Exercise 3. Match the word with its definition. Sometimes there can be more then one definition for a word or more then one word for a definition

Exercise 2. Answer the questions.

1. What is meant by the word «system»? How do you understand it?
2. What systems do you know? Give your examples.
3. What ideas does the word «system» imply?
4. Why is the text on economics started by the extract about “system”?
5. Has economics been always taught in universities?
6. Into what two parts were the sciences split in the 1700s?
7. What are the subdivisions of a social science?
8. Who is Adam Smith?
9. Do you know any classical economists? Name them.
10. How did neo-classical economics begin?
11. What is Walrasian economics?

Economics, economic, economical, economize, economy, economist

1. a system according to which the money, industry, and trade of a country
or region are organized.

2. careful spending or the use of things in order to save money.

3. concerned with economics and with the organization of the money, industry, and trade of a country, region, or social group.

4. relating to services, businesses, etc. that produce a profit.

5. a country's economy is the wealth that it gets from business and
industry.

6. something that is economical does not require a lot of money to operate.

7. save money by spending it very carefully and not buying expensive
things.

8. using the minimum amount of time, effort, language, etc. that is neces­sary.

9. large-size packages of goods which are cheaper than the normal sized packages on sale.

10. the study of the production of wealth and the consumption of goods and services in a society, and the organization of its money, industry, and trade.

11. an expert or student of economics.

Exercise 4. Write down a synonym for each of the words on the left. Choose the one on the right. In what do they differ?

1. choice A. give

2. objective B. current

3. predict C. own

4. happen D. option

5. handle E. target

6. posses F. influence

7. grant G. foresee

8. get H. occur

9. affect I. present

10. process J. obtain

Exercise 5. The following words can be classified into 5 groups. What are they? Show the difference in their meaning with the help of your own sentences.

Choice, have, solve, dilemma, own, profit, posses, variant, cope with, to process, option, tackle, problem, handle, return, predica­ment, gain, alternative.

TEXT 2. THE ECONOMIC SYSTEM

When an artist looks at the world, he sees colour. When a musician looks at the world, he hears music. When an economist looks at the world, he hears a symphony of costs and benefits.

D. Colander

There are many forms of economic order, ranging from the mixed private enterprise system to partially or completely controlled econo­mies. Regardless of their form, however, economic system is the system that a society uses for allocation and distribution of scarce resources.

Private enterprise means that decisions about what and how much to produce are left to the discretion of owners and managers. In controlled economies such decisions are the responsibility of some governmental agency. There is, of course, no economy today that is completely free of governmental influence, nor is this condition necessarily undesirable. There are many beneficial services and protections available from gov­ernment. The question then is a matter of degree. Irrespective of the form of economic order, it performs certain valuable functions in the life of organizations of all types.

Among the functions of the economic order the most important one is to provide some means of resource allocation. In a private enterprise this function is basically performed by the price mechanism. This simply means that demand for and supply of goods and services interact to set their market price. In the case of regulated utilities, there are governmen­tal agencies such as public service commissions that determine the rates that may be charged by utility companies. These rates are set at the level that will allow a fair return on investments made by the companies. This form of regulated monopoly is considered, on balance, preferable to un­checked competition. This is true because of efficiency reasons. In taking actions in the area of employment, government is attempting to control the economy in such a fashion as to help the business community oper­ate at the level of production that will yield full employment.

Without a system of distribution economy simply could not exist. A major part of this distribution system is credit. Economy flourishes on credit or extended methods of payment. Such a system literally affects every link in the distribution chain from the supplier of raw materials to the ultimate consumer. Without this vital financing function being per­formed, the economy would doubtless be forced to a lower order of pro­duction.

Economic goals for a nation include price stability, full employment, economic growth, and equitable distribution of income. Price stability contributes to the efficient allocation of resources and facilitates long-term planning. Full employment means that jobs are available for those seeking work. Higher standards of living require increased output per person (economic growth per capita). An equitable distribution of income means that the fruits of the economy are divided in a way that seems fair to the majority of the people. With the long-run trend toward a more sophisticated, highly integrated economic system, it is becoming increas­ingly important for an individual decision maker to be aware of the macro-economic environment.

EXERCISES

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