Part II. Finance

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3.

(1)___ analyses what, how, and for whom society produces. The central economic

problem is to (2)____ the conflict between the people's virtually unlimited (3)_______

with society's limited ability to produce goods and services to fulfil these demands.

The production possibility frontier shows the (4)_____ amount of one good that can be

produced for each given level of (5)_____ of the other good. It depicts the trade-off o:

menu of choices that society must make in deciding what to (6)______. (7)___ are

scarce and points outside the frontier are unattainable. It is inefficient to produce within the frontier. By moving on to the frontier, society could have more of some good without having less of any other good.

Industrial Western countries rely extensively on markets to (8)______ resources. The

market is the process by which production and (9)_____ decisions are co-ordinated

through adjustments in prices. The role of (10)_____ is central to this definition.

PART I. ECONOMIC:

4. In a (11)___ economy, decisions on what, how, and for whom are made in a central

planning office. No economy relies entirely on command, but there was extensive planning in many Soviet bloc countries.

5. A (12)____ economy has no government intervention. Resources are allocated

entirely through markets in which individuals pursue their own self-interest.

6. Modern economies in the West are (13)_____, relying mainly on the market but with a

large dose of government intervention. The optimal level of government (14)_______

remains a subject of controversy.

7 (15)____ economics studies how the economy actually behaves. (16)_____ economics

makes prescriptions about what should be done. The two should be kept separate as

far as (17)___. Given sufficient research, economists should eventually agree on

issues in positive economics. Normative economics involves subjective value judgements. There is no reason why economists should agree about normative (18)

8. (19)___ offers a detailed analysis of particular activities in the economy. For

simplicity, it may neglect some interactions with the rest of the economy. (20)______

emphasizes these interactions at the cost of simplifying the individual building blocks.

X. Look at these key terms. Write a short explanation of each one.

Scarcity, income distribution, transfer payments, production possibility frontier, diminishing returns, the free market, the command economy, the mixed economy, microeconomics, macroeconomics, Gross National Product (GNP), inflation, unemployment rate.

XI. Labour. Match the terms from Column A and their definitions from Column B.

Column A	Column В
1 labour	a) Payment made to a worker, normally fixed as a rate per hour, day or week.
2. labour force	b) The lowest legal wage an employer can pay.
3 wages	c) Money paid to an employee, normally expressed as so much per year, but usually paid by cheque or directly into the employee's bank account on a monthly basis.
- labourer	d) Cost of goods and services needed for an average standard of living.
S wage rate	e) The human effort required to produce goods and services.
1 salary	f) Association of workers formed to promote the interests of their members.
1 labour market	g) Generally refers to unskilled workers such as freight handlers, sweepers, trash collectors and the like.
1 minimum wage	h) Individuals, 16 years of age or older, working or looking for work.
- cost of living	i) The market that determines who has jobs and the rate of pay for a particular job.
labour/trade unions	g) A standard amount of pay given for work performed.

XII. Inflation. Fill the gaps in the extract below with suitable words from the box.

production	unemployment	rate	interest rates	cost-push
wages	demand-pull (3)	spiral	supply	money
resulted	rises	costs	demand	factors

(1)____ inflation occurs when the economy is buoyant (пожвавлений) and there is a

high aggregate of (2)_____, which is in excess of economy's ability to (3)_______. Because

demand exceeds supply, prices rise. Since supply needs to be raised, there will be an

increase in demand for factors of (4)______, and so factor rewards (wages, (5)______ and so

on) will also rise. Since demand exceeds the output capability of the economy, it should

follow that (6)_____ inflation can only exist when (7)_______ is low. Another feature of (8)

___ inflation would be a plentiful supply of (9) ___________. Traditionally Keynesian

[VISION EXERCISES

economists saw inflation as being caused by demand-pulled (10)_________. However, they

now accept that cost-push factors are involved as well.

(11)____ inflation occurs where the (12)______ of factors of production rise regardless

of whether or not they are in short supply. This appears to be particularly the case with

(13)____: workers anticipate inflation rates and demand wage increases to compensate,

thus initiating a wage-price (14)______. Interest rate rises can also add to the (15)_______ of

inflation, because mortgage costs will rise. According to the cost-push view, the high rates

of inflation in the UK in the 1970s (16)______ largely from the oil price rises of 1973/74 and

inflationary pay settlements by trade unions for their members. Interest rate (17)_______ can

also add to inflation.

PART I. ECONOMI:

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Дата добавления: 2014-12-23