Economics

Economics is a social science, like history, geography, politics, psychology and sociology. It is the study of human efforts to satisfy what seems like unlimited and competing wants through the careful use of relatively deficient resources. It studies the most important aspects of our life linked with production, distribution, exchange and consumption of welfare. Therefore we can define economics as "the study of mankind in the everyday business life."

The principles of economics lay the foundations for the way we transact business. It explains why things are produced and how supply is matched with demand. It explains why we pay a certain price for one good and another price for another good. It explains how prices change, how employment and output are determined in the economy as a whole and the effects of government spending and taxes.

The principles of economics support all commercial transactions. An understanding of these principles is therefore essential if you are to understand how the business world works.

Economics as a science consists of two disciplines: macroeconomics and microeconomics.

Macroeconomics is the study of "global" or collective decisions by individual households or producers. It looks at a national or international economy as a whole ‑ e.g. total output, income and expenditure, unemployment, inflation, interest rates and balance of international trade etc., and what economic policies a government can pursue to influence the condition of the national economy.

Microeconomics deals with analysis of specific economic factors and detail study of their behaviour. It studies individual producers, consumers or markets. Microeconomics studies how government activities such as regulations and taxes affect individual markets.

Text 5

I. Remember the following words and word-combinations:

II. Read and translate the text: