Revision exercises. I. Find the equivalents

I. Find the equivalents.

1. production	а) споживання
2. distribution	b) необмежені потреби
3. exchange	c) міжнародна торгівля
4. consumption	d) розподіл
5. to determine price	є) безробіття
6. international trade	f) споживчі товари
7. unemployment	g) визначати ціну
8. scarce resources	h) податки
9. unlimited wants	і) виробнтцтво
10. limited resources	j) грошова вартість
11. to gain a living	к) обмін
12. taxes	1) обмежені ресурси
13. capital goods	т) заробляти на життя
14. consumer goods	п) недостатні ресурси
15. monetary value	о) засоби виробництва

II.

The Fundamental Problems of Economics.

appropriate words from the box.

Fill the gaps in the following text with

scarcity	unlimited	resources	services
demand	needs	produce	producers
tools	fundamental	consumers	satisfy

Albert Camus wrote: "Economics is the art of trying to satisfy infinite (1)__________ with

limited (2)____."

A fundamental concept in economics is the (3)_____ of resources. There are not enough

resources to meet the needs of (4)_____ and producers.

In the case of consumers, the scarcity of goods and (5) _________ might seem obvious

enough. Everyone would like to have more - another car, a bigger home, more domestic
goods, better food and drink, more holidays, more trips to the cinema or theatre, a boat, a
private plane, membership of more clubs and societies, more clothes and so on. There
simply isn't enough to go round to satisfy the potential (6)______.

In the case of (7)____, there are four scarce resources:

• natural resources, referred to collectively as 'land';

• labour;

• capital - e.g. equipment and (8)_____;

• enterprise or entrepreneurship.

- E VISION EXERCISES

Scarce resources mean that producers cannot make (9)_______ quantities of goods and

services. Since resources for production are scarce and there are not enough goods and

services to (10)____ the potential demand, choices must be made. Choice is only necessary

because resources are scarce. That is why consumers must choose what goods and services
they will have. Meanwhile producers must choose how to use available resources, what
goods and services to (11)____, and in what quantities.

The (12) ____ problem of economics is the allocation of these scarce resources.

Therefore the question what, how and for whom to produce is of great significance.

III. Classical Economic Theory. Insert the words from the box in the extract.

assumptions	exchange	information
commodity	exogenous	perfect competition
equilibrium	industrialists	resources

The standard classical theory of the economy, the theory that we all tend to begin with

when we all learn about economics, suggests that economies naturally return to an (1)_______

level, where they make full use and efficient use of all their (2)_________. But most of the

textbooks, when they are moving to teach that model, also mention the fact that there are

a number of very strong (3)____ to make that model work. There has to be (4)______, there

has to be a lack of (5)____ shocks, shocks from the world outside in terms of (6)______ rates

or (7)___ prices to the system, there has to be perfect (8)_____, so everybody knows what's

going on in the market at any one time, and the responses have to be very quick. (9)________

have to adjust their prices very quickly, wage-setters have to adjust their wages very quickly.

IV Friedman is not Dead and Keynes Lives. Read the imaginary dialogue below. It is between two economists: Milton Friedman, who believes in leaving everything to market forces; and J.M. Keynes, who believes in partnership between the State and private capital. They are discussing an impact of the European Airbus project on the world airliner market. Fill in the spaces with appropriate words from the box.

competition	economies	market share	scale
competitor	export subsidies	monopoly	subsidy
consortium	free trade	resources	suppliers

Keynes: The Airbus project has been good for consumers. It has stopped Boeing
having a (1)___ in the airliner market.

Friedman: In fact, Boeing already had a (2)____ in Mc Donnell Douglas.

Keynes: Yes, it did. But the airbus did lower prices due to the arrival of more (3)_______.

Friedman: But the benefits of Airbus do not match the subsidy which the European

taxpayer paid for. (4)____ is the best way to run the global economy. It is cheaper than

tariff barriers, import quotas and (5)_____.

Keynes: I can't agree. The airliner industry has few companies. They can make (6)_______

of (7) ___. This means low costs and real competition between (8) _________. this is what

happened between Boeing and Airbus. The Airbus (9)_______, with four countries, has built

up (10)____. the benefit to the European economy has been more than the cost of'the

(H) _■

Friedman: I am not sure. I think subsidies are a waste of (12)_____.

Keynes: Well, I think I'll have a cup of tea. Will you join me?

Friedman: Only if it's free market tea.

Note: Biographical details

Milton Friedman, economist, born New York.

John Maynard Keynes, economist, born Cambridge, UK, 1883-1946.

PART I. ECONOMICS

V Traditional Economy. Fill the gaps with a suitable word from the box

goods and services	economic	advantage	stable	distributed
skills	stagnant	behaviour	decisions	disadvantage

In a society with a traditional economy nearly all (1)______ activity is the result of ritual

and custom. Habit and custom also prescribe most social (2)______. Individuals are not free

to make (3)_____ based on what they want or would like to have. Instead their roles are

defined. They know what (4)_____ will be produced, how to produce them, and how such

goods and services will be (5)______.

An example of traditional economy is the society of polar Eskimo of the last century. For generations, parents taught their children how to survive in a harsh climate, make

tools, fish and hunt. Their children, in turn, taught these (6)________ to the next generation.

The main (7)_____ of the traditional economy is that everyone has a role in it. This helps

to keep economic life (8)______ and community life continuous. The main (9)_______ of the

traditional economy is that it tends to discourage new ideas and even punishes people for

breaking rules or doing things differently. So it tends to be (10)________ or fails to grow over

time.

VI. The Market System. Fill the gaps with a suitable word from the box. Write a short summary of the text.

minimum	rational	profit (2)	scarcity
interests	compromises	classified	agents
purchased	hand	represent	factors
resources	utilization	interaction	wants
efficient

The modern market economy is populated by three types of economic agents, whose

(1) ___ constitutes economic activity: consumers, producers, and the government. The

main social purpose of the economy is to produce goods and services for the satisfaction
of the needs and (2)____ of consumers.

Consumers, typically, represent households that provide labour, and other (3)________ to

produce against an income which they use to purchase consumer goods or save.

Producers, typically, (4)____ enterprises or firms that acquire (5)______ of production, or

inputs - labour, land, and capital - from households and combine them to produce

outputs, or commodities which can be (6)______ into goods - tangible commodities - and

services. The activities of firms move around the sale of their output at a (7)______.

The third basic element, the government, is involved with the economy, on the one

hand, as a producer and consumer and. on the other (8)_______. as a regulator, supervisor

and promoter of economic activities.

The economic (9)____ are engaged in a complex web of transactions involving factors

of production and outputs. However, the volume of the commodities that can be

produced and (10)____ is limited by the (11)_____ of resources. This fact has two important

consequences as regards economic decision-making:

• the utilization of resources has to be (12)_____. In terms of the welfare of economic

agents, the (13)___ of resources is efficient when every opportunity has been

exhausted to make some individuals better off without hurting the (14)______ of

others;

• individual economic agents and society as a whole cannot simply use more, they
have to make (15)___ between alternative uses.

Given these constraints, consumers, producers, and the government have to make (16)

__ decisions over available resources. Rational decisions reflect choices that draw

maximum (17)___ from given resources or obtain desired results with the (18)_______ efforts

or cost.

SION EXERCISES

VII. Economic Systems. Match the terms in Column A with its definitions in Column B.

Column A	Column В
1. economic system	a) An economic system that allocates scarce resources according to custom.
2. traditional economy	b) Place where buyers and sellers come together to conduct transactions.
3. command economy	c) An economic system in which major decisions concerning the allocation of resources are made by agencies of the government.
4. business	d) An economy in which the What, How, and For whom questions concerning resource allocation are primarily determined by supply and demand in markets.
5. consumer	e) The approach a country uses to deal with scarcity and achieve its economic goals.
6. competition	f) The production, distribution, and sale of goods and services for a profit.
7. market	g) An economy in which some decisions about the allocation of resources are made by private firms and households and some by the government.
8. profit	h) The rivalry among buyers and sellers in the purchase of of resources and products.
9. marker economy	i) A person who buys and uses goods or services.
10. mixed economy	j) The difference between revenues and operation costs incurred by a business.

VIII. The Business Cycle. Fill the gaps with a suitable word from the box.

boom	market	contraction	peak
rates	slump	trade cycle	capacity
demand	prices	trough	recessions

The business cycle or (1) _____ is a permanent feature of (2) _______ economics: Gross

Domestic Product (GDP) fluctuates as booms and (3)_______ succeed each other. During a

(4)___, an economy (or at least parts of it) expands to the point where it is working at

full (5)____, so that production, employment, prices, profits, investment and interest (6)

__ all tend to rise. During a recession, the (7)______ for goods and services declines and the

economy begins to work at below its potential. Investment, output, employment, profits.

commodity and share (8) _____, and interest rates generally fall. A serious, long-lasting

recession is called a depression or a (9)_____.

The highest point on the business cycle is called a (10)________, which is followed by a

downturn or a downswing or a period of (11)_____. The lowest point on the business cycle

is called a (12)___, which is followed by a recovery or an upturn or upswing or a period of

expansion. Economists sometimes describe contraction as 'negative growth'.

IX. Summary. Fill the gaps with a suitable word from the box.

output	allocate	resources	maximum	statements
consumption	economics	positive	microeconomics	mixed
reconcile	possible	macroeconomics	prices	free market
intervention	command	normative	produce	demands

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.

SO

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: