MICROECONOMICS AND MACROECONOMICS
1. Do you know what the difference is between macroeconomics and microeconomics?
2. Are the following statements about microeconomics or macroeconomics?
· … deals with topics of inflation and unemployment.
· … studies how people make decisions to allocate limited resources.
· In … the focus is placed on factors that affect the decisions made by firms and individuals.
· ... includes a national, regional, or global economy.
Study the following vocabulary and do the tasks that follow.
1. Use a dictionary and underline the odd word (лишнее слово) in each line. Explain your choice and learn the vocabulary.
a) distribution – allocation – consumption
b) examine – deal with – study
c) effect – affect – influence
d) allocate – connect – distribute
2. Complete the crossword puzzle using your active vocabulary.
1. the state of not having a job
2. complete or full
3. money earned by work or investments
4. to make something happen
6. the amount of money expected, required, or given in payment for something
7. a general direction in which something is developing or changing
8. to inspect (someone or something) thoroughly in order to determine their nature or condition
9. to have an influence on someone or something, or to cause them to change
Read the text and check whether you answered the Lead-in questions correctly.
Economics is the science that deals with production, allocation, and use of goods and services. It is important to study how resources can best be distributed to meet the needs of the greatest number of people. As we are more connected globally to one another, the study of economics becomes an extremely important issue.
Economics is a broad subject that can be divided into two areas: microeconomics and macroeconomics.
Microeconomics, the study of the economic behaviour of small economic groups such as firms and families, is one of the largest subfields in economics. Microeconomics deals with economic decisions made at a low, or micro, level. It is the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions affect others.
Microeconomics asks questions: “How do individuals make consumption decisions?”, “How do firms make profits and price their goods and services?”, etc.
“Macro” means “large”. Macroeconomics is the field of economics that studies the behaviour of the economy as a whole, not just specific companies, but entire industries and economies. This area of economics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels. Macroeconomics asks questions like: “What causes inflation?”, “What effect does the national debt have on economic growth?”, etc.
So, macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. These two studies of economics are different, but they are interdependent and complement each other. The factors that are studied by macro- and microeconomics often influence each other.
1. Match these sentence halves describing economics and its two areas.
2. Decide whether the following statements are True or False.
1. Resources should be distributed in the best way to meet the needs of people.
2. The study of macroeconomics is an extremely important issue.
3. Microeconomics is one of the largest subfields in economics.
4. Microeconomics is the analysis of the decisions made by individuals and groups.
5. Macroeconomics deals with economic decisions made at a low level.
6. The two studies of economics complement each other.
3. Answer the questions.
1. What is economics?
2. Why is it important to study economics?
3. Is microeconomics the study of the economic behaviour of small economic groups?
4. What kind of analysis is microeconomics?
5. What does macroeconomics examine?
6. What questions are asked by the two areas of economics?
7. Do factors that are studied by macro- and microeconomics influence each other? In what way?
1. Complete the gaps choosing the right alternative.
1. The current … rate is six percent.
2. Cold weather … the crops.
3. I haven't had much … from my business this year.
4. Digital technology is the latest … in television.
5. An accountant (бухгалтер) has been employed to … the company's books.
6. We need to find the best way to … our resources.
2. Fill in the gaps with prepositions, where necessary.
1. The bank deals directly … the private sector.
2. I need time to study … this contract before signing it.
3. No one knows how this decision will influence … the outcome of the election.
4. Consumer magazines can be divided … a number of categories.
5. What may cause … unemployment?
3. Look through the text once again and find the words and phrases which mean the following.
-to satisfy the needs
- a very important subject or problem
- to influence decisions
- the industry as a whole
-to study economy-wide phenomena
1. Imagine that your friend has got an opportunity to take one course in economics, so he has a choice between macroeconomics and microeconomics. Which course would be more interesting and useful? What would your advice be? Why?
Use the following expressions:
I think, I would… (Я думаю, я бы …)
He should perhaps …(Возможно, ему следует …)
In his position, I would … (На его месте я бы …)
2. Prepare to talk about the differences and similarities between macroeconomics and microeconomics. Complete the statements and share your opinions.
a) Microeconomics and macroeconomics are the fundamental tools to be learnt, in order to understand … .
b) While the two studies are different, they are interdependent, and together they … .
c) The main differences between … are … .
1. Skim the text once more and identify its main idea. Use the necessary vocabulary from Unit 1 Summary Points.
2. Make up a plan of the text about micro- and macroeconomics. Discuss it in pairs, then report to the whole group.
TYPES OF ECONOMIC SYSTEMS
Answer the following questions before you read the text below. If you can’t answer them now, try to answer them after reading the text.
1. What types of economic systems do you know? What is the difference between them?
2. What factors may affect the type of economy a country holds? When would it be beneficial for a country to change its economy?
1. Study the following list of vocabulary.
2. Mind the following forms of the irregular verb “to sell”:
sell (sold, sold) - продавать
1. Match synonyms from the two columns. Learn these pairs of words.
2. Consult a dictionary and complete the chart. Some boxes will not be filled.
Read the text focusing on the main ideas.
There are three main questions any economy has to answer, whether it is a highly developed economy, the poorest of countries, or a small group of people.
· What is to be produced?
· How will it be produced?
· Who will get what is produced?
To answer these questions, different economic systems have been developed.
Traditional economies are dictated by tradition, customs, and religion. One of the features of this type of economy is very little economic growth. In traditional societies people use methods of production and distribution which were invented in the past and have become accepted ways of doing things.
A market economy is an economy in which the prices of goods and services are determined in a free price system. Trading and exchange of goods, services and information takes place in a free market. A market economy may, therefore, also be known as a free market economy. In the real world, market economies do not exist in pure form, as societies and governments regulate them to different degrees rather than allow self-regulation.
The opposite of a market economy is a planned or command economy, where the government decides what to produce, in what quantity, and to be sold at what price. A planned economy alleviates the use of private enterprises and allows the government to determine everything from distribution to pricing. Planned economies can provide stability, but they can also limit the growth and advancement of the country if the government does not allocate resources to the innovative enterprises.
A mixed economy is the one in which there exists a mixture of free enterprise and government control. In some areas of a mixed economy, the government may even have a monopoly. In a typical mixed economy, the government may run such things as the postal service, rail lines, libraries, and in some cases, the health care service. Even in industries which are not owned or run by the government, its influence is very noticeable in the form of taxes and regulations like wage controls.
1. Are these statements True or False? Use the following expressions:
I (don’t) agree that… (я (не) согласен, что…)
I think that… (я думаю, что…)
1. Any highly developed country has to answer three main questions.
2. Traditional economies are dictated by very little economic growth.
3. A free market economy is an economy in which the prices of goods and services are determined in a free price system.
4. A planned or command economy is the opposite of a mixed economy.
5. A planned economy is the one that can limit the growth and advancement of the country.
6. A mixed economy is a mixture of market and planned economies.
7. In a mixed economy the influence of the government is considerable.
2. Complete the sentences.
1. Three main questions any economy has to answer are: … .
2. Different economic systems have developed to … .
3. One of the features of traditional economies is … .
4. In a market economy … takes place in a free market.
5. In a command economy, the government decides … .
6. Planned economies can provide stability, but … .
7. … the government may have a monopoly.
3. Check how well you know some characteristic features of different types of economic systems. Are these statements about market, command, or traditional economies?
1. You can decide what job you would like to do in this economic system.
2. Making a profit is highly stressed in this economic system.
3. Making money is not stressed in this economic system.
4. You will work at the same job that your ancestors worked at in this economic system.
5. You produce what your ancestors produced in this economic system.
6. The government decides what you will produce in this economic system.
7. You decide what you will produce in this economic system.
8. You work in this economic system to make as much money as you want.
9. Competition, material rewards, self-gain, and freedom are the basic values for this economic system.
10. Custom, traditional ways and beliefs are the basic values of this economic system.
1. Complete the sentences, choosing the right word.
1. It’s … property!
a) market b) private c) free
2. He … the car to me for $1000.
a) produced b) determined c) sold
3. This shop … my favorite brand.
a) determines b) sells c) regulates
4. Our manager … not to leave.
a) has provided b) has determined c) has decided
5. The Prime Minister has formed a new … .
a) market b) government c) society
6. Most shops allow the purchaser … goods.
a) to alleviate b) to sell c) to exchange
2. Look through the text and find English equivalents.
торговля и обмен товарами и услугами
решать, в каком количестве производить
находиться во владении и управляться государством
3. Match the words from Key Vocabulary with their definitions.
a) an organized group of people associated together for religious, cultural, scientific, political, patriotic, or other purposes
b) a sum of money demanded by a government for its support or for specific facilities or services
c) the sum or amount of money or its equivalent for which anything is bought, sold, or offered for sale
d) money that is paid or received for work or services, as by the hour, day, or week
e) the act or process of buying, selling, or exchanging commodities within a country or between countries
1. Think about features, advantages and disadvantages of different types of economic systems. Discuss these issues in pairs or small groups first, and then make a report.
2. List countries which have these economic systems.
1. Look through the text about different types of economic systems once more and identify its main idea.
2. Draw up an outline of the text.
3. Can this text be divided into some parts? How many and what are they? Give a one-sentence summary of each point of your plan.
Use the following vocabulary:
SCARCITY AND CHOICE
Working in a group, try to identify the term ‘scarcity’ and answer the following questions.
1. Why does scarcity exist?
2. How do individuals, communities and countries attempt to solve the problem of scarcity?
Make sure you know the following words and word-combinations.
1. Consult a dictionary and find in the columns groups of synonyms and antonyms.
2. Translate in writing the following paragraph.
Scarcity is the fundamental economic problem: humans have unlimited wants and needs in a world of limited resources. It states that society has insufficient productive resources to satisfy all human wants and needs. Goods (and services) that are scarce are called economic goods (or simply goods). Other goods are called free goods if they are desired but in such abundance that they are not scarce, such as air and seawater.
Read the text and explain what the terms “scarcity” and “opportunity cost” mean.
Scarcity is the fundamental economic problem. Not all human needs and wants can be satisfied, scarcity limits us both as individuals and as a society. As individuals, we face scarcity of time and ability. As a society, our resources, land, labor, and capital, are insufficient to produce all the goods and services we might desire.
So, scarcity is the condition of not being able to have all of the goods and services a person wants. It exists because a society can only produce limited amounts of goods and services with the limited resources. The resources, however, have alternative uses and can be combined in various proportions. With the alternative use of scarce resources, choices must be made.
People must choose how to use scarce resources and which of their desires they will satisfy and which they will leave unsatisfied. When we, either as individuals or as a society, choose more of something, scarcity forces us to take less of something else.
Economics is sometimes called the study of scarcity because economic activity would not exist if scarcity did not force people to make choices. The fact that choices must be made reflects the fact that scarcity exists.
Scarcity is an imbalance between what is wanted and the amount that is freely available. Choice, in economic terms, is rational choice and is defined as an act of making calculated, self-interested decisions. Basically, this type of choice is about choosing what will cost the least and have the highest benefit.
In making a choice, some alternatives are forgone. Economists use the term ‘opportunity cost’ to mean the cost of a specific choice measured in terms of the next best alternative choice. In other words, it is what the decision-maker must forgo in order to make the choice that is finally made. Another term for opportunity cost is “real cost”. Opportunity cost is useful when evaluating the cost and benefit of choices. It is often expressed in non-monetary terms.
1. Answer the questions.
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