Text 1 (C) Microeconomics and Macroeconomics

Text I (A) Economic Activity

READING MATERIAL

Most people work in order to earn their living.

They produce goods and services.

Goods are either produced on farms, like maize and milk, or in factories, like cars and paper.

Such things as schools, hospitals and shops provide services.

Some people provide goods, some provide services.

Other people provide both goods and services. For example, in the same garage, a man may buy a car or he may buy some service, which helps him to maintain his car.

The work which people do is called their economic activity.

Economic activities make up the economic system.

The economic system is the sum-total of what people do and what they

want. The work which people undertake either provides what they need or provides them with money.

People buy essential commodities with money.

Notes: the sum-total - общая сумма

Text 1 (В) The Science of Economics

Economics is a science.

This science is based upon the facts of our everyday lives.

Economists study our everyday lives. They study the system, which affects our lives.

The economist tries to describe the facts of the economy in which we live. He tries to explain how the system works.

His methods should be objective and scientific.

We need food, clothes and shelter. If we could get food, clothes and shelter without working, we probably would not work.

But even when we have these essential things, we may want other things.

If we had them, these other things (like radios, books and toys for children) might make life more enjoyable.

The science of economics is concerned with all our material needs and wants. It is not just concerned with basic needs like food, clothes and shelter.

Economics as a science consists of two disciplines, that is of microeconomics and macroeconomics.

Microeconomics is a branch of economics that studies individual producers, consumers, or markets. It is concerned with scarcity, choice and opportunity costs, and with production and consumption. Microeconomics also studies how government activities such as regulations and taxes affect individual markets. Besides microeconomics tries to understand what factors affect the prices, wages and earnings. Principal emphasis is given by microeconomics to the study of prices and their relationship to units of economy.

Macroeconomics is the branch of economics that studies the economy as a whole. It examines questions such as how fast the economy is running; how much overall output is being generated; how much total income is. It also seeks solutions to macroeconomic problems such as how employment can be increased, and what can be done to increase the output of goods and services. It tries to understand the picture as a whole rather than small parts of it. In particular, it studies the overall values of output, of unemployment and of inflation.

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