour. No government ministry decides how many shirts or shoes to manufacture, or what style or colours. Business produce goods to make a profit.

Workers are paid wages by employers according how skilled they are and how many firms wish to employ them. They spend their wages on the products and services they need. Consumers are willing to spend more on products and services, which are favoured. Firms make more of the more profitable goods – those demanded by consumers. They make fewer of the less profitable goods – those least demanded by the consumers. This leads to direct competition between different firms making and selling these products, and that competition is one of the basic reasons why there are generally so many different styles, fabrics and brands of clothing for consumers to choose from in market economies.

Market economies are directed by prices. As the price of an item rises, sellers are encouraged to increase production, and consumers are discouraged from purchasing them. When the price falls, the opposite is true. In this way prices send out “signals” to buyers and sellers, and are influenced by the demand for and supply of the goods.

Thus, we can see that in a market economy consumers decide what is to be produced.

There are certain advantages and disadvantages of a free market economy.

Advantages:

- Consumers are free to choose what they want to buy.

- Workers are encouraged to work hard as they can keep most of their income because of low taxes.

- Business compete with each other and this could keep prices low.

Disadvantages:

- There are no government-provided goods or services such as health or education, available for everybody.

- As there is no government control over the economy there could be many uncontrolled booms and recessions in the economy.

- Businesses might be encouraged to create monopolies in order to increase prices. Consumers will have limited choice.

In fact, there is no country in the world with a completely free market economy. In all countries governments are involved in making important economic decisions. The United States is the country with an economy most like a free market system. But even there, the USA government has a lot of control over the economy.