XIV. Communicative situations:
1.Assume that you have just received your first paycheck of $135.
Describe how the concepts of scarcity, opportunity costs, and the
need to make choices will affect the way in which you spend your
money.
2.If all people could have anything they wanted simply by rubbing a
magic lantern, there would be no need to study economics. Explain
this statement.
3.Suppose the United States Government decided to send every
man, woman and child living in Ukraine a package containing 10,000
crisp new $10 bills. What effect would this have on us all?
Lesson 2 THE AMERICAN ECONOMIC SYSTEM
I. Read and memorize following words, word-combinations and
word-groups:
a pillar — опора, стовп
e.g. There are three «pillars» of economic system: private property,
the price system and competition.
to use one's assets — використовувати (чиє-небудь) майно
e.g. According to the right to private property the owners of natural
resources and capital can use their assets as efficiently as they can.
economic incentives — економічні стимули
e.g. Economic incentives influence our decisions about what and
where to buy.
to switch one's deposits from one bank to another —
переводити депозити з одного банку в інший
to receive higher interest rates — одержувати вищі відсотки за
вкладом
e.g. Savers will switch their deposits from one bank to another to
receive higher interest rates.
profit motive — мотив прибутку
e.g. The profit motive is the force that drives our economic
system.
entrepreneur — підприємець, businessmen
e.g. Profits drive entrepreneurs to risk capital, hire employees and
purchase the things they need to produce goods and services.
to set the price — встановити ціну
e.g. Monopolies can set the price at which their goods are
sold.
gross national product — валовий національний продукт
e.g. The total value of the goods and services produced
by the economy in a single year is called the gross national
product (GNP).
household — домашнє господарство; сім'я
e.g. We live in what economists like to call households.
II. Give English equivalents of the following:
економічні стимули, приймати рішення,
домашнє
підприємець,
кінцевий продукт, господарство,
стабільні ціни,
обмежувати,
наймати на роботу,
діяльність опора,
валовий
використовувати
національний
(чиє-небудь)
продукт.
Майно,
III. Fill in the blanks with appropriate words:
1. Property owners know they will
money
make ... if they can produce goods and
resources
services that buyers want, at ... they
a profit
are willing to pay.
the answers
2. Government in America functions at prices three ... consumers
3. In our economic lives we spend ...
levels
to buy the things we want.
a price
4. Price stability refers to time during which ... remain
constant.
5. As a national goal, economic efficiency refers to
the entire economy's ability to get the most out of
its limited ....
6. ... are people who use goods and services to
satisfy their wants.
7. The price system provides ... to the fundamental
questions of what goods and services will be
produced, how they will be produced, and who will
receive them.
IV. Read and translate the text:
The «pillars» of economic system are private property, the price system
and competition.
The right to private property gives the owners of natural
resources and capital the incentive to use their assets as they
can. The price system provides the answers to the fundamental
questions of: «What goods and services will be produced?»;
«How they will be produced?» and «Who will receive them?».
Competition refers to the rivalry among buyers and among
sellers.
Economic incentives influence our decisions about what and where to
buy. The desire to achieve the greatest profit for our efforts is the principal
economic incentive in the American and other market economies.
Economists refer to this as
economic self-interest.
Profits are what remains after the costs of production have
been deducted from sales. The quest
for profits, or the profit
motive, as it is often called, is the force that drives our economic
system.
People in business buy or sell land or other natural resources
if they think they can profit from the transaction. They also put
those resources to use in such a way as to make the greatest
profit. Profits affect the allocation of labor, influence the allocation of
capital resources. Profits drive entrepreneurs to risk capital, hire
employees and purchase the things they need to produce goods and
services. Profits also provide the incentive to improve products, reduce
costs and outsell the competition.
Government in America functions at three levels:
federal, state and local.
Governments
— compel people to sell their property for public use
through the power of eminent domain;
— decide who may sell electric power in a geographic
region;
— control which medicines may be sold commercially;
— licence certain businesses (such as banks, barber shops,
taxi cabs and restaurants);
— pay dairy farmers for not producing as much milk as
they can;
— forbid export of certain machinery to specific foreign
countries;
— establish the minimum wages employers must pay;
— issue permits for and inspect construction of homes and
buildings.
The following economic responsibilities are best fulfilled by
government:
—safeguarding the market system;
—providing public goods and services;
—dealing with externalities;
—assisting those in need;
—helping specific groups;
—stabilizing the economy.
- The gross national product, or GNP, is the total value of all the goods
and services produced by the American economy in a single year.
Government transfer payments, payments like Social Security benefits,
pensions, welfare, and interest on government debt represent a significant
percentage of GNP.
In order to calculate the GNP, government economists add the amounts
that were spent by the three elements of the economy (households,
business and government) to purchase the finished products. We can
express this mathematically as C + I + G = GNP, where:
C — consumer household spending;
I — investment, or business;
G — government purchases of goods and services (pp. 11 — 22)*.
V. Answer the following questions:
1. What are the «pillars» of economic system?
2. What does the right to private property give the owners of natural
resources and capital?
3. How do prices influence American economic system? Give your own
examples.
4. What does competition refer to?
5. How do you understand the term «profits».
6. What is the force that drives our economic system?
7. What is the role of profits in the economic system?
8. What economic responsibilities are best fulfilled by government?
9. What is «the gross national product»?
VI. Define the terms:
competition
economic self-interest
profit motive
private property
GNP
consumers
profit
price system
VII. Translate into English:
1. Приватна власність, цінова система, конкуренція — головні
«опори» економічної системи. 2. Цінова система відповідає на такі
питання: а) які товари та послуги виробля тимуться? б) як їх
вироблятимуть? в) хто їх отримуватиме? 3. Економічні стимули
впливають на наше рішення, що і де купити. 4. Бізнесмени купують
або продають землю чи інші природні ресурси, якщо сподіваються
на прибуток від цієї угоди. 5. Валовий національний продукт — це
загальна вартість усіх товарів і послуг, вироблених за один рік. 6.
Для того щоб купити щось, треба мати гроші. 7. Споживачі — це
люди, які користуються товарами та послугами для задоволення
своїх потреб.
VIII. Read and dramatize the following dialogue:
Mary (a student): Would it be troubling you too much, Mr.Brown, if I ask you
some questions about economics?
Mr. Brown (an American teacher of economics): Not at all, dear. I'll answer all
your questions with great pleasure, but what particulars are you
interested in?
M.:
I'm mostly interested in everything concerning the American economic
system.
Mr. B.: Well, ask your questions and I'll do my best to satisfy you.
M.:
Thank you. First of all I should like to know what is Adam Smith and why
is he considered «the father of modem economics»?
Mr. B.: Well, you see, 1776' the year that we associate with the signing of the
Declaration of Independence, also marked the publication in England of
one of the most influential books of our time «The Wealth of Nations»
written by Adam Smith. It earned the author the title «The father of
economics».
M.:
Did he describe the principal elements of the economic system in this
book?
Mr. B.: Yes, he did. He differed with the physiocrats who argued that land was
the only source of wealth. He also disagreed with the mercantilists who
measured the wealth of a nation by its money supply, and who called for
government regulation of the economy in order to promote a «favorable
balance of trade»,
M.:
In Smith's view a nation's wealth was dependent upon
production, not agriculture alone, wasn't it?
Mr. B.: Yes, it was. How much it produced, he believed, depended upon how well
it combined labor and the other factors of production. The more efficient the
combination, the greater the output, and the greater the nation's wealth.
The heart of Smith's economic philosophy was his belief that the economy
would work best if left to function on its own without government regulation.
In those circumstances, self-interest would lead business firms to produce
only those products that consumers wanted and to produce them at the
lowest possible cost. They would do this, not as a means of benefitting
society, but in an effort to outperform their competitors and gain the
greatest profit. But all this self-interest would benefit society as a whole by
providing it with more and better goods and services, at the lowest prices.
M.: Now, I know why Adam Smith is considered «the father of economics». I
think that the other sections dealing with the factors of production, money
and international trade are as meaningful today as when they were first
written.
Mr. B.: Yes, of course. Adam Smith gave the best description of the principles
upon which our economic systems are based.
IX. Make your own dialogue using the following words,
expressions and word-combinations:
the role of government
price system
private property
gross national product
free enterprice
the American economic system
competition
X. Open the brackets using the Present Indefinite Tense in the
Passive Voice:
Model: Every society (to face) with the identical problem of scarcity.
Every society is faced with the identical problem of scarcity.
1. Human wants (to unlimit), but the resources necessary to satisfy
those wants (to limit). 2. The total value of the goods and services
produced by the economy in a single year (to call) the gross national
product (GNP). 3. Mr. Redd (to offer) an excellent price for selling his
land. 4. The term capital (to use) often by business people. 5.
Monopolies can set the price at which their goods (to sell).
XI. Read and change the sentences according to the model:
Model: Adam Smith describes the principal elements of the economic
system in his book «The Wealth of Nations».
The principal elements of the economic system are described by Adam
Smith in his book «The Wealth of Nations». 1. Everything concerning the
American economic system interests me. 2. They consider Adam Smith
«the father of modern economics». 3. Economic incentives influence our
decisions about what and where to buy. 4. Economic forces affect
decisions in the world of business. 5. Prices direct market economies.
XII. Translate into English:
1. Рентою називають ціну за користування землею. 2. Термін
«капітал» часто вживається бізнесменами. 3. Економічні системи
можуть бути класифіковані як традиційні, загальні та ринкові. 4.
Людей, які користуються товарами та послугами для задоволення
своїх потреб, називають споживачами. 5. Загальна вартість усіх
товарів і послуг за один рік називається валовим національним
продуктом.
XIII. Communicative situations:
Marta Redd owns a 10-acre plot of ground at the eastern edge of town. It
is next to an area that is «going commercial». Last month Ms. Redd was
offered an excellent price for selling her land to the Blue Manufacturing
Company. Blue wanted to erect a new plant on the land. Ms. Redd knew
that if she sold her acreage to the firm she would receive more than if
she continued to lease it to Frank White, a farmer who is presently
growing vegetables on the land.
a)Why did Blue Manufacturing want to buy Ms. Redd's land?
b)Why is Redd likely to accept Blue's offer?
c)How will these events affect White?
d) Explain how the story illustrates the ways that the
opportunity cost of land, profits, and the profit motive affect
the use of land.
e) Describe a situation in which the profit motive would
affect the use of another productive resource (labor, capital,
or entrepreneurship).
LESSONS (УРОКИ)
LESSON І
THE FUNCTIONS OF AN EXECUTIVE (ФУНКЦИИ РУКОВОДИТЕЛЯ
DIALOGUE
(Anna is having lunch with her sister Barbara. Anna has just ac-cepted a
position as an Administrative Assistant. Her boss is an ex ecutive with a firm
that manufactures heavy machinery used in con struction.)
Barbara You've got a new job, Anna. My congratulations.
Anna
Thanks, Barbara.
Barbara Tell me a few words about your boss. What does he do?
Anna
Well, he is one of the vice-presidents of the company, so he's rather
important. He is an executive.
Barbara Do you know the difference between an executive, a mart ager and an
administrator?
Anna
I am afraid I can hardly tell you the difference, I think these words are
interchangable and they really aren't different in many companies.
Barbara
Anna
What about your company?
In our company the top officers are called administrators. The next
highest group — the vice-presidents, the heads of major departments
and branch plant managers — are executives like my boss.
Barbara Is that all?
Anna
The group below consists of managers, they are general managers and
foremen.
Barbara So I see that an organisation has a number of positions and some
people have more authority than others.
Anna
You are right.
Barbara But it would be interesting to know more about the functions of an
executive like your boss.
Anna
I'd say he makes a lot of important decisions. He sets objectives,
Barbara
Anna
Barbara
Anna
Barbara
Anna
Barbara
coordinates work, delegates authority, makes hiring, firing,
evaluating and just general leading.
It seems to be important.
It is important. It's evident that making careful decisions is
the basis of good management.
But do you work under much pressure?
Barbara, you know I am quite used to working under pressure from my
last job. I am also accustomed to lots of paper work and red tape.
Good for you.
And what's more important I feel that I can learn a lot because my boss
is very competent.
Good, I think we'd be in a hurry not to get late for the work.
VOCABULARY EXERCISES
ACTIVE VOCABULARY
executive — руководитель,
администратор
vice-president — вице-президент
manager — управляющий, администратор
administrator — управляющий,
администратор
head of department — руководитель отдела
foreman (pl. foremen) — мастер, руководитель
position — должность
to set objectives — ставить
цели
to delegate authority — pacпределять обязанности
to work under pressure — paботать по принуждению
red tape — зд. бюрократическая, канцелярская работа
to be competent — быть компетентным
Exercise 1. Transform the sentences according to the model
Model: I'm accustomed to setting objectives.
I'm used to setting objectives.
1. We are accustomed to having unlimited liability. .
2. He is accustomed to delegating authority. .
3. They are accustomed to hiring and firing people.
4. She is accustomed to working as a head of the department. .
5. You are accustomed to working under pressure.
6. The executive is accustomed to making decisions.
Exercise 2. Change the modal verb according to the model.
Model: We ought to set objectives this month.
We should set objectives this month.
1. They ought to talk about the functions of an executive.
2. A manager ought to make careful decisions.
3.An executive ought to be very competent.
4.A vice-president ought to decide on hiring, firing, vacation, working hours.
5.The board of directors ought to plan objectives and changes.
6.They ought to have a meeting with the head of the department.
Exercise 3. Your executive is a very tough man. What shout
his staff do to please him? For ideas:
to be creative — творчески относиться к делу
to be well-organized — быть хорошо организованным
to keep fit — держать себя в форме
to be punctual — быть пунктуальным
to be enthusiastic — быть энтузиастом
to obey the rules — подчиняться правилам
Exercise 4. Answer the questions.
1.What working position is the best for you?
2.Are you accustomed to working under pressure?
3.Are you accustomed to a red tape job?
4.Do you want to be an executive or an administrator of a big company? What
should you do for it?
5.What qualities do you need to be an executive of the company?
6.What does it mean to be a competent manager?
Exercise 5. Supply the articles where necessary. Translate.
... principal trends of our activities are:
—training, retraining, enhancing skills and establishing ... system ... continuous
education of ... managers and specialists in ... field of . personnel management as
... whole;
—establishing ... criteria and methods of ... personnel selection and qualification
of ... personnel and ... social development work;
—providing ... personnel activities with ... effective personnel, technologies,
developing and putting into ... practice ... modern forms and methods of ...
personnel management;
—studying and sharing... world experience of ... personnel management,
consulting in ... field of ... personnel management.
Exercise 6. Supply the correct tense-forms of the verbs. Translate.
To be engaged in such activities (to be) necessary to have an organization
sufficiently independent of state structures, free to carry out its plans that (to unite)
qualified specialists on the work with personnel. The prototype of such an
organization (to be) the cooperative «The Kyiv Inculcation Centre "Personnel"»
which (to be) created in 1989.
At that time the organization (to establish) its branches in Ukraine, Byelorussia
and Russia which (to train) more than one thousand staff workers early.
The work of the People's University (to make) possible to extend the research
conducted, master the system of training, improve and perfect a scientific and
methodical provision of the process of studies.
Text
WHERE AND HOW TO HIRE AN EMPLOYEE?
1. An employer has several options to consider when he wants to hire a new
employee. First of all, he may look within his own company. But if he can't find
anybody suitable for the position, he will have to look outside the company. If
there is a personnel office in the company, he can ask them to help him to find a
qualified applicant. The employer can also use other valuable sources, for
example, employment agencies, consulting firms, placement offices and
professional societies. He can also advertise in a newspaper or in a magazine and
request candidates to send in resumes.
2.The employer has two sets of qualifications to consider if he wants to choose
from among the applicants. He must consider both professional qualifications and
personal characteristics. A candidate's education, experience and skills are
included in his professional qualifications. These can be listed on a resume.
Personal characteristics or personality traits must be evaluated through interviews.
ACTIVE VOCABULARY
employer — наниматель, работодатель
option — выбор
to consider — рассматривать,
принимать во внимание
employee — служащий, работающий по найму
to be suitable for the position —
соответствовать должности
personnel office — отдел
кадров applicant — кандидат на
должность
valuable source — ценный
источник
employment agency — агентство
по найму
consulting firm — консультационная фирма
to advertise — помещать
о’бьявление, рекламировать .
resume — резюме .
two sets of qualifications —
два вида характеристик
experience — опыт, впечатление evaluate through interviews —
оценивать через интервью,
собеседование
COMPREHENSION QUESTIONS
1. Which options should an employer first consider when he wants to hire a new
employee?
2. What services does a personnel department provide?
3. In what way can the new employees be found outside one's company?
4. What qualifications does the employer consider in choosing an employee?
5. What is meant by "professional qualification" for a job?
6. What personal characteristics does the administrator consider when choosing
an employee?
VOCABULARY PRACTICE
Exercise 1. Choose the necessary word and put it in the sentence (to advertise,
resume, employee, applicant, personnel office, qualification, agency,
personal).
1. We are going to interview three ... on the position.
2. If you need applications for this position, ... in a special section of the local
newspaper.
3. Personnel office will help you to find a new ... .
4. All the information about the staff of the firm can be found in....
5. She has a good ... for the position: a college degree, good work experience.
6. I want to find a new secretary, so I'll call an employment ... .
7. If you are an applicant for the position, you have to write your ...
8. Don't ask him ... questions, it will be impolite.
Exercise 2. Translate into English.
1. Его должность в компании очень важна.
2. Администратор ставит цели, принимает на работу, увольняет.
3. Она не любит работать по принуждению.
4. Я привычен к канцелярской работе.
5. Управляющий должен быть компетентним.
6. Руководитель этой группы — очень талантливый специалист.
7. Нам нужно нанять нового служащего.
8. Поместите обьявление в газету.
9. Этот руководитель с большим опытом.
10.Мы должны рассмотреть два вида характеристик.
11.Кандидата на должность должны послать резюме.
12.Вы найдете всю информацию в отделе кадров.
13.Обратитесь в агентство по найму.
14.Наниматель должен обратиться в консультационную фирму.
For the student: While translating the sentences mind the accentuation and be
ready to speak about.
For the teacher: Remind the students of the theory (Present Indefinite Tense).
As you begin your reading, you are probably wondering, why study economics?
In fact people do it for countless reasons. Some study economics because they hope
to make money. Others worry that they will be illiterate if they cannot understand
the laws of supply and demand. People are also concerned to learn how budget
deficits and inflation will affect their future. All these reasons, and any more , make
good sense. Still, we have come to realize, there is one overriding reason to learn the
basic lessons of economics. All your life - from cradle to grave - you run up against
the brutal truth of economics. As a voter, you make decisions on issues - the budget
deficit, taxes, and foreign trade - that cannot be understood until you have mastered
the rudiments of this subject.
Choosing your life's occupation is the most important economic decision you will
make. Once you have earned your income, economics will help you decide how
much to spare or save. Of course, studying economics is not guaranteed to make you
a genius. But without economics the dice of life arc simply loaded against you. No
need to belabor the point. We hope you will find that, in addition to be useful,
economics is a fascinating field in its own right. Generations of students, often
discover how stimulating economics can be.
EXERCISE № 5
Sentence Structure.
For the student: While translating the sentences mind the accentuation.
For the teacher: Remind the students of the theory (Present Continuous Tense).
In an exciting new development, economists are turning to laboratory and other
controlled experiments to understand complex economic processes. 2. He is looking
for a more challenging position where his field of specialization can be exploited in a
more stimulating environment. 3. He realizes that our company is growing rapidly,
and that he would be expected to contribute to that growth. 4. At the moment he is
attending a training course at the Goethe Institute in order to perfect his German. 5.
Mr. Sutherland is going away tomorrow for two weeks. 6. In some cases unhappy
employees are challenging the arbitrary rules, which have been uses by the airlines to
recruit only good-looking women. 7. We are recruiting more and more graduates. 8.
James is working at home until the new office is ready.
EXERCISE № 6
Sentence Structure.
For the student: While translating the sentences mind the accentuation.
For the teacher: Remind the students of the theory ( The Infinitive).
As an example of analysis, consider the drive to protect domestic workers and firms
from foreign competition. 2. The key ingredient in such a controlled experiment is to
vary saccharin and hold all other things equal, thereby allowing the scientists to
determine data. 3. It is difficult to replicate the real economy in a laboratory, and
people often behave peculiarly in experiment situations. 4. Attempts of individuals
to save more in a depression may lessen the community's total savings. 5. People
sometimes believe that there is an objective reality outside themselves and that the
task of science is to discover the facts and laws of nature or society. 6. Newborn
babies see light but do not yet perceive that the light forms objects. As they grow
up, they begin to organize light, touch, and sound into parents. 7. But no sooner do
we begin to understand the world around us, than we become captives of our own
knowledge. 8. Growing up on planet Earth, it was natural for our ancestors to believe
that the rest of the universe revolved around them. 9. Growing up in a capitalist
economy, we may find it hard to sympathize with or even understand socialist
systems. 10. Just as Newton, Einstein, and Planck revolutionized perceptions in
physics, so did the giants of economics like Smith, Marx, and Keynes - indeed, all
whose names appear on the family tree of economics to show on the back endpaper
of this book - transform economic understanding by converting the young and openminded.
EXERCISE № 7
Modal Verbs.
For the student: While translating the sentences mind the accentuation.
For the teacher: Remind the students of the theory (Modal verbs).
How can we understand the damage done by inflation? One way is to study
historical inflations. 2. Analysis of History and facts are central to an empirical
science like economics, but facts cannot tell their own story. 3. To recorded history
we must add economic analysis, for only by developing and testing economic
theories can we shape the jumble of data and facts into a coherent view of reality.
4. What do we mean by economic analysis ? This is approach which can deduce or
predict certain kinds of economic behaviour on the basis of prior assumptions about
how people or firms are motivated or will act. 5. What might be done? Some people
suggest putting barriers on trade, say by taxing imports or by selling quotas. 6.
People could argue endlessly about the impacts of such import restraints. 7. Or they
could study the predictions of economic supply and demand analysis. 8. Where might
we use statistics? With millions of workers, you can hardly hope to compile history
of each one to explain the disparity. 9. Using these data you might then employ
statistical techniques to estimate what fraction of the difference in earnings of men
and women is due to
In some (I) …….the President and Congress can choose to increase taxes or
reduce government spending or both. (2) ……is applied by changing the level of
tax receipts relative to federal spending. (3) …….refers to regulating the supply
of money as a way of stabilizing the economy. (4) ……..occurs when
government's revenues are less than its expenditures. A reduction in the
(5) …….will serve to reduce demand and lower prices. It is the responsibility of
the President to control the level of this (6) ……..in the country. Since the funds
come from within the firm they are described as internal funds. The rest must
come from outside, or (7) …….
EXERCISE № 10
Producing the Correct Tenses.
For the student Give the English translation of the text.
For the teacher: Oral or written; group or individual.
Українська економіка на піднесенні. Після декади спаду вона засвідчує один з
найпотужніших темпів зростання в Європі, але важливо винести правильні
макроуроки з нелегкого перегону 2003-го. Якість економічного зростання
минулого року не сприяла розв'язанню всіх суперечностей. Де плюс - там
мінус. Стабільний курс гривні наражається на відчутний інфляційний
податок за підсумками року. Високе зростання ВВП - на майже непомітні
зміни у структурі виробництва. Рекордний індустріальний випуск продукції та
послуг - на кризу в аграрному секторі. Справжній інвестиційний вибух (32 %
за 9 місяців) - на очевидне гальмування зростання реальних доходів
населення. Рекордні валютні резерви країни - на зростання зовнішнього
боргу. Стабільна облікова ставка Нацбанку - на уповільнення зниження
вартості кредитів комерційних банків. Окрема розмова про бюджетні доходи,
які зростали так стрімко, що в Держказначействі та на місцях не встигати
витрачати їх.
EXERCISE № 1
Discussion.
For the student Be ready to inform the audience on the latest economic news
(home or international).
For the teacher: From individual presentation to group discussion.
КОНТРОЛЬНІ ЗАВДАННЯ
Варіант 1
1. Перекладіть текст з англійської мови на українську та поставте
запитання до нього.
ECONOMIC SYSTEMS
There are a number of ways in which a government can organize its economy and
the type of system chosen is critical in shaping environment in which businesses
operate. An economic system is quite simply the way in which a country uses its
available resources (land, workers, natural resources, machinery etc.) to satisfy the
demands of its inhabitants for goods and services. The more goods and services that
can be produced from these limited resources, the higher the standard of living enjoyed
by the country's citizens.
THERE ARE THREE MAIN ECONOMIC SYSTEMS: Planned
economics
Planned economies are sometimes called "command economies" because the state
commands the use of resources (such as labour and factories) that are used to
produce goods and services, as it owns factories, land and natural resources. Planned
economies are economies with a large amount of central planning and direction, when
the government takes all the decisions. The government decides production and
consumption. Planning of this kind is obviously very difficult, very complicated to
do, and the result is that there is no society, which is completely a command
economy. The actual system employed varies from state to state, but command or
planned economies have a number of common features.
Firstly, the state decides precisely what the nation is to produce. It usually plans
five years ahead. It is the intention of the planners that there should be enough
goods and services for all.
Secondly, industries are asked to comply with these plans and each industry and
factory is set a production target to meet. If each factory and farm meets its target,
then the state will meet its targets as set out in the five-year plans. You could think of
the factory and farm targets to be objectives, which, if met, allow the nation's overall
aim to be reached. A planned economy is simple to understand but not simple to
operate. It does, however, have a number of advantages:
• Everyone in society receives enough goods and services to enjoy a basic standard
of living.
• Nations do not waste resources duplicating production.
• The state can use its control of the economy to divert resources to wherever it
wants. As a result, it can ensure that everyone receives a good education, proper
health care or that transport is available.
A major problem faced by command or planned economies is that of deciding what
to produce. Command economies tend to be slow when responding to changes in
people's tastes and fashions. Planners are likely to underproduce some items, as they
cannot predict changes in demand. Equally, some products, which consumers regard
as obsolete and unattractive, may be overproduced. Planners are afraid to produce
goods and services unless they are sure substantial amounts will be purchased. This
leads to delays and queues for some products.
2. Лексико-граматичний аналіз тексту.
Варіант 2
1. Перекладіть текст з англійської мови на українську та поставте
запитання до нього.
MARKET ECONOMICS
The best examples of this type of economy are to be found in small South-East
Asian states like Hong Kong and Singapore, though even they are not pure examples
of market economies. Even they contain some businesses owned and run by the
state.
In a true market economy the government plays no role in the management of the
economy, the government does not intervene in it. The system is based on private
enterprise with private ownership of the means of production and private supplies of
capital, which can be defined as surplus income available for investment in new
business activities. Workers are paid wages by employers according to how skilled
they are and how many firms wish to employ them. They spend their wages on the
products and services they need. Consumers are willing to spend more on products
and services, which are favoured. Firms producing these goods will make more
profits and this will persuade more firms to produce these particular goods rather
than less favoured ones.
Thus, we can see that in a market economy it is consumers who decide what is to be
produced. Consumers will be willing to pay high prices for products they particularly
desire. Firms, which are privately owned, see the opportunity of increased profits
and produce the new fashionable and favoured products. Such a system is, at first
view, very attractive. The economy adjusts automatically to meet changing
demands. No planners have to be employed, which allows more resources to be
available for production. Firms tend to be highly competitive in such an environment.
New advanced products and low prices are good ways to increase sales and profits.
Since all firms are privately owned they try to make the largest profits possible. In a
free market individual people are free to pursue their own interests. They can become
millionaires, for example. Suppose you invent a new kind of car. You want to make
money out of it in your own interests. But when you have that car produced, you are
in fact moving the production possibility frontier outwards. You actually make the
society better off by creating new jobs and opportunities, even though you become a
millionaire in the process, and you do it without any government help or
intervention. Not surprisingly there are also problems. Some goods would be
undeipurchased if the government did not provide free or subsidized supplies.
Examples of this type of good and service are health and education.
There are other goods and services, such as defence and policing that are impossible
to supply individually in response to consumer spending. Once defence or a police
force is supplied to a country then everyone in this country benefits. A cornerstone
of the market system is that production alters swiftly to meet changing demands.
These swift changes can, however, have serious consequences. Imagine a firm, which
switches from labour-intensive production to one where new technology is
employed in the factory. The resulting unemployment could lead to social as well as
economic problems. In a market economy there might be minimal control on working
conditions and safety standards concerning products and services. It is necessary to
have large-scale government intervention to pass laws to protect consumers and
workers.
2. Лексико-граматичний аналіз тексту.
Варіант З
1. Перекладіть текст з англійської мови на українську та поставте
запитання до нього.
MIXED ECONOMICS
Command and market economies both have significant faults. Partly because of
this, an intermediate system has developed, known as mixed economies. A mixed
economy means very much what it says as it contains elements of both market and
planned economies. At one extreme we have a command economy, which does not
allow individuals to make economic decisions, at the other extreme we have a free
market, where individuals exercise considerable economic freedom of choice without
any government restrictions. Between these two extremes lies a mixed economy. In
mixed economies the government controls some resources whilst others are used in
response to the demands of consumers. Technically, all the economies of the world
are mixed: it is just the balance elements between market and planned elements that
alters. Some countries are nearer to command economies, while others are closer to
free market economies.
So, for example, Hong Kong has some state-controlled industry, while Cuba has
some privately owned and controlled firms. The aim of mixed economies is to avoid
the disadvantages of both offers. So, in a mixed economy the government and the
private sector interact in solving economic problems. The state controls the share of
the output through taxation and transfer payments and intervenes to supply essential
items such as health, education and defence, while private firms produce cars,
furniture, electrical items and similar, less essential products.
The UK is a mixed economy: some services are provided by the state (for example,
health care and defence) whilst a range of privately owned businesses offers other
goods and services. The Conservative government under Margaret Thatcher switched
many businesses from being state-owned and controlled to being privately owned as
part of its privatization programme. This has taken the UK economy further away
from the planned system.
2. Лексико-граматичний аналіз тексту
РART I ECONOMIC SYSTEMS
An economic system is an accepted way of organizing production, establishing the
rights and freedom of ownership, using productive resources, and governing business
transactions in a society.
When studying economic systems one could view the people of the whole world as
participating in one worldwide economic system and to some degree economists
occasionally do. But they customarily distinguish between economic systems.
Sometimes the distinctions are broad — as between capitalistic and socialistic;
sometimes the distinctions are narrow — ones made on the basis of national
boundaries, as the American economic system, the British economic system, the
Japanese, and so on.
But all societies are faced with the problem of scarcity, as they differ considerably
in the way they tackle the problem. One important difference between societies is in
the degree of government control of the economy.
At one extreme lies the completely planned or command economy, where all
economic decisions are taken by the government. At the other extreme lies
completely free-market economy. In this type of economy there is no government
intervention at all. All decisions are taken by individuals and firms. Households
decide how much labour and other factors to supply, and what goods to consume.
Firms decide what goods to produce and what factors to employ. The pattern of
production and consumption that results depends on the interactions of all these
individual demand and supply decisions.
In practice all economies are a mixture of the two. It is therefore the degree of
government intervention that distinguishes different economic systems. It is
nevertheless useful to analyze the extremes, in order to put different mixed economies
of the real world into perspective.
Countries also differ in the type of government intervention as well as the level. For
example, governments intervene through planning, through nationalization,
through regulation, through taxes and subsidies, through partnership schemes with
private industry, and so on.
It is possible to group the different economic structures into the following basic
types: the traditional economy, the command economy, the free-market economy,
the mixed economy.
TRADITIONAL ECONOMIES
Traditional economic systems are usually found in the more remote areas of the
world. Such systems may characterize isolated tribes or groups, or even entire
countries. They are less common today than they were in earlier decades. Typically,
in a traditional economy most of people live in rural areas and engage in agriculture
or other basic activities, such as fishing or hunting.
In traditional societies, people use methods of production and distribution that
were devised in the distant past and which have become the accepted ways of doing
things by a long process of trial and error. The strong attachment and habit is often
reinforced by superstition, religious beliefs. People may hold on to traditional ways
of life because they believe that some misfortune will befall them if they deviate
from the accepted patterns of life and work.
In these societies we find that the division of land among the families in the
village or tribe, the methods and times of planting and harvesting the selection of
crops, and the way in which the produce is distributed among the different groups
are all based upon customs. Year by year little is changed; indeed, a change in
working procedures may well be regarded as an affront to the memory of one's
ancestors or as an offence against the gods.
The basic economic problems do not arise as problems to be discussed and argued
about. They have all been decided long ago. One follows the path that one was bom
to follow; a son follows in the footsteps of his father and uses the same skills and
tools. A caste system such as obtained in India until quite recent times provides a
good example of the rigidity of a traditional society. The production problems (i.e.
What? and How?) are solved by using land as it has always been used and by the
worker carrying out the traditional skills according to his or her fixed place in the
social structure. The distribution problem (i.e. For Whom?) is solved in a similar
manner. There will be time-honored methods of sharing out the produce of the harvest and the hunt. The elders, the heads of families, the women, and the children
will receive shares according to ancient custom.
Traditional solutions to the economic problems of production and distribution are
encountered in primitive agricultural and pastoral communities. The economics of
the Burmese village or Bedouin tribe will be much the same today as they were a
thousand years ago. But even in advanced countries, tradition still plays some part in
determining how the economy works. For example, we are all familiar with industries
in which it is customary for the son to follow his father into a trade or profession
ownership, n
private ownership
collective ownership
corporate ownership
public ownership
transaction, n
business transaction
credit transaction
market transactions
productive resources
view, v.
scarcity, n.
tackle a problem
labour, n.
manual labour
surplus labour
forced labour
skilled/unskilled labour
labour contract
labour exchange
labour hours
lost labour
supply, v.
demand, n.
consumption, n.
devise, v.
process of trial and error
attachment, n
reinforce, v
deviate from, v
1) власність, право власності
2) володіння
приватна власність
колективна (загальна) власність
акціонерна власність
суспільна власність
справа, угода, операція
ділова операція (угода),
господарська
операція
кредитна угода
ринкові угоди
виробничі ресурси
1) оглядати, обдивлятися; дивитися;
2) розглядати; оцінювати; судити,
мати судження
недостача,
брак;
убогість,
обмеженість вирішувати проблему;
розв'язувати задачу
праця, робота, завдання
фізична праця
додаткова праця
примусова праця
кваліфіковані/некваліфіковані
робітники
трудовий договір
біржа праці
години праці, робочий час
марна праця; марні зусилля
постачати, доставляти, давати
потреба, вимога, попит
1) споживання, витрачання;
2) затрата, витрата (енергії)
вигадувати, винаходити; розробляти
процес спроб та помилок
прихильність, відданість, вірність
посилювати, підсилювати, зміцнювати
відступати (від правила), відхилятися
tribe, n.
custom, n.
affront, n.
ancestor, n.
offence, n.
rigidity, n.
time-honoured, adj.
encounter, v.
(від курсу), порушувати (стандарти
тощо)
плем’я, рід, клан
звичай, звичкка
образа, кривда
предок, прабатько, попередній власник
образа, кривда; порушення (закону),
жорстокість, твердість, негнучкість
освячений віками
стикатися, наштовхуватися, зустріти
І. Match the words from the text with their corresponding definitions on the
right (a-l):
1) rigidity
2) attachment
3) affront
a) deliberate show of disrespect
b) make stronger by adding smth more
c) racial group united by language and customs, living as a
community under one or more chiefs
4) reinforce
d) stiffness, inflexibility
5) ancestor
e) act of joining
6) superstition
f) usual and generally accepted behaviour among members of a
social group
7) devise
g) think out, plan
8) encounter
h) look at, examine, consider
9) tribe
i) find oneself faced by
10) custom
j) state of being not available in sufficient quantity; smallness of
supply compared with demand
11)view
k) irrational fear of what is unknown
12) scarcity
1) one of those persons from whom one is descended
//. Complete the following sentences:
1. The distinctions between economic systems are made ...
2. Societies differ in the way ...
3. At one extreme lies ..., at the other ...
4. In fact all economies are ...
5. Government intervention could be through ...
6. Basic types of economic organization ...
7. People often hold on to traditional ways of life ...
8. A change in working procedures may be regarded ...
9. A son follows his father ...
10. The production problems are solved ...
11. Traditional economies are encountered in ...
12. People of the whole world could be considered as participating ...
13. In advanced countries tradition ...
14. All decisions in the command economy are taken ...
15. In the free-market economy firms decide ...
III. Match the words on the left with their synonyms on the right There may be
more than one synonym.
up to the minute
predecessor
ownership wide
distribution consider
variety frontier
offence wrongdoing
tempt job
rigidity property
allocation
recent diversity
boundary
border
mistake
broad possession
view error
labour entice
ancestor inflexibility
work
affront
IV. Supply the correct word from the
box for each
sentences given below:
consumpdevise
footsteps
mixed
tion
variety
distinguish labour
distribution
scarcity (2)
supply
engage
skills
tradition
supplies
free-market
command
traditional
allocation profit
tackle
intervention
space in the
regulatory
affect
resources
trial
demand
1. If we look at the different political and social structures, we are tempted to say
that people are making use of a great ___________ of economic systems.
2. Every human being encounters the problem of _______— even a Robinson
Crusoe.
3. In traditional societies a son follows in the of his father and uses the same
______ and tools.
4. The ______ of oil didn't go down when the tax was raised.
5. Economists customarily _______ between different economic systems.
6. In completely ______ economy all decisions are taken by the government.
7. In traditional societies, people use methods of production and
that were ________ in the distant past and which became the ac
cepted ways of doing things by a long process of and error.
8. The student didn't know how to ________ this problem, how to start on it.
9. The firm will be receiving new _______ of goods next week.
10. The majority of people in India earn their living by manual ______
11. The oldest and until fairy recent times the most common way in solving
common problems was that of _______.
12. In a _ economy most of the people live in rural areas and ______ agriculture.
13. At the other extreme in a economy, government would play no role in the
______ of resources.
14. Economics is about choices that are made difficult by
_______ the sorts
of choices we, as individuals and as members of society, have to make
every day.
15. In economies, both government decisions and market forces _______ the
allocation of resources.
16. The restaurant owner is more likely to be interested in his than in the efficient
use of society's scarce _______.
17. The government _______ could be through rules and _______ governing the
behaviour of private industries.
18. A rise in ______ is signaled by a rise in price and a rise in is signaled by a fall
in price.
V. Make up sentences of your own with the words and expressions given
below.
worldwide
view, v.
to some degree
on the basis of
scarce, a.
befall, v.
obtain, v. timehono(u)red
deviate from
rigidity
household
labour
consumption
regulation
tax
advanced
working procedures
follow the path
primitive communities
offence, n.
engage in
reinforce, v.
superstition, n
tackle the
problem
remote, a.
skills
tribe, n
tool, n
encounter, v.
be familiar with
VI. Make up questions to which the following statements will be the answers.
Summarize the answers:
Q ...............................
A. Economics is the study of one important aspect of human society — man's
striving to satisfy his needs and desires for material goods and services available
to him.
Q ..............................
A. Men strive to satisfy their needs and desires for goods and services within a
system of relationships to other men, within an economic system.
Q ..............................
A. If we look at the very different political and social structures which exist in the
world today, and the way in which these systems have developed over the years,
we are tempted to say that people have made use of, and are making use of, a
great variety of economic systems.
A. You see, it is possible to group these different economic struc-tures into four
broad categories. These basic types of economic organization are usually
described as Traditional economies, Market economies, Command economies and
Mixed economies.
Q……………………
A. There are three things every economic system must do, so there are three
functions of an economic system.
Q…………………..
A. The first one is to yield a decision on what we are going to produce with our
available productive resources since not everything needed or desired can be
produced.
Q...............................
A. The second function which the economic system performs is that
of deciding how we are going to produce goods and services,
that is, the method we will use.
Q ..............................
A. The third function how these products will be divided up among customers is
the most direct concern to people, for their share of the goods produced can be
increased only be the reduction of some other person's share.
VII. Answer the questions. Begin your answers with:
Well, let me see ... I am not really sure ... As far as I can remember ...
I remember quite clearly that ... I am not sure I can remember all the details but
... Well, I'd just like to say that ... My attitude from the beginning was ... I would
like to say that ...I think/believe that...
1. What are the distinctions between different economic systems?
2. What kind of problem are all societies faced with?
3. In what type of economy all the economic decisions are taken by
the government?
4. Who takes all decisions in the completely free-market economy?
5. Why is it useful to analyze the extremes?
6. What broad categories can different economic systems be
grouped into?
7. Where can traditional economic systems be found?
8.What methods of production and distribution are used by people in traditional
societies?
9. Are the basic economic problems discussed in these societies? 10. How are the
production and distribution problems solved in tra ditional economies?
VIII. Agree or disagree with the statements. Give your reasons. The following
phrases may be helpful:
That 's just what I
think ... I can't agree
more ... The point is
that... Far from it...
Perhaps J could begin
by saying that I
absolutely agree ...
Well, I'm not sure I agree ...
I 'm sorry I have to disagree ...
That's not right I 'm afraid ...
/ think I should be frank to say that...
I'm sorry I can't give you the exact answer ...
1.It is possible to view the people of the whole world
as participating in one worldwide economic system.
2.There are no distinctions between economic systems.
3.All societies are faced with the problem of surplus production of all goods and
services.
4.In the completely planned economy and in free-market economy all economic
decisions are taken by the government.
5.In fact all economies are a mixture of the two.
6.Countries differ in the degree and type of government intervention.
7.One can group the different economic structures into two basic types.
8.Traditional economic systems may characterize the most advanced countries
of Europe.
9.In traditional societies all the economic decisions are based upon customs.
10. The economies of the Burmese village or Bedouin tribe will be much the
same today as they were a thousand years ago.
IX. Translate into English:
1.Суспільство, маючи обмежені ресурси, прагне використати їх найбільш
ефективно, іншими словами, намагається отримати максимальну кількість
продуктів і послуг для задоволення своїх потреб.
2.Різні політичні та соціальні структури використовували та продовжують
використовувати велике розмаїття економічних систем.
3. В історії людства існували такі основні типи економічних систем:
традиційна, командна, ринкова та змішана.
4. Сьогодні, як правило, суспільства організовані за одним з двох зразків. В
одному випадку уряд ухвалює більшість економі-чних рішень, в іншому —
рішення приймаються на ринках.
5. При економіці, подібній до тієї, що діяла у Радянському Союзі, уряд
вирішував всі проблеми виробництва та розподілу; він керував діяльністю
підприємств, був роботодавцем для більшості робітників і вказував, що їм
робити.
6. Ринковою економікою є економіка, в якій приватні особи та фірми
приймають рішення щодо виробництва та розподілу.
7. Насправді в усіх сучасних суспільствах існує змішана економіка з
елементами командної та ринкової систем. Ніколи не існували 100% ринкової
системи.
8. Історично першою економічною системою була традиційна, вона існувала
протягом дуже тривалого часу.
9. Вона базується на традиціях, звичках, які передаються від покоління до
покоління (from generation to generation)
10. Більшість людей при традиційній економіці живе в сільській місцевості і
займається сільським господарством.
11. В традиційному суспільстві використовуються методи виробництва та
розподілу, які були розроблені у далекому минулому.
12. Люди дотримувались традицій та звичок тому, що вони вважали, що якесь
нещастя спіткає їх, якщо вони відійдуть від прийнятого способу життя.
13. Основні економічні питання, такі як виробництво та розподіл, не
потребують обговорення або вирішення у традиційному
суспільстві.
14. В традиційному суспільстві син слідує шляхом батька, ви
користовуючи такі ж самі навички та інструменти.
X. Act as an interpreter:
A.: Economics is the study of one important aspect of human society — man's
striving to satisfy his needs and desires for material goods and services from the
limited resources available to him.
В.: Так, це абсолютно вірно. Я можу додати, що кожне суспільство, маючи
обмежені ресурси, прагне використати їх найбільш ефективно. Іншими
словами, намагається отримати максимальну кількість корисних продуктів
для задоволення своїх потреб.
A.: But this problem can be solved efficiently only within certain economic systems.
If we look at the very different political and social structures which exist in the
world today, and the way in which these systems have developed over the years,
we are tempted to say that people have made use of, and are making use of, a
very great variety of economic systems.
А.: Але, незважаючи на велике розмаїття економічних систем їх можна
згрупувати у такі широкі категорії: традиційну, командну, ринкову та
змішану. Я знаю, що вирішуючи проблему використання обмежених
економічних ресурсів, кожна економічна система повинна дати відповіді
на три основні економічні питання. Чи не можете Ви пояснити, які це
саме питання?
В.: As far as I know there are three things every economic system must do. The first
one is to yield a decision on what we are going to produce with our available
productive resources since not everything needed or desired can be produced.
А.: Я розумію, коли ми питаємо, що виробляти, ми маємо на увазі, які саме
товари та послуги виробляти для задоволення потреб людей, в якій
кількості та асортименті. І в залежності від цього, якою буде структура
виробництва.
В.: You are absolutely right. The second question is that of deciding how we are
going to produce goods and services, that is, the method we will use. Virtually
every product we can imagine can be produced in more than one way. Since our
productive resources are scarce, we want to be certain we use them in the best
way possible, that is, the most efficient way.
А.: Так, одні й ті ж товари можна виробляти по-різному, тому стає питання які
для цього використовувати ресурси, технологію; якою буде організація
виробництва.
В.: And finally, the third question is to decide how these products will be divided up
among consumers. This question is the one most direct concern to people, for their
share of the goods produced can be increased only by the reduction of some other
person's share.
А.: Якщо економіка ефективна, то всі вироблені товари та послуги повинні
бути спожитими. Тому питання, яким чином розподілятимуться доходи,
товари та послуги між окремими людьми є дуже важливим.
В.: І may say, it is no surprise that the most controversial questions about an
economic system frequently turn on the results of the system's decisions on the
allocation of consumer goods and services.
Dialogue В
A. Історично першою економічною системою була традиційна, вона
існувала протягом дуже тривалого часу, а зараз її можна спостерігати у
племенах або країнах з низьким рівнем економічного розвитку.
B. It's quite true, the economies of the Burmese village or Bedouin tribe will be
much the same today as they were a thousand years ago. But even in advanced
countries tradition still plays some part in determining how the economy works.
What are the main characteristics of a traditional economy?
A. Ця економічна система базується на традиціях, звичках, які передаються
від генерації до генерації. Економічне положення людини визначається її
належністю до певного класу, касти чи клану, воно успадковується від
попередніх поколінь.
B. І also know that in a traditional economy most of the people live in rural areas
and engage in agriculture or other basic activities, such as fishing or hunting.
A. При традиційній системі найбільш просто вирішуються три основні
економічні проблеми: що?, як? і для кого? виробляти. Це визначається
традиціями залежно від наявних економічних ресурсів.
B. Such systems may characterize now only isolated tribes or groups. They are less
common today than they were in earlier decades.
Dialogue C,
А.: Розглянуті нами питання — що?, як? і для кого виробляти? — отримали
назву Трьох фундаментальних проблем економіки.
В.: Так, суспільства вирішують ці проблеми по-різному; залежно від форми їх
вирішення розрізняють різні типи економічних систем.
А.: А що таке економічна система?
В.: Під економічною системою розуміють форму організації економіки,
задачею якої є знайти найбільш ефективні форми та методи використання
обмежених економічних ресурсів.
А.: Чи можете Ви пояснити це більш детально?
В.: Так, дуже простими були форми та методи вирішення фундаментальних
економічних проблем Робінзоном Крузо. В залежності від своїх власних
уподобань та смаків він займався мисливством, рибалив або взагалі нічого
не робив. Але зараз картина набагато складніша. Окремі економічні ресурси належать приватним особам або державі. Одночасно, власники
ресурсів виступають як споживачі, їм потрібні товари та послуги для
задоволення потреб.
А.: Які ж основні типи економічних систем існували в історії людства і яка
основна різниця між ними?
В.: В історії людства існували: традиційна, ринкова, командна та змішана
економічні системи. Ринкова та командна — це полярні економічні
системи. Командна економіка спрямовується централізованим контролем
уряду; у ринковій економіці більшість рішень приймається приватними
особами та фірмами. На ранніх етапах розвитку людського суспільства та у
слаборозвинених країнах існувала та існує традиційна економічна
система.
А.: Але, наскільки мені відомо, тепер не існує країн з «чисто ринковою» або
«чисто командною» економічною системою.
В.: Так, це вірно. Для різних суспільств у теперішній час характерними є різні
комбінації командної, ринкової, а іноді і традиційної форми; економіка всіх
країн є змішаною.
Dialogue D
Complete the open dialogue:
A.: I need some information about types of economic systems, I have to write a
course-paper.
В.: І can help you. You see last month I studied this topic at the Uni
versity .......... is an accepted way of organizing production, us
ing productive resources and governing business transactions in a
society. There are four basic types of economic systems.
A.: Well, actually, I know that they are ………..
B.: You are right. In a ..... economy the government makes all decisions about….
In ………. economy the government plays no role in allocating In
a
……….. economy both the and the private sector (businesses and consumers)
play important roles in answering the ………….. questions for soci
ety as a whole.
A. But what about a traditional.... ?
B.: It is usually found in ...... Such systems may characterize ………. Until fairly
recent times the most common way of solving economic problems was that of……
................................................
XL Compose your own dialogues.
XII. Read the following text and give a short summary of it:
Let's look at these three functions of an economic system from an individual point
of view. We see at once that the individual consumer ordinarily does not have
enough purchasing power to buy all the goods and services he would like to have.
No aspect of economics is more obvious to university students than this one. This
inability to buy all the things one would like to buy is merely the reflection at the
level of the individual of the general proposition that economic life is characterized
by scarcity. When one does make a purchase, one is voting for the production of
those goods and voting against the production of all those goods on which the money
is not spent. Each of us in this way contributes a small part of the answer to the
question of what the economic system should produce.
You, as an individual, similarly cast a vote on how it is going to be produced when
you decide what kind of work you will seek or train for. Those fortunate enough to
be owners of non-human productive resources — lands or machines — will have to
decide to what use to put them. Thus we view the problem of how to produce from
the level of the individual. If you will think again about your inability to buy all the
things you would like to buy, you can see this as the working out on the level of an
individual of the rationing function of our economic system. In effect, the system in
this way provides you with your ration of the goods and services produced.
And, finally, your personal economic position may improve because the economy as
a whole is growing, your part in the increased production comes to you in improvement
in your personal standard of living.
PART II COMMAND ECONOMIES
In a command economy the government decides what to produce, how to produce
and for whom to produce. It is more usual to refer to command economies as
planned economies, although strictly speaking, leaving the economy to run itself (i.e.
laissez-faire) may be described as a kind of economic «plan». Nevertheless, in line
with general usage, we shall also use the term «planned economy» to refer to an
economy which is subject to a high degree of direct centralized control.
A planned or command economy is usually associated with a socialist or
communist economic system, where land and capital are collectively owned. The
government plans the allocation of resources at three important levels:
• It plans the allocation of resources between current consumption
and investment for the future. By sacrificing some present consump
tion and diverting resources into investment, it could increase the
economy's growth rate.
The amount of resources it chooses to devote to investment will depend on its
broad macroeconomic strategy: the importance it attaches to growth as opposed to
current consumption.
• At a microeconomic level it plans the output of each industry and
firm, the techniques that will be used, and the labour and other re
sources required by each industry and firm.
In order to ensure that the required inputs are available, the state would probably
conduct some form of input-output analysis. All industries are seen as users of inputs
from other industries and as producers of output for consumers or other industries.
For example, the steel industry uses inputs from the coal and iron-ore industries and
produces output for the vehicle and construction industries. Input-output analysis
shows, for each industry, the sources of all its inputs and the destination of all its
output. By its use the state attempts to match up the inputs and outputs of each
industry so that the planned demand for each industry's product is equal to its planned
supply.
• It plans the distribution of output between consumers. This will
depend on the government's aims. It may distribute goods according
to its judgement of people's needs; or it may give more to those who
produce more, thereby providing an incentive for people to work
harder.
It may distribute goods and services directly; or it may decide the distribution of
money incomes and allow individuals to decide how to spend them. If it does the
latter it may still seek to influence the pattern of expenditure by setting appropriate
prices: low prices to encourage consumption, and high prices to discourage
consumption.
In practice, even with the best computers, the government has an impossible task
in a command economy. It is difficult to imagine that such an economy could ever
produce anything close to an efficient allocation of resources. Not surprisingly, no
pure command economies exist in the real world.
But it is also important to note that no modem economy is without some elements
of command, just as none is devoid of elements of tradition. In all developed and
most underdeveloped countries there is a large measure of government control.
Read, translate and learn the following definitions:
planned
(command)
economy
capital
resources
allocation
investment
a type of economy that is centrally controlled by a government rather than by the amount of goods available
and the amount wanted by customers;
1) the total value of the land, buildings, machinery, etc.;
assets belonging to a business less the sum of any debt it has;
2) money that is used to start a business; 3) money
that is lent or borrowed with interest charged on it;
4) wealth which can be used to produce further wealth;
wealth, supplies of goods, raw materials, etc. which a
person, country, etc. has or can use;
1) the setting aside of money, materials, etc. for a par
ticular purpose; 2) the amount set aside;
1) the purchase of materials, machines, etc. to produce
goods or to sell; 2) the purchase of property, shares,
securities, etc. to sell again, to make a profit or to re
ceive money in the form of interest or dividends; 3) the
money invested;
input
something that is put into business, a system or a process and has an effect on it;
output
the quantity of goods produced by a worker, a machine
or an organization;
inputthe analysis which involves dividing the economy into
output
sectors where each sector is a user of inputs and a supanalysis
plier of outputs to other sectors. The technique examines how these inputs and outputs can be matched to the total
resources available in the economy;
destination a place where people or goods are going to or being sent;
distribution 1) putting parts of a set of things in different places; giving or
sending out; 2) the movement of goods to places where they can be
sold; the arrangements made for this;
goods
manufactured items, e.g. fridges, prepared items, e.g.
flour, or raw materials, e.g. coal that are for sale;
incentive
income
expendifute
price, n.
price, v.
something which incites, rouses or encourages a person;
money (in the form of wages or a salary or profit) received from
work done, or as interest from money invested or a rent from
property owned;
1) action of spending money or using time and re
sources; 2) an amount of money spent;
the amount of money for which something can be
bought or sold;
1) to fix the price of something; 2) to mark the price on
goods in a shop.
II.. Read the text given below and find the equivalents of the Ukrainian words
and expressions in the box:
стимул; отримувати прибуток; за певних умов; запишатися незмінним;
премія (додаткова винагорода); ставити завдання; виконувати план;
відставати від плану; боротьба; зрізати кути; неякісні товари (мотлох);
недооцінювати потенціал виробництва; мати тенденцію; хибний
(помилковий) ефект; вирішувати проблему; засновувати; контролювати
якість; самофінансування; працювати на безприбутково-збитковому
рівні; підвищувати ціни
GETTING INCENTIVES RIGHT
WHEN THE WRONG INCENTIVES CAUSED
A STORM IN THE USSR
Any economic system will involve incentives. For example, under a capitalist
system, firms have the incentive to make profits. This will under certain
circumstances, cause them to produce what the consumer wants and to produce as
efficiently as possible.
Under the Soviet system of central planning that was developed in the 1930s and
remained virtually intact until the 1980s, the main centive for managers and workers
was the bonus. Bonuses were awarded if targets were fulfilled. These targets were
set by the central planning authorities and were normally expressed in quantitative
units: so many tonnes, metres, cubic metres, etc. The bonuses were usually awarded
monthly.
PART I FREE-MARKET ECONOMIES
The free-market economy is usually associated with a pure capitalist system,
where land and capital are privately owned. All economic decisions are made by
households and businesses interacting in markets free of any sort of government
intervention. This kind of economy is also characterized by competition among
businesses seeking a profit.
Individuals in free-market economies pursue their own interests, trying to do as
well for themselves as they can, without government interference.
At first it might seem that an economy in which everyone pursued his or her selfinterest with no government direction at all would be at least as chaotic and inefficient
as a command economy. Adam Smith (1723-1790), a Scottish philosophy professor and
one of the founders of economics, argued strongly against this view in his classic book
The Wealth of Nations (1776). Smith contended that individuals pursuing their selfinterest in a free-market economy would be led, «as if by an invisible hand,» to do
things that are in the interests of others and of society as a whole.
It is assumed that individuals are free to make their own economic choices.
Consumers are free to decide what to buy with their incomes. Workers are free to
choose where and how much to work. Firms are free to choose what to sell and what
production methods to use.
The resulting supply and demand decisions of firms and households are transmitted
to each other through their effect on prices.
The price mechanism. The price mechanism works as follows. Prices respond to
shortages and surpluses. Shortages cause prices to rise. Surpluses cause prices to
fall.
If consumers decide they want more goods (or if producers decide to cut back supply),
demand will exceed supply. The resulting shortage will cause the price of the goods to
rise. This will act as an incentive to producers to supply more, since production will now
be more profitable. It will discourage consumers from buying so much. Price will
continue rising until the shortage has thereby been eliminated.
If, on the other hand, consumers decide they want less goods (or if producers decide
to produce more), supply will exceed demand. The resulting surplus will cause the price
of the goods to fall. This will act as a disincentive to producers, who will supply less,
since production will now be less profitable. It will encourage consumers to buy more.
Price will continue falling until the surplus has thereby been eliminated.
The same analysis can be applied to factor markets. If the demand for a particular
type of labour exceeds its supply, the resulting shortage will drive up the wage rate (i.e.
the price of labour), thus reducing firms' demand for that type of labour and
encouraging more workers to take up that type of job. Wages will continue rising until
demand equalls supply, until the shortage is eliminated.
Likewise if there is a surplus of a particular type of labour, the wage will fall until
demand equalls supply.
The effect of changes in demand and supply. How will the price mechanism
respond to changes in consumer demand or producer supply? After all, the pattern of
consumer demand changes. For example, people may decide they want more bicycles
and fewer skateboards. Likewise the pattern of supply also changes. For example,
changes in technology may allow the mass production of microchips at lower cost,
while the production of hand-built furniture becomes relatively expensive.
In all cases of changes in demand and supply, the resulting changes in price act as
both signals and incentives.
A change in demand. A rise in demand is signalled by a rise in price. This then acts
as an incentive for supply to rise. What in effect is happening is that the high prices of
these goods relative to their costs of production are signalling that consumers are
willing to see resources diverted from other uses. This is just what firms do. They
divert resources from goods with lower prices relative to costs (and hence lower
profits) to those goods that are more profitable.
A fall in demand is signalled by a fall in price. This then acts as an incentive for
supply to fall. The goods are now less profitable to produce.
A change in supply. A rise in supply is signalled by a fall in price. This then acts
as an incentive for demand to rise. A fall in supply is signalled by a rise in price.
This then acts as an incentive for demand to fall.
The interdependence of markets. The interdependence of goods and factor markets.
A rise in demand for goods will raise its price and profitability. Firms will respond by
supplying more. But to do this they will need more inputs. Thus the demand for the
inputs will rise, which in turn will raise the price of the inputs. The suppliers of inputs
will respond to this incentive by supplying more. This can be summarized as follows:
1.Goods market
— Demand for the goods rises.
— This creates a shortage.
— This causes the price of the goods to rise.
— This eliminates the shortage by choking off some of the demand and
encouraging firms to produce more.
2. Factor market
— The increased supply of the goods causes an increase in the demand for factors
of production (i.e. inputs) used in making it.
— This causes a shortage of those inputs.
— This causes their prices to rise.
— This eliminates their shortage by choking off some of the demand and
encouraging the suppliers of inputs to supply more.
Interdependence exists in the other direction too: factor markets affect goods
markets. For example, the discovery of raw materials will lower their price. This will
lower the costs of production of firms using these raw materials and will increase the
supply of the finished goods. The resulting surplus will lower the price of the goods
which will encourage consumers to buy more.
Thus, even though all individuals are merely looking to their own self-interest in
the free-market economy, they are in fact being encouraged to respond to the wishes of
others through the incentive of the price mechanism.
When markets are highly competitive, no one has great power. Competition
between firms keeps prices down and acts as an incentive to firms to become more
efficient. The more firms there are competing, the more responsive they will be to
consumer wishes.
The more efficiently firms can combine their factors of production, the more profit
they will make. The more efficiently workers work, the more secure will be their jobs
and the higher their wages. The more carefully consumers decide what to buy, the
greater the value for money they will receive.
Thus people pursuing their own self-interest through buying and selling in
competitive markets help to minimize the central economic problem of scarcity, by
encouraging the efficient use of the nation's resources in line with consumer wishes.
From this type of argument, the following conclusion is often drawn by defenders of
the free market: 'The pursuit of private gain results in the social good'. This is obviously a highly significant claim and has profound moral implications.
So the framework of a market system contains six essential features. They are:
1)private property
2)freedom of choice and enterprise
3)self-interest as the dominating motive
4)competition
5)a reliance on the price system
6) a very limited role of the government.
чистий; ясний (про звук); однорідний (про колір); правильний, що
відповідає певним нормам (про мову); теоретичний; незіпсо-ваний;
правдивий, чесний; абсолютний
набирати, приймати, брати на себе (to ~ responsibility — брати на
assume, v.
себе відповідальність); вживати (заходів); вважати, припускати
(it's ~d that... — вважають, що...)
повідомляти, передавати (to ~ news — передавати новини);
transmit, v.
передавати у спадщину; посилати, відправляти, проводити,
пропускати (iron ~s heat— залізо проводить тепло)
household, n. сім 'я, родина, домочадці; хатнє (домашнє) господарство; (The Н.)
двір (монарха)
shortage, n. недостача, нестача, брак (чогось); дефіцит
лишок, зайвина, решта; активне сальдо
surplus, n.
market, n.
ринок, базар; продаж; збут, попит; торгівля; ринкова ціна
pure, a.
factor (input) ринок факторів виробництва (напр. робочої сили)
market
зовнішній ринок
foreign
(external,
overseas, outer)
market
внутрішній ринок
domestic
(home, internal,
inland) market
commodity
товарна біржа, ринок товарів
market
foreign exchange market
money market
implication, n. enterprise, n.
reliance, n.
real estate market
securities (stock) market
sheltered (closed)
market
eliminate, v.
divert, v.
choke off, v.
secure, a.
in line with
gain, n.
pursuit, n.
claim, n. rate, n.
wage rate birth rate discount rate exchange
rate growth rate interest rate profound, a.
валютний ринок
збільшення; прибуток
переслідування, погоня; пошук,
грошовий ринок; ринок
домагання; заняття; виконання вимога,
короткострокового капіталу
претензія; заявка; позов норма; ставка,
ринок нерухомості
тариф; курс; ціна; темп; відсоток,
ринок цінних паперів, фондова
частка, коефіцієнт ставка заробітної
біржа
плати коефіцієнт народжуваності
закритий ринок (доступ не членів облікова ставка валютний курс темп
зростання відсоткова ставка
організації обмежений, напр..
глибокий, ґрунтовний (~ changes —
фондова біржа)
усувати, виключати; ліквідувати, кардинальні зміни); важкий для
знищувати; ігнорувати, не брати розуміння, складний; повний, абсолютний
залучення, утягування; причетність,
до уваги, не зважати
відхиляти, відвертати, відводити; співучасть, приховане значення,
контекст підприємство;
відволікати (увагу)
задушити, заглушити, знищувати; підприємливість; діловитість,
ініціативність; підприємництво; справа
відмовити (когось від чогось)
(особл. ризикована); починання, захід
безпечний, надійно захищений;
довір'я, довіра, упевненість (to
надійний, міцний, вірний;
have/to place/to put ~ in/on/upon smb/smth
спокійний, упевнений у
— покладатись на когось/щось); опора,
відповідності до
надія
користь, нажива; виграш;
1. Match the words from the text with their corresponding definitions on the right (al):
1) private property
2) competition
3) wage
4) surplus
5) shortage
6) business
7) profit
8) producer
9) cost
10) raw material
a) an amount that is more than is needed
b) a person or group of people making, distributing,
buying or selling goods or providing services; a firm or
company
c) a house, factory, land, buildings, etc. owned by an
individual or an independent company without being
controlled or financed by the government
d) the money gained in a business deal esp. the difference
between the amount earned and the amount spent
e) a natural substance, e.g. copper, wood, coal, used to
make something in an industrial process
f) activity in which a person or company that offers the
same or better goods and services as another and therefore
competes for the same customers
g) the amount of money paid or charged for goods and
services
h) a person, organization or country that makes or
grows something
i) money paid to a worker for work done
j) a situation where there is not enough of something
II. Complete the following sentences:
1. In the free market economy all economic decisions
2. This kind of economy is also characterized ...
3. Individuals in free-market economies pursue ...
4. Adam Smith argued against...
5. The resulting supply and demand decisions ...
6. Prices respond to ...
7. If consumers decide they want more goods ...
8. Price will continue rising until...
9. If consumers decide they want less goods ...
10. The same analysis ...
11.In all cases of changes in demand and supply ...
12.The rise in demand is signaled by ...
13. Interdependence exists ...
14. Even though all individuals are looking to their own self-interest ...
15. Competition between firms ...
16. The more efficiently firms can combine their factors of production ...
17. People pursuing their own self-interest through buying and selling in competitive
markets help ...
18. The framework of a market system contains the following features: ...
III. Match the words on the left with their synonyms on the right. There may he more
than one synonym.
unmixed
real estate
consider
deep
decrease
interference
eliminate
reduce
rivalry
assume
immovable propincrease
erty
apply
profound
lower
intervention
pass on
rise
competition
use
cost
pure
cut back
price
choke off
transmit
believe
IV. Supply the correct word or word combination from the box for each space in the
sentences given below:
profit (2)
private ownership fail
trade
price
equity
interfere
competition (2)
advocate
drawbacks
choices (2)
fairness
distribute
services
free enterprise
freedom of enterprise
advertising
market
reliance
respond
intervention
persuade
property
households
1. Capitalism is characterized by ______________ of capital and by among
business seeking a profit.
2. The ___________of people greatly influence decisions about production
and use of resources.
3. ___________means that businesses and individuals with the capital may
enter any legal business venture they wish.
4. Under capitalism, any business or individual can earn ___________by
producing useful goods or ____________.
5. _________is another important part of capitalism.
6. A business that consistently loses money and makes no profit will _______.
7. Adam Smith argued with one or two exceptions, that the state should not ____ in the
functioning of economy.
8. The state should allow _________for firms and free _______for countries.
9. Adam Smith is considered to be the father of the «libertarian
movement» — the movement that _________ the absolute minimum amount of state
________in the economy.
10.But Smith was not blind to______ the of unregulated markets
11. The free-market economy can _____ quickly to changing demand and supply
conditions.
12.Giant firms may charge high _______ and make large
13. Rather than merely responding to consumer wishes, they may attempt to ________
consumers by ________.
14.Power and _______ may be unequally ________.
15. _______on prices as a mechanism for distributing goods and re
sources implies that we believe such a distribution is fair.
16.The efficiency of the price system may conflict with standards of _____ and
_______.
17.The decisions of firms and _____interact through ________to
make all the «what», «how» and «for whom» decisions.
18. It is assumed that individuals are free to make their own economic _______.
V. Make up sentences of your own with the words and expressions given below:
price mechanism
shortage, n.
surplus, n.
cut back, v.
incentive, n.
profitable, adj.
exceed, v.
cause, v.
encourage, v.
be applied to
be associated with
interact, v.
be characterized by
intervention, n.
essential features
interference, n.
self-interest
inefficient, adj.
argue, v.
transmit, v.
eliminate, v.
be signaled by
interdependence, n.
finished goods
secure, adj.
cost, n.
divert from
affect, v.
respond, v.
in line with
VI. Make up questions to which the following statements will be
the answers:
Q ...............................
A. The institution of private property is a major feature of capitalism. It means that individuals have the right to own, control and
dispose of land, buildings, machinery, and other natural and man-made resources.
Q ............................
A. Freedom of enterprise means that individuals are free to buy and hire economic
resources, to organize these resources for production, and to sell their products in the
market of their own choice.
Q ....................... .....
A. Freedom of choice means that owners of land and capital may use these resources as
they see fit, that workers are free to enter (and leave) any occupations for which they are
qualified, that consumers are free to spend their incomes in any way they wish.
Q ............................
A. The motive for economic activity is self-interest. Each unit in the economy attempts
to do what is best for itself. Firms will act in ways which will lead to maximum profits
(or minimum losses). Owners of land and capital will employ these assets so as to obtain the highest possible rewards.
Q ............................
A. Economic rivalry or competition is another essential feature of a free enterprise
economy. In the market for each commodity there are large numbers of buyers and
sellers. Each buyer and seller accounts for an insignificant share of the business
transacted and hence has an influence on the market demand and market supply. So,
competition is the regulatory mechanism of capitalism as no single firm or individual is
large enough or strong enough to control a market and exploit the other buyers or
sellers.
Q ................. ..........
A. The most basic feature of the market economy is the use of the price mechanism for
allocating resources to various uses. The price system is an elaborate system of
communications in which innumerable free choices are aggregated and balanced against
each other. The decisions of producers determine the supply of a commodity; the decisions of buyers determine the price. Changes in demand and supply cause changes in
market prices and bring about the changes in the ways in which society uses its
economic resources.
VII. Answer the questions. Begin your answers with:
Well, let me think for a
moment
For one thing ... for another
thing ...
In my opinion ...
There's no doubt that ...
That's a very
interesting question ...
Perhaps I could begin
by
saying that...
As far as I can remember ...
The point is that ...
As a matter of fact ...
1. What are the major characteristics of the free-market economies?
2. Who makes all economic decisions in the free-market economy?
3. Whose interests do individuals in the free market economy pursue?
4. What did Adam Smith write in his book The Wealth of Nations?
5. What does freedom of choice mean?
6. How does the price mechanism work?
7. In what way do changes in demand and supply affect the price mechanism?
8. What can you say about the interdependence of markets?
9. Why are individuals being encouraged to respond to the wishes of other people?
10. Competition in the free-market economy acts as the regulatory mechanism, doesn't
it?
11. How do people help to minimize the central economic problem of scarcity?
VIII. Agree or disagree with the statements. Give your reasons. The following phrases
may be helpful:
It's hard to say now, though I'm
sure ...
I have got the impression that...
Actually ... That's exactly what I
was going to say myself...
Nothing could be further from the
truth ...
No, I'm sorry, I disagree entirely ...
That's not right, I'm afraid ...
Yes, it's absolutely true. More
than that...
I'd like to underline the fact
that...
I feel I should point out that ...
I'd like to make it clear that...
1. The market system of economic organization is commonly described as a free
enterprise or laissez-faire, or capitalist system.
2. The pure market system exists in many countries of the world.
3. The institution of private property is a major feature of capitalism.
4. Shortages cause prices to fall and surpluses cause prices to
rise.
5. The decisions of producers determine the supply of commodity;
the decisions of buyers determine the price.
6. In the free-market economy freedom of choice means that producers don't respond to
consumers preferences — they produce whatever they want.
7. Since capitalism is based on the principle that individuals should be free to do as they
wish, it is not surprising to find that the motive for economic activity is self-interest.
8. When markets are highly competitive, no one has great power.
9. The more efficiently firms can combine their factors of production, the less profit they
will make.
10.The pursuit of private gain results in the social good.
IX. Translate into English:
1. Вільна
ринкова
економіка
зазвичай
асоціюється
з
капіталіс
тичною системою, де земля і капітал знаходяться у приватній
власності.
2. Ринкову економіку визначають декілька важливих елементів, один з яких —
приватна власність.
3. Під приватною власністю розуміється право окремих людей і фірм володіти
засобами виробництва (підприємствами, заводами, фермами, шахтами і т.п.).
4. Мотив отримання прибутку — ще один важливий елемент у
ринковій системі.
5. Прибуток змушує виробників виготовляти товари, що мають попит у покупця, і
поставляти їх на ринок.
6. Ця ж вимога прибутковості змушує продавців робити продукт із найменшими
витратами, тому що найменші витрати дозволяють: а) підвищити прибуток, тобто
різницю між продажною ціною і витратам; б) знизити ціни у боротьбі з
конкурентами; в) зробити і те і інше.
7. Той факт, що вільна ринкова економіка функціонує автоматично є однією з її
великих переваг.
8. Коли ринки є високо конкурентними, ніхто не має надмір.
ної влади.
9. Конкуренція між підприємствами стримує ціни і стимулює
фірми працювати більш ефективно.
10. Таким чином, люди, керуючись власними, особистими інтересами, купуючи та
продаючи товари на ринку, мінімізують основну економічну проблему обмеженості
ресурсів, стимулюючи ефективне використання цих ресурсів згідно з бажаннями
споживачів.
X. Act as an interpreter:
Dialogue A
A.: Is it true that in a free-market economy all economic decisions are made by
households and businesses interacting in markets?
В.: Так, у ринковій системі всі економічні рішення приймаються домашніми
господарствами і фірмами, які взаємодіють на ринку. І споживачі, і власники
ресурсів є особисто незалежними та у своїх діях керуються власними особистими
інтересами.
A.: How is the problem of what we are going to produce solved in a free-market economy?
В.: Фірмам вигідніше виробляти ті товари, які бажають купити споживачі та ладні
сплатити за них більшу ціну. Саме в цих галузях зростає прибуток фірм, як наслідок,
у виробництво залучаються додаткові ресурси, зростає їх обсяг. Якщо ж споживачам
не подобаються певні товари, ціна на них зменшується, вона навіть не покриває
витрати фірми на ресурси, виробництво стає збитковим і, звичайно, скорочується.
Таким чином, відповідь на питання ЩО виробляти дає ринок.
A.: Do you think that the most basic feature of the market economy is the use of the
price mechanism?
В.: Так, система цін є однією з дуже важливих рис ринкової системи. Вона є
індикатором бажань споживачів, та розміщує виробничі ресурси суспільства згідно з
ними. В ринковій економіці немає ніякої «вищої» (державної) влади, яка б
вирішувала, що виробляти і як використовувати ресурси.
A.: In what way is the second problem (How to produce?) solved in the market
economy?
B. Ефективність виробництва у ринковій економіці досягається завдяки
матеріальному стимулюванню. Для фірм таким стимулом є максимальний прибуток,
який вони отримують, якщо продадуть свою продукцію за найменшою ціною, а свої
витрати зроблять мінімальними. Домашні ж господарства намагаються продати свої
виробничі ресурси як можна дорожче. Таким чином вирішується проблема ЯК
виробляти.
A. We know that the question how all goods and services will be divided up among
consumers is the most direct concern to people. How is it solved in the market economy?
B. Доходи, які отримують домашні господарства за виробничі ресурси, визначають,
хто буде споживати вироблені товари та послуги (ДЛЯ КОГО виробляти?). Таким
чином, ринок автоматично і ефективно дає відповідь на три основні питання
економіки. Його порівнюють з досконалим комп'ютером, який реєструє
уподобання людей щодо певних товарів та послуг, передає цю інформацію фірмам,
переміщує згідно з цим необхідні ресурси та визначає, хто отримає кінцеві
продукти.
Dialogue В
A. Ми бачимо, що ринкова система має багато переваг. Але як і будь-яка система
вона має і свої недоліки. Що ви можете сказати про них?
B. It's quite true. Although the market mechanism is an efficient method for choosing the
mix of output, it is not without blemishes. One of the foremost objections to the market
mechanism concerns equity. Use of price system presumes allegiance to certain standards
of fairness. In particular, reliance on prices as a mechanism for distributing goods and
resources implies that we believe such a distribution is «fair». For example, goods and
services distributed through the market mechanism go disproportionately to those with the
greatest ability to pay. Rich people live in comfortable homes, while some poor people
sleep in abandoned cars.
A. Так, ця проблема є дуже важливою. Але ми знаємо, що вона не єдина. Інша дуже
серйозна проблема стосується товарів, що не мають ціни, чи не так?
В.; Yes, this problem is the one that strikes at the very heart of the market mechanism.
There are a lot of valuable things that cannot be priced. Clean air, for example, is
something nearly everyone considers precious. Nevertheless, it is difficult to imagine how
we could buy it.
Clean air is not alone among unpackageable and unmarketable goods. The list of them is
long, including such diverse products as national defence, traffic congestion, and the
vibration from your neighbour's stereo. In every such case, we are sidestepping the
market mechanism: benefits or costs are being exchanged without direct payment. These
kinds of interactions are referred to as externalities. They violate the basic market concept that
everything must be packaged, marketed and exchanged for a negotiated price.
А.: Ще однією дуже важливою проблемою є недостатньо висока конкуренція між
фірмами, що може призвести до підвищення цін.
В.: Yes, competition between firms is often limited. A few giant firms may dominate
an industry. In these cases they may charge high prices and make large profits. Rather
than merely responding to consumer wishes, they may attempt to persuade consumers
by advertising. Consumers are particularly susceptible to advertisements for products
that are new to them and of which they have little knowledge. Lack of competition and
high profits may remove the incentive for firms to be efficient.
Dialogue C
А.: Багато економістів, починаючи з Адама Сміта і закінчуючи Фрідріхом А. Фон
Хайєком вважали, що механізм вільного ціноутворення є найбільш ефективним
засобом розподілу ресурсів. Але життя виявляє, що ринкова система працює не
так гладко, як було нами розглянуто, не всі рішення, які приймає ринок є
задовільними. В таких випадках мова йде про «неспроможність» ринку. Які ж ці
недоліки або обмеження ринкової системи (market imperfections); які питання вона
не може вирішити автоматично?
В.:
По-перше, ефективність ринкової системи базується на механізмі вільної
конкуренції, який передбачає велику кількість виробників певного товару. В
дійсності в багатьох галузях існує перевага для крупних виробників, що
призводить до монополії. Це може супроводжуватися завищенням цін на їхню
продукцію та зниженням цін на виробничі ресурси.
A. Tак, це абсолютно зрозуміло. Я думаю, що в таких випадках в ринкові відносини
змушена втручатися держава, захищаючи споживача та обмежуючи монополіста.
B.: По-друге, в економіці будь-якої країни існує досить широке коло так званих
«суспільних» товарів (socially desirable goods), які не можна продати на ринку
окремим споживачам (оборона, охорона порядку, система правосуддя, національні
парки і т.п.). Користування ж ними окремими людьми не зменшує їх кількості для
інших споживачів.
А.: І знову в цьому випадку держава бере на себе «виробництво» таких товарів,
витрати на них компенсуються за рахунок податків. Держава також бере на себе
витрати на утримання безробітних, хворих та людей похилого віку.
В.: По-третє, внаслідок діяльності приватних фірм виникають так звані зовнішні
ефекти (externalities). Вони можуть бути позитивними (наприклад, біля кінотеатру
будується автостоянка, це не тільки привабить додаткових глядачів, але й дозволить
прибрати автомобілі з узбіччя, що добре для інших водіїв та пішоходів) або
негативними. Наприклад, цукровий завод забруднює річку, виникає необхідність
очищення води, що пов'язано з додатковими витратами. В такому випадку
втручається держава, змушуючи фірму покрити витрати.
А.: Таким чином, всі ці проблеми: недосконала конкуренція, потреба у суспільних
товарах, зовнішні ефекти є недоліки ринку (market failure). Вони є прикладами тих
випадків, коли ринок неспроможний ефективно розподілити ресурси.
Dialogue D
Complete the open dialogue:
A.: Oh, Helen, I'm glad to meet you at last! How are you?
B.: To tell you the truth, I'm very tired. There was a students conference at the University
and I made a report.
A.: What is its subject?
B.: A Market System. You know the question is of great importance for future
economists.
A.: I know that originally the word «
_______» meant a specific place
where goods were bought and sold.
В.: You are right. But at present ________ is an arrangement by which
buyers and sellers of ______ and _______ interact to determine ______ and quantity.
A.: I know that in a market system almost everything has its ______ each commodity
and each ________.
B.: Yes, in fact even different kinds of human labour have ________, namely, wage
rates. But it is also very important to see the role of ____ ________ in guiding the market
mechanism. ________ provide the
rewards and penalties for business.
A.: As far as 1 know ________ lead firms to enter areas where consumers want more goods and to leave areas where consumers want
_______ goods _______ force the firms to use the most _______ techniques of production.
XI. Compose your own dialogues.
XII. Read the following text and give a short summary of it:
ADAM SMITH (1723—1790) AND THE 'INVISIBLE HAND' OF THE MARKET
Many economists would argue that modern economics dates from 1776. That was the
year in which Adam Smith's An Inquiry into the Nature and Causes of the Wealth of
Nations was published — one of the most important books on economics ever written.
Adam Smith was born in 1723 in Kirkcaldy, a small coastal town north of Edinburgh. His
father died when Adam was just a baby, and for most of his life he lived with his mother:
he never married. After graduating from Glasgow University at the age of 17, he first
became a fellow of Balliol College Oxford, but then returned to Scotland and at the age
of 29 became professor of moral philosophy at the University of Glasgow. At the age of
40 he resigned and spent three years touring the continent where he met many influential
economists and philosophers. He then returned to Scotland, to his home town of
Kirkcaldy, and set to work on The Wealth of Nations.
Tne work, in five books, is very wide ranging, but the central argument is that market
economies generally serve the public interest well. Markets guide production and
consumption like an invisible hand. Even though everyone is looking after their own
private self-interest, their interaction in the market will lead to the social good.
In book I, chapter 2, he writes:
Man has almost constant occasion for the help of his brethren and it is in vain for him to
expect it from their benevolence only. He will be more likely to prevail if he can interest
their self-love in his favour, and show them that it is for their own advantage to do for him
what he requires of them. Whoever offers to another a bargain of any kind, proposes to do
this. Give me that what 1 want, and you shall have this which you want, is the meaning
of every such offer; and it is in this manner that we obtain from one another the far
greater part of those good offices which we stand in need of. It is not from the benevolence
of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to
their own interest. We address ourselves, not to their humanity but to their self-love, and
never talk to them of our own necessities, but of their advantages.
Later in book IV, chapter 2, he continues: Every individual is continually exerting himself
to find out the most advantageous employment of whatever capital he can command. It is his
own advantage, indeed, and not that of the society, which he has in view. But the study of his
own advantage naturally, or rather necessarily, leads him to prefer that employment which is
most advantageous to the society ... he intends only his own gain, and he is in this, as in many
other cases, led by an invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it. By pursuing his own interest
he frequently promotes that of society more effectually than when he really intends to promote
it.
He argued, therefore, with one or two exceptions, that the state should not interfere in the
functioning of the economy. It should adopt a laissez-faire or «hands-off» policy. It should
allow free enterprise for firms and free trade between countries.
This praise of the free market has led many on the political right to regard him as the father
of the 'libertarian movement' — the movement that advocates the absolute minimum
amount of state intervention in the economy. In fact one of the most famous of the
libertarian societies is called 'the Adam Smith Institute'.
But Smith was not blind to the drawbacks of unregulated markets. In book I, chapter 7, he
looks at the problem of monopoly:
. A monopoly granted either to an individual or to a trading company has the same effect as
a secret in trade or manufactures. The monopolists, by keeping the market constantly understocked, by never fully supplying, the effectual demand, sell their commodities much
above the natural price, and raise their emoluments, whether they consist in wages or profit,
greatly above their natural rate.
Later on he looks at the dangers of firms getting together to pursue their mutual interest:
People of the same trade seldom meet together, even for merriment or diversion, but the
conversation ends in a conspiracy against the public or in some contrivance to raise
prices.
PART II MIXED ECONOMIES
Command and free-market economies are both unrealistic extreme cases. They are
interesting mainly because they help us understand the operation of real economies, which
are complex mixtures of these two extremes.
In a mixed economy both the government and the private sector (businesses and
consumers) play important roles in answering the «what,» «how,» and «for whom»
questions for society as a whole.
Although economies use some mix of market signals and government intervention to
fashion economic outcomes, there are profound differences in those mixes. The U.S.
economy is distinguished by a heavy reliance on the market mechanism. Other «mixed»
economies include a heavier dose of government intervention.
Our heavy reliance on the market mechanism is based on its efficiency in allocating
resources and goods in accordance with consumer preferences.
At the same time, our apparent commitment to government intervention reflects the
judgment that market outcomes are not always best. The market mechanism is only a
means to an end, not an end in itself. When we find the mechanism or the outcomes
incompatible with our visions of the good and proper life, we can and do seek to change
them. This explains why we formulate public policies to reduce unemployment, to slow
the rate of inflation, to foster economic growth, and to redistribute incomes. If the market
mechanism could itself ensure fulfillment of these goals, economic policy would be unnecessary.
We should not embrace market interference too hastily, however. We have no assurance
that public policy is capable of improving our economic performance or that such policy
will be properly implemented. That is to say, nonmarket signals are imperfect, too. Accordingly, we cannot assume that all our economic problems are attribut able to the market
mechanism or that public policy will always provide a solution. On the contrary,
experience has taught us that the government may fail too.
We speak of government failure when government intervention fails to improve economic
outcomes — or makes them worse. Identifying a market problem is not the hardest part of
formulating economic policy; devising an intervention strategy that will not worsen the
problem is far more difficult. This is the core dilemma that the countries of Eastern Europe
had come to recognize as they assessed the failures of central planning. It is the same
dilemma that U.S. policymakers must confront on a smaller scale at every turn. Should we
try to fix every market blemish? Can we be sure that our policy intervention will improve
economic outcomes? These basic concerns—the competing risks of market failure and
government failure—are emphasized by economists.
— an economy in which some industries are owned by the state and
others are owned by individuals and groups of people;
— a person who buys goods and services for his/her own use and not
for resale
— 1) the situation of buying and selling goods for personal use, not for
consumer
resale; 2) the buying and selling of a particular consumer product or
service;
consumer
— the ability to produce a good result without wasting time or energy;
market
(Note: not used with a or an. No plural and used with a singular verb
only);
efficiency
— something to which one has made himself/herself responsible;
promise; pledge; undertaking;
— effect or result of market activity; operation;
commitment
market
— lack of paid work; unused labour (Note: not used with a or an. No
outcomes
unemployment plural and used with a singular verb only);
— the rise in prices resulting from the increase in
inflatio
demand for goods and services, which may be
n
connected with an increase in the money supply (Note:
not used with a or an. No plural and used with a
singular verb only);
interference
— coming into opposition; hindering or preventing;
government fail— government intervention that fails to inj
ure
prove economic outcomes;
dilemma
— situation in which one has to choose between
two things, two courses of action, etc. both unfavourable or undesirable;
scale
— relative size, extend, etc.; on a large/small
scale — to a large/small extent/degree;
blemish
— mark, etc. that spoils the beauty or perfection of something; moral defect;
basic concerns
— basic problems/questions in which one is
interested or which are important to one.
mixed
economy
If. Read the text given below and find the equivalents of the Ukrainian words and
expressions in the box:
видатний критик; головна риса; переслідування власних інтересів; досягати мети;
точка зору; отримувати винагороду; страждати від негативних наслідків
ледарства; стимулювати ініціативу; шукати роботу; зусилля; розміщення ресурсів;
максимальне задоволення потреб; вважати; вводити тарифи; стягувати податки;
вільна конкуренція; «невидима рука»; виробляти товари; регулювання цін; підприємства громадського користування; відстань у милях (гроші за відстань у милях)
ADAM SMITH: THE WEALTH OF NATIONS
Adam Smith, a professor at the University of Edinburgh in Scotland in the late 1700s, was
a prominent critic of mercantilism. Smith wanted to make individuals and their needs the
focal point of the economy; he felt that individuals' pursuit of their own best interests
would lead a nation to attain its goals. His book The Wealth of Nations (published in
1776) presented many of his views. Smith believed:
— People do their best when they reap the rewards of hard work and intelligence and
suffer the penalties of laziness. (He favored the use of profits as a means of encouraging
individual incentive and initiative.)
— People should be free to conduct business or seek work that provides them with the
greatest reward for their efforts.
— What serves the individual also serves society. The pursuit of individual self-interest
leads to the best allocation of the nation's resources and thus to the maximum satisfaction
of people's needs.
Smith assumed the enemy of human freedom at that time to be the state—the
internationalist, mercantilists government that imposed tariffs, granted monopolies, levied
taxes, and above all sought to improve what was best left to itself. Smith argued for free
competition among all producers. He felt that free competition can exist only if the
government follows a policy of laissez-faire, which encourages government to leave
business and the economy alone. (The French word laissez-faire means to let people do as
they choose.) Only on rare occasions, in order to prevent monopolies, should a laissez-faire
government interfere with the operation of the economy. Instead, the economy is guided
by the «invisible hand» of competition. This was the key to Smith's philosophy: if
government stayed out of the economy and allowed businesses and consumers to pursue
their own best interests, competition among producers would keep prices low while
generating the goods demanded by consumers. The invisible hand that guides us, according
to Smith, is the profit motive. Expected and actual profits motivate business leaders to do
what must be done.
Though many of Adam Smith's suggestions have been practiced in the United States, the
concept of laissez-faire has generally been rejected. Ignoring Smith's advice that the economy
operates best when left alone, government officials have actively sought to improve its
operation. Today, government involvement covers numerous areas, including:
Price regulation.
Truth in advertising.
Nonsmoking regulations.
mileage standards.
Maintenance of product quality.
Highway construction.
Regulation of public utilities.
Automobile safety, emission, and
Pollution standards. Personnel hiring decisions.
III. Match the words on the left with their definitions on the right Memorize the
definitions. Use the words in the sentences or situations of your own.
1) competitor
a) to put a limit on something;
2)regulate
b) to control or direct an industry, an organization,
etc. by rules and restrictions;
3) regulation
c) an amount that must be paid when particular
goods are imported into a country or occasionally when they are
exported; a list of prices charged for goods or services;
4) restrict
d) the people employed by an organization; the
staff; the department in an organization that recruits and trains
employees and deals with their problems;
5)restriction
e) a plan of action or statement of ideas;
6)policy
f) a person or company that offers the same or
better goods and services than another and therefore competes
for the same customer;
7) tariff
g) keeping something in good condition or working order;
keeping something in existence at the same level, standard;
8) tax
h) a sum of money that a government takes from people's
incomes, company profits, the sale of goods, etc. to be used for
public spending;
9) taxation
i) a rule or a restriction made by an authority;
10) maintenance j) the system of raising money for public spending;
11) personnel
k) a limit on something; the act of limiting something.
IV. Complete the sentences by filling in the following table. Connect the figures (1-8)
with the letters (a-h)
1) Because of the problems of
both the purely market and the
purely command economies,
all real world economies are
...
a) to choose what techniques to
use, and where to obtain inputs.
2) All market economies ...
b) of a government business that
competes with private businesses
such as Federal Express and
United Parcel Service.
3) In mixed command
economies ...
c) mixture of the two systems.
4) Managers in mixed
economies may be allowed ...
d) have freedom of choice in
purchasing goods and services,
in selecting an occupation or a
school, and in deciding how to
use money that is earned.
5) Consumers under
capitalism…
e) in such areas as medical
research, electric power
generation, and communication.
6) The American economic
system became mixed when ...
7) An economic system also
becomes mixed when
government competes directly
with business, which often happens ...
f) involve some degree of
government intervention.
g)
government
established
operating guidelines and laws for
businesses to follow.
8) The US Postal Service is an
example ...
h) the government may, despite
adopting a system of planning,
allow the prices of goods and
inputs to fluctuate to some extent
in line with changes in demand
and supply.
V. Make up questions to which the following statements will be the answers:
Q ...........................
A. In the mixed economies private property is an important institution.
Q ...........................
A. Supporters of the mixed system hold the view that private property provides and
important incentive for people to work, save and invest.
Q ............................
A. Many scientists oppose the abolition of private property and argue that it is possible to
prevent great inequalities of wealth from arising by the appropriate government measures
(e.g. heavy taxation of income and wealth).
Q ............................
A. The mixed economy has come into being as a result of increasing government
intervention and control in capitalist countries.
Q ............................
A. In mixed market economies, the government may control the pattern of production
and consumption, by the use of legislation (e.g. making it illegal to produce unsafe goods),
by direct provision of goods and services (e.g. education and defence), by taxes or by
nationalization.
A. The government also regulates the macroeconomic problems of unemployment,
inflation, lack of growth and balance of payments deficits, by the use of taxes and
government expenditure, the control of bank lending and interest rates, the direct control
of prices and incomes, and the control of the foreign exchange rate.
Q ............................
A. The relative merits of alternative mixtures of government and the market depend on
the weight attached to various political and economic goals: goals such as liberty,
equality, efficiency in production, the fulfilling of consumer wishes, economic growth
and full employment.
Q ............................
A. No one type of mixed economy is likely to be superior in all respects.
VI. Agree or disagree with the statements. Give your reason. The following phrases
may be helpful:
I personally think that...
From what I remember ...
I hold the same opinion on the
matter...
This may (not) be altogether right,
you know ...
I agree with you in a sense, but...
I'm sure (certain) of it...
It can be confidently said
that ...
I'm sorry I have to disagree ...
That's not right...
I don't think it's true ...
Far from it...
1. The economic systems of different countries vary according to the extent to which
they rely on the market or the government to allocate resources.
2. At the one extreme in a command economy decisions are made by the interaction of
demand and supply. Price changes act as the mechanism whereby demand and supply
are balanced. If there is a shortage, price will rise until the shortage is eliminated. If
there is a surplus price will fall until that is eliminated.
3. At the other extreme is the free-market economy in which the state makes all the
economic decisions. It plans how many resources to allocate for present consumption
and how many for investment for future output. It plans the output of each industry, the
methods of production it will use and the amount of resources it will allocate. It plans
the distribution of output between consumers.
4. A command economy has the advantage of being able to address directly various
national economic goals, such as rapid growth and the avoidance of unemployment and
inequality. A command economy, however, is likely to be inefficient, a large
bureaucracy will be needed to collect and process information; prices and the choice of
production methods are likely to be arbitrary, incentives may be inappropriate;
shortages and surpluses may result.
5. A free-market economy functions automatically and if there is plenty of competition
between producers this can help to protect consumers' interests. In practice, competition
is limited and it causes equality and macroeconomic stability.
6. In practice all economies are some mixture of the market and government
intervention. It is the degree and form of government intervention that distinguishes one
type of economy from another.
VII. Answer the questions. Begin your answers with:
Perhaps, I could begin by
saying
that...
I believe you know that...
There is no doubt that...
So, what you are actually
asking
is ...
I have got the impression that...
I really do think that...
I am absolutely convinced
that...
I am glad you asked me
that...
As a matter of fact ...
The point is that...
1. Is there any difference between the countries with a mixed economy?
2. What is our reliance on the market mechanism based on?
3. Are the market outcomes always best?
4. What do we usually do when we find the mechanism or the outcomes incompatible
with our vision of the good and proper life?
5. Can the market mechanism ensure reduction of unemployment, slowing the rate of
inflation and redistribution of incomes?
6. Why is public policy incapable of improving our economic performance?
7. Do you think that public policy will always provide a solution?
8. What is government failure?
9. What is the core dilemma that the countries of Eastern Europe have come to
recognize?
10. What basic concerns are emphasized by economists?
VIII. Translate into English:
У змішаній економіці як держава, так і приватний сектор (до-могосподарства та
фірми) відіграють важливу роль у відповіді на основні економічні питання ЩО? ЯК?
ДЛЯ КОГО? виробляти.
Залежно від ступеня втручання держави в економіку та ролі приватного сектору
розрізняються різні моделі змішаної економіки. Розглянемо деякі з них.
Американська модель базується на заохоченні приватного підприємництва та
високих доходах найбільш активної частини населення. Більша частина
національного виробництва припадає на приватний сектор. Держава створює
прийнятний рівень життя для малозабезпечених, але задача соціальної рівності взагалі
не стоїть. Питання про оптимальний рівень державного втручання є об'єктом
тривалого та напруженого обговорення. Ця модель базується на високому рівні
продуктивності праці та масовій орієнтації людей на досягнення особистого успіху.
Шведська модель. її можна було б назвати антиподом американській, відрізняється
сильною соціальною політикою, що спрямована на скорочення майнової
нерівності людей за рахунок перерозподілу багатства на користь найменш
забезпечених. Основна частина товарів та послуг виробляється з активним втручанням держави, і при перерозподілі доходів державні витрати становлять до 50%
від ВВП при високому рівні оподаткування. Ця модель отримала назву
«функціональної соціалізації», або навіть шведського «соціалізму», при якому
функція виробництва лягає на приватні фірми, а функція забезпечення високого
рівня життя (зайнятість, освіта, соціальне страхування) — на державу. Як наслідок в
країні рівень безробіття — один з найнижчих в світі- значною мірою вирівняні
поточні доходи населення. Але в останній час все частіше економісти та політики
кажуть про те, що подібна «благодійна» діяльність держави негативно впливає на
ділову активність, стримуючи її.
Соціальне ринкове господарство Німеччини. Ця модель сформувалась на основі
ліквідації крупних концернів часів фашизму та надання всім формам бізнесу
(крупний, середній, малий) можливостей для стійкого розвитку. Особливу увагу
держава приділяє підтримці малого та середнього бізнесу для підвищення
ефективності функціонування ринкового механізму. Уряд активно впливає на ціни,
мита, технічні норми; забезпечує охорону навколишнього середовища. Велику роль
він відіграє у вирішенні соціальних питань.
Змішана економічна система Великобританії. Три чверті продукції цієї країни
виробляється в приватному секторі, хоча багато ринків функціонує під суворим
урядовим контролем. Держава бере участь у перерозподілі доходів через систему
податків та субсидій, а також виробляє суспільні товари.
IX. Render into English:
ОСОБЛИВОСТІ ЕКОНОМІЧНОЇ СИСТЕМИ УКРАЇНИ
Яка система існує зараз в Україні? Це дуже важливе для всіх нас і дуже складне
питання. В Україні в останні роки почалися ринкові перетворення, на основі
процесів роздержавлення та приватизації виник приватний сектор (в основному
малі та середні підприємства), який існує поряд з крупними державними підприємствами. Розвиваються ринкові відносини, що сполучаються із залишками
командно-адміністративної системи. В зв'язку з цим економічну систему сучасної
України можна назвати еклектичною або «перехідною». По-перше, вона складається
з елементів командної системи, ринкової системи епохи вільної конкуренції та
сучасної ринкової системи. По-друге, в економічній системі країни весь час
відбуваються інтенсивні зміни. По-третє, цей перехід тривалий за часом; виникло вже
декілька моделей такого переходу (східноєвропейська, прибалтійська, китайська і т. п.).
Остаточний вибір конкретної моделі переходу до змішаної економіки в Україні в
кінцевому ітозі буде визначатись співвідношенням політичних сил в країні,
характером та інтенсивністю ринкових перетворень, масштабами та ефективністю
підтримки українських реформ міжнародним співтовариством, а також історичними
та національними традиціями.
X. Read and translate the following text:
THE U.S. ECONOMIC SYSTEM
The United States has developed the world's largest economic system. The basic parts of
the American economy are illustrated in the following figure. This model, a simplification
of the mixed economic system, includes only the broadest parts of the economy; it does
not include the government.
The Sector
The previous discussion suggests the existence of a network of firms that transcend the
single firm. Now the interfirm cooperative relationships become the appropriate level of
analysis. Alliances and partnerships become key success factors in a large number of
industries. The business sector becomes the focal point of discussion, and interfirm
relationships driven by cooperative interests become the meaningful competitive metric.
A more traditional model might view such cooperative actions as cartel-like behavior.
Such an interpretation would suggest that cooperation is anticompetitive and serves to
stifle innovation. Under the new competition, the opposite is true, because these new
organizational linkages often give rise to heightened competition and are the result of
new and innovative thinking. Milliken, for example, sits at the hub of a number of
interfirm networks whose immediate goal is to improve the inventory levels of the
apparel industry through economic order levels and other types of just-in-time systems.
This cooperation from the mill to the fabricator, retailer, and consumer removes
unnecessary costs from the entire channel of distribution.
The Government
At a deeper level, the Milliken example represents a change in government policy
regarding the interpretation of antitrust behavior. By focusing on a different level of
analysis, concern now shifts to international trade: At stake is the survival of the U.S.
textile industry as it attempts to compete against lower-cost Asian imports. Similar
stories can be told about the horizontal alliances among global airlines, ocean shipping,
and the various research consortia that exist in the semiconductor, specialized metals,
and multimedia industries. In short, when the new competition is taken to a global
context, firms do not have the luxury of a go-it-alone strategy and are likely to be
severely disadvantaged if they try to do so. As we'll discuss elsewhere in the book,
capital and knowledge know no company or national boundaries. Access to national
resources is not sufficient to ensure success. The only sustainable means of production
is knowledge! The rise of the Internet, for instance, has made information widely
available in real time. Drucker7 suggests that the function of the business enterprise is to
make knowledge productive.
THE INTELLIGENT ENTERPRISE
The notion of the intelligent enterprise has a profound impact on the definition of
business. Our goal is not to argue that the U.S. economy has shifted away from its
manufacturing base and become a service economy. Rather, our intent is to show how a
number of Quinn's points serve to reshape managers' thinking. Many of the points raised
here are consistent with the new competition.
Basic Restructuring of the Economy
Basic power relationships have shifted away from those who produce to those who
control information. Whether we examine Toys 'Я' Us, Wal-Mart, or Boeing, it is clear
that all are driven by a need to compete through reduced cycle time. For retailers, the
issue is how to reduce inventory levels so they can be responsive to changing customer
tastes. To be sure, Wal-Mart tracks consumer taste along with its distribution costs with
equal concern. For Boeing, the question is how to develop, FAA-certify, and sell a new
generation of aircraft in the fastest possible manner without sacrificing quality and
safety. For all three companies, sharing information with their partners contributes to
competitive success. These linking technologies permit real-time information access and
sharing that have restructured the economy. It is important to recognize that the 777
went from concept to production without the different stages of development and
prototypes witnessed with the production of the 757 or the 767. Again, the airframe
industry is being redefined as Boeing's constellation of firms compete against AirBus
and its consortium of Pan-European aerospace companies.
Different Organizational Strategies
The notion that organization follows strategy must be complemented by the second
adage that structure follows technology. Organizations have become flatter as a result of
technology, and the concept of mass production as the only way to achieve low costs
has become passe. In later chapters we espouse the merits of mass customization. To be
sure, this new paradigm has changed the face of business forever! Again, these different
structures and strategies are knowledge-based and depend on information exchanges
both among function units within the firm and among different organizations. In short,
command-and-control administrative systems are not effective with these new
organizational forms. In addition, the strategies that emerge allow innovative
relationships with customers and competitors. These new strategies are driven, in part,
by the role of middle managers, as we discuss in Chapter 14, "Leading from the
Middle."
Management Challenges
More and more, the distinction between manufacturing and service is fading as the two
become more intertwined. The issue becomes one of understanding the full value chain,
recognizing unique competencies, and identifying the skills
THE MILLENNIUM PROBLEM
As the world awaits the beginning of the twenty-first century with hopes of peace,
economic prosperity, and increasing freedom across much of the earth, two digits are
causing a problem that knowledgeable people believe will cost the world $1 trillion. The
so-called millennium problem in computers is an object lesson for all of us as we
consider the future.
The problem arose in the 1960s when one of the foremost concerns of software
developers was memory. To save space, programmers shortened dates by eliminating
the first two digits of the year, and the 19 became implicit. Thus 1947 became 47 and
1972 became 72. This seemed innocuous enough, but as the millennium approaches,
these two digits have become a time bomb. When the clock strikes 12 on December 31,
2000, these computer programs will assume that the years have a 20 prefix. A 1947 date
of birth will become 2047, and instead of being 53 years old an individual born in that
year will be considered nonexistent for another 47 years. Individuals born in 1947 who
die in 2005 will have passed away 42 years before they were born! Pensions, interest
payments on loans, insurance premiums, eligibility for federal or state benefits, and
much more will be jeopardized as computers attempt to calculate starting dates, years of
credit, and so forth. The solution is an end-of-century frenzy to rewrite computer codes
in essentially every program at banks, insurance companies, brokerage houses, and
government agencies. How could this have happened, and what does it say about how
firms prepare for the future?
It happened because people overestimated the value of memory and computational time
and underestimated the value and difficulty of software development. Due to
technological advances, there are now laptop computers that are far more powerful than
1960s mainframes, and saving two digits of code by ignoring the century prefix is
unnecessary. At the same time, many of the programs in use today are variations of
programs written 25 or 30 years ago. Embedded in these programs are the quirks and
economies of software development based on old hardware. When these programs were
written, it was assumed that their useful lives would not extend to the end of the
century. In fact, the programs have out-lived their developers, so that those attempting
to correct the problem are not the original creators. This has added to the difficulty. In
response, consulting firms have been established just to address the millennium problem
and to try to develop innovative solutions. A couple of these firms have gone public,
with market values in the hundreds of millions of dollars, reflecting the lure of capturing
some of the trillion dollars to be spent on correcting the problem.
It is not possible to foretell the future. It is possible and essential to consider the future
or, more accurately, futures. Managers need to think broadly about the forces that will
influence their firms and industries. As strategies are formulated, investments made, and
products designed, management must predict their appropriateness in a world that might
be very different from todays. Changes in the workforce, technology, and markets will
all have a significant impact on how firms are organized and on the policies and
procedures they implement. Because the future cannot be predicted with certainty,
management must be prepared to adapt its strategies and plans when the future unfolds
differently than anticipated. Successful firms are not necessarily those that guessed
right, but those that are agile enough to thrive in many different futures.
The millennium problem is a unique one in both the scope of its impact and the
simplicity of its origin. It is a real-life example of chaos theory, where a butterfly
flapping its wings in Malaysia causes an earthquake in California. Seemingly minor
decisions or events can have major consequences, yet those consequences can be
mitigated if we adjust as events unfold and the shape of the future becomes more
apparent.
ELEMENTS OF DEVELOPING SCENARIOS
There is no precise way to develop scenarios, but there are a number of guidelines that
are helpful. Following them keeps the process from going astray. Scenario planning is
neither blue-sky guesswork nor statistical forecasting. It is a process that provides
structure for thinking about the future and is used by many organizations, including
Global Business Network (GBN). Scenario planning entails considering different
possibilities that a firm might confront in the future. Peter Schwartz of GBN has
provided a list of steps to assist those who are developing scenarios.' Exhibit 2.2
summarizes these scenarios. GBN developed scenarios for AT&T, its
EXHIBIT 2.2 Steps to developing scenarios.
1. Identify the focal issue or decision.
2. Key forces in the local environment.
3. Driving forces.
4. Rank by importance and uncertainty.
5. Selecting scenario logic.
6. Fleshing out the scenarios.
7. Implications.
8. Selection of leading indicators and signposts.
Source: From The Art of the Long View by Peter Schwartz. Copyright © 1991 by Peter
Schwartz. Used by permission of Doubleday, a division of Bantam Doubleday Dell
Publishing Group, Inc.
Presen t simple
A Form
Look at the example of how to form the present simple tense of the verb to
work. All verbs except to be and the modals (see Units 23-6) follow this pattern.
I/you/we/they work/do not (don't) work. He/she/it
works/does not (doesn't) work.
Do I/you/we/they work? (Yes, I/you/we/they do./No, I/you/we/they
don't.)
Does he/she/it work? (Yes, he/she/it does./No, he/she/it doesn't.)
COMMON MISTAKES: A common mistake is to forget to put the -s ending on
the he/she/it forms. All verbs except modals must end in -s in the third
person singular affirmative:
WRONG: Our new computer system work very efficiently.
RIGHT: Our new computer system works very efficiently.
A second common mistake is to add the -s to the he/she/it forms of negatives and
questions. We add the -es form to the auxiliary (do), and not to the main verb (work):
WRONG: I know Karl doesn't works in Accounts.
RIGHT: I know Karl doesn't work in Accounts.
В Permanent situations
The present simple is used to talk about actions and situations that are
generally or permanently true:
IBM is the largest computer company in the world; it manufactures
mainframes and PCs and sells its products all over the world.
C Routines and frequency We use the present simple to talk about routines and things we do regularly:
I usually get to the showroom at about 8.00 and I have a quick look at the
post. The sales reps arrive at about 8.15 and we open at 8.30.
D Facts
We use the present simple to talk about scientific or other facts:
Superconductors are special materials that conduct electricity and do not
create any electrical resistance.
E Programmes and
timetables
We use the present simple to talk about programmes and timetables. When
we use the present simple like this, it can refer to the future:
There are two flights to Tokyo next Thursday. There is a JAL flight that
leaves Heathrow at 20.30 and gets in at 06.20, and there is a British
Airways flight that departs at 22.00 and arrives at 08.50.
Practice
Exercise
1 Form
Exercise 2
Permanent situations
(company activities)
Complete the dialogue using the verbs in brackets.
A: Where (1) do yon come (come) from?
B: I(2) ______ (come) from Thailand.
A: (3) ______ (you/live) in Bangkok?
B: No, I(4) ______ (not/live) in Bangkok. I(5) ____(live) in Chang
Mai.
A. What (6) ______ (you/do)?
B. I'm an accountant. I(7) ______ (work) for Berli Jucker.
A. How often (8) _ . (you/travel) England?
B. I (9) _____ (not/come) here very often.
Complete the information about the business activities of the Thai
company Berli Jucker, using the verbs in the box.
operate
own
be
Berli Jucker Group (1) is one of Thailand's oldest trading organizations, and it
(2)
_________ a number of different companies that
(3)
_________ in four main business areas: manufacturing, engineering,
marketing, and services.
export
have
produce
In our manufacturing division, we (4)________factories that
(5)
_________ bottles, soap, and cosmetics for the local market, and we
also (6) ______ medical equipment to Europe.
install
do
manufacture
Our engineering division (7) ________ a great deal of work for
Thailand’s electricity authority; (8) ________Siemens power control
systems, and our factory at Thai-Scandic Steel (9)______ large
steel structures for the electricity industry.
be
handle
import
There(10)______also a Marketing and Distribution division. This
.(11)
___ goods from our factories in Thailand, and also a wide
(12)
____ range of products from overseas.
consist
be
sell
Our services division (13) _______ of a travel agency, Pacific
Leisure, and an insurance group. There (14) ______also a new
Information Systems department which (l5) _______Informix
products and FourGen applications.
Practice
Exercise 3
Routines and frequency
Exercise 4
Scientific facts
Complete the dialogue by putting the verbs into the correct form.
need to speak to Gina about this new publicity brochure. (1)Do
you know (you/know) where she is?
DIANA: She (2) (not/work) on Fridays. She only (3)______(have) a
part-time job now.
BRIAN: Right. When (4) _________(she/come) to the office?
DIANA: Well, she (5)______
(come) in from Monday to Thursday,
but she (not/stay) all day. She usually (7)_______(start) at 9.00 and
(8)
______(go) home at about 2.15.
BRIAN: I
Complete the passage using the verbs in the box.
go
have
make
rise
Cuts in interest rates (l) have a number of good effects on the economy.
Firstly, they(2) _________ it easier for companies to make profits,
because the cost of repaying loans (3) ______ down. As a result, share
prices usually (4) _________.
feel
help
lead
spend
The second reason is that consumers (5) ______more confident, so they
(6)
_____ more in the shops. This also (7)_______ manufacturers and
retailers to increase their turnover. However, if interest rates are too low,
this can sometimes(8) ________ to higher inflation.
Exercise 5
Programmes
and timetables
Read the following dialogue. Make any necessary changes to the verbs
in brackets.
LAURA: I
need to be in Birmingham for a meeting tomorrow by 3.15.
Have you got a train timetable? CLAIRE: Yes, here it is. Right, there (1)
is
(be) a train at 12.47, and that(2) _______(arrive) at 2.50, but
it(3)_______ (stop) at most of the main stations on the way.
LAURA: IS there another one that(4) ____ (get) there before 3.00?
CLAIRE: No, but there (5)_____ (be) an Intercity Express that(6) ___
(get) in at five past.
LAURA: And when (7) ____ (it/leave)?
CLAIRE: It (8) _____ (go) at 1.15.
LAURA(9) ______(be) there any buses to East Street?
CLAIRE: Oh, yes, there's a bus that(10) ___ (run) every ten minutes and
it only(11) _______ (take) about five minutes to East Street.
Production
Choose a word from box A and a word from box В to describe
what these people do, making any necessary changes to the
verbs. А
В
Task l
Personnel officers
An architect
A journalist
Venture capitalists
1.
2.
3.
4.
5.
6.
7.
8.
Management
consultants
A stockbroker
An air steward
Auditors
invest
design
write
check
advise
look after
arrange
buy and sell
An air steward looks after passengers on a plane.
_____________________ stocks and shares.
_____________________ houses.
_____________________ in small, high-risk companies.
_____________________ the accounts of a company.
_____________________ companies on how they should be run.
_____________________ articles for a newspaper.
_____________________interviews.
Task 2
Look at the information about Berli Jucker on page 7, and write
down some similar information about the business activities of
your company.
____________________________________
____________________________________
____________________________________
Task 3
Answer the following questions about your daily
routine.
1 How do you get to work in the morning?
2 How long does it take to get to work?
3 What do you do in the mornings?
4
What do you do for lunch?
5
What do you do in the afternoons?
6
What time do you usually finish?
7
What do you do at the weekends?
Present continuous
A Form
The present continuous is formed by using the present tense of the auxiliary
verb be and the -ing form of the verb:
I am working/am not working.
He/she/it is/is not (isn't)working.
You/we/they are/are not (aren't) working.
Am I working? (Yes, I am./No, I'm not.)
Is he/she/it working? (Yes, he/she/it is./No, he/she/it/ isn't.)
Are you/we/they working? (Yes, you/we/they are./No, you/we/they aren't.)
(For spelling rules, see Appendix 1.)
В Moment of speaking
The present continuous is used to talk about an activity taking place at the
moment of speaking:
I'm afraid Mr Jackson's not available at the moment. He is talking to a
customer on the other phone.
C Current projects
The present continuous is used to talk about actions or activities and current
projects that are taking place over a period of time (even if they are not taking
place precisely at the moment of speaking):
Bartons is one of the largest local construction companies. At the moment we
are building a new estate with 200 houses and we are negotiating with the
council for the sale of development land in Boxley Wood.
D Temporary situations
The present continuous is used to indicate that an action or activity is
temporary rather than permanent. Compare:
Mrs Harding organizes our conferences and book launches.
(The present simple is used because this is generally true.)
Mrs Harding is away on maternity leave, so I am organizing them.
(The present continuous is used because this is only true for a limited time.)
E Slow changes
The present continuous is used to describe current trends and slow changes
that are taking place:
The latest economic statistics show that both unemployment and inflation are
falling, and that the economy is growing at an annual rate of 2.6%.
(For information about how the present continuous is used to refer to the future,
see Unit 13.)
Practice
Exercise 1
Moment of
speaking
Exercise 2
Current
projects
Put the verbs in brackets into the present continuous.
1 Could I ring you back in a few minutes? I am talking (talk) to someone
on the other line.
2 Jane's upstairs with Anne and Roy. They _____(have) a meeting
about the catalogue.
3 What ______ (you/do) here? I thought you had gone to the airport.
4 Could you tell Mr Ford that Miss Lee is here? He ____ (expect) me.
5 Oh no, the printer. (not work). Г11 call the Maintenance Department.
6 This is a very bad line. _____(you/call) from your car phone?
7 I ______ (phone) to tell you that your account is overdrawn by £326.
Read these newspaper extracts about various projects that different
companies are currently involved in. Match the extracts in column
A with the extracts in column B.
1. Burmah Castrol has invested £1.3 million in a
joint venture in China.
a) It is currently developing a new financial
television service for the UK and Europe.
2. Aer Lingus has leased four A330 aircraft.
b) It is shutting down mines and reducing the
workforce in order to become more competitive.
3. First Leisure has moved into the health and
leisure business.
c) It is looking for its coke, polypropylene, and
fertilizers business.
4. British Coal is getting ready for privatization.
5. Reuters Holdings is a finansical and news
information group.
d) It is maintaining its exploration programme at
al Masile and is testing a number of smaller sites
near the main oilfield.
6. ICI, the chemicals giant, wants to sell off some
of its noncore subsidiaries.
e) He is having talks with ministres about the
liberalization of financial markets.
7. The US trade representative arrived in Japan
last Thursday.
f) It is building a factory to manufacture product
for the Chinese aluminium industry.
8. Canadian Occidental Petroleum is optimistic
about its exploration activities in the Yemen.
g) It is currently expanding its flights to New
York and Boston
h) It is setting up three new fitness clubs and
hopes to expand further next year.
Practice
Exercise 3
Two friends meet in Paris. Read the dialogue and put the verbs into the Temporary situations
present continuous.
PIERRE: Hello, Jason. What(1) are you doing (you/do) over here?
JASON: Hello, Pierre. I'm just here for a few days. I (2) ______(attend)
the conference at the
Pompidou Centre.
PIERRE: Where (3) _________(you/stay)?
JASON: At the Charles V.
PIERRE: Very nice. And how's business?
JASON: Not that good. The recession (4) ______ (affect) us. People
(5)
_____ (not/spend) very much and we (6) _______ (not/get) many
new orders, but it could be worse. How about you?
PIERRE: It's much the same over here. Interest rates are still very high, so everyone (7)_____
(try) to cut down on expenses. Not many companies (8) _________(buy) new equipment,
so it means that our Training Division (9) _________(not/do) very well. Still, our
Financial Services Division (l0) ____ (manage) to get new customers, because in the
current climate there are a lot of people who (11) ______ (look) for good financial advice.
Exercise 4
Read the following passages about changes that are taking place in the Slow changes
software industry. Fill in the blanks with the verbs from the box, using the present continuous
spend
come
sell
shrink
After two years in which the price of PCs has fallen by half, the price of
software (1) is coming down too. The big software houses (2)______
software at lower and lower prices, and a price war looks inevitable. The profit
margins of major companies like Borland, Lotus, and Microsoft (3)______ In the last
quarter Borland were down to a mere 2.6%. In addition, they (4)____less and less
on R&D, which may affect their long-term product plans.
become
begin
take over
turn
Now the major software companies (5) ____________________ their attention to the
less profitable home computer market, and software packages for children, such as
Microsoft's 'Creative Writer' (6) ___________________________ from business software.
Specialist computer shops are (7) ________________________ less popular, as
families are unwilling to spend their weekends there, and computers (8) _____to appear
in supermarkets such as Wal-Mart and Costco.
Production
Task 1
Continue these sentences using a verb in the present continuous.
1
2
3
4
5
Task 2
I'm afraid the MD is busy. He's having a meeting with the auditors.
Could you call the maintenance people? _____________________________
The meeting room isn't free. ______________________________
I've just seen Jane in the cafeteria. _____________________________
Shh! Listen! ____________________
Answer these questions about yourself and your company's current projects.
1 What new product or service is your company currently working on?
2 What are you doing at work these days?
Task 3
3
What training courses are you doing?
4
What examinations or professional qualifications are you studying for?
5
What other aims and objectives are you trying to achieve outside work?
Complete the following paragraph about a temporary situation. Say how
people are dealing with one or more of the following problems.
No transport (trains, buses, underground, etc.)
No emergency services (ambulances, fire brigade, etc.)
No local government services (rubbish collection, etc.)
No postal service
The General Strike is now in its second week, and is causing widespread chaos and
disruption in the capital...
Task 4
Write about changes currently taking place in the car market, using the prompts.
1
2
3
4
5
6
size
On the whole, cars are getting smaller.
safety
Nowadays... _________________
the Japanese These days ... _______________
reliability
____________________________
electric cars
__________________________
pollution
____________________________
13
Present simple vs present continuous
Read through the following examples comparing the present simple and
present continuous.
A Routine vs moment of
speaking
1 James works for an investment magazine. Every month he writes
articles about new investment opportunities.
2 Take these figures to fames. He needs them for an article he's writing.
In 1, we are talking about something that James does as a routine.
In 2, we are talking about something he is doing at the moment of
speaking
В General activities vs
current projects
1 I work for 'Teletraining'. We make training videos.
2 At the moment we're making a training video for British Telecom..
In 1, we are talking about a general activity.
In 2, we are talking about a specific current project.
C Permanent vs temporary
situations
1 Peter deals with enquiries about our car fleet sales.
2 I am dealing with enquiries about fleet sales while Peter is away on
holiday.
In 1, this is seen as permanently true. In 2,
this is seen as a temporary situation.
D Facts vs slow changes
1 As a rule, cheap imports lead to greater competition.
2 Cheap imports are leading to the closure of a number of inefficient
factories.
In 1, we are making a statement about a general fact that is always
true. In 2, we are talking about a change that is taking place at the
moment.
E Stative verbs
There are a number of verbs which describe states rather than actions. They are not
normally used in the continuous form. Common examples are:
Verbs of thinking:
believe, doubt, guess, imagine, know, realize,
suppose, understand
Verbs of the senses: hear, smell, sound, taste
Verbs of possession: belong to, have (meaning possess), own, possess
Verbs of emotion:
dislike, hate, like, love, prefer, regret, want, wish
Verbs of appearance: appear, seem
Others:
contain, depend on, include, involve, mean,
measure, weigh, require
These are usually found in the simple form because they do not refer to actions:
I'm sorry, I don't understand what you mean.
Practice
Exercise 1 Routine
vs moment of
speaking
Decide if the speaker is talking about routine activities or activities going on
at the moment of speaking. Put the verbs into the present simple or the present
continuous.
A: How(1) do you usually organize (you/usually organize) the delivery of
milk to the factory? (2) ______ (the farmers/bring) it here themselves?
B: No,(3) _____ (we/always collect) the milk ourselves, and the tankers
(4)
_____ (deliver) it to the pasteurization plant twice a day.
A: What sort of safety procedures (5) _______ (you/have)?
B: As a rule we (6) ________ (test) samples of every consignment, and then
the milk (7) _______ pass) down insulated pipes to the bottling plant, which (8)
______(operate) 24 hours a day. I'll show you round a bit later, but the
production line (9)_____ (not work) at the moment because the employees(10)
__________(change) shifts.
Exercise 2
General activities vs
current projects
Exercise 3
Permanent vs
temporary
situations
Decide whether the verbs refer to general activities or current projects. Put the
verbs into the present simple or present continuous.
Our company was founded fifteen years ago, and we(1) manufacture
(manufacture) and (2) ____ (supply) clothing to large organizations such
as the police, hospitals, and so on. We always (3) ______ (spend) a long
time talking to the customers to find out their needs. At the moment we
(4)
______ (produce) an order for 18,000 shirts for the police. The next
order is for a local electronics factory, and our head designer (5)______
(have) discussions with them to find out what sort of clothes they
(6)
______ (require).
In the following exercise, decide whether these situations are permanent or
temporary. Put the verbs into the present simple or present continuous.
1 He joined the company 25 years ago and he still works (work) for us.
2 We ______(not/send) out any orders this week because we're waiting
for the new lists.
3 I _____ (deal) with Mr Jarman's clients this week because he's away.
4 Go down this road, turn right, and the road ___ (lead) straight to
the industrial estate.
5 Because of the high cost of sterling, exports______ (not/do) very well.
6 The stock market can be risky because the price of shares______(vary)
according to economic conditions.
7 She would be excellent as a European sales rep because she_____
(speak) French fluently.
8 I'm Heinrich Brandt, I'm German, and I ____ (come) from a small
town near Munich.
9 We ______(spend) a great deal on phone calls due to a postal strike.
Practice
Exercise 4
Facts vs slow changes
A In the following passage, decide whether the verbs refer to general
statements about change, or changes that are currently taking place. Put the
verbs into the present simple or present continuous.
Political parties cannot last for ever. Normally they (1) enjoy (enjoy) a period
of great popularity in their early years; then they (2) ______ (go) through a
period of stability and (3) ____ (put) their ideas into practice. After that,
they (4) _____ (run) out of ideas, and the opposition (5) ________(take)
power. Now the present government (6) ________ (become) old and tired. It
(7)
______ (make) mistakes and it (8) _______ (lose) popularity, and the
opposition party (9) ______ (start) to look like a possible alternative
В Fill in the blanks with the verbs in the box, using the present simple
or present continuous.
fall
grow
begin
go
demand
make
In many ways, the economic outlook is good. Unemployment (1) is falling
and is now down to 8% from 14%. The economy (2) _________ at a rate of
2.5%. However, the real danger is that inflation (3)__________ to rise. This is
dangerous because every time that inflation (4) __________ up, people always
(5)
_____________ higher wages, and this in turn (6)____ the problem worse.
Exercise 5
Stative verbs
In each of the following sentences, put one of the verbs into the present
simple and the other into the present continuous.
1 We are interviewing (interview) people from outside the company for the
new post in the export department, but I think (think) we ought to give the
job to Mr Jackson.
2 At the moment we ____ (carry) out a survey to find out what sort of
after-sales service our customers____ (want).
3 We've got a competition on at work to do with our new range of
cosmetics. The marketing people ___ (try) to find a brand name
that ______ (sound) natural and sophisticated.
4 _____ (you/know) what Mrs Ericson ____ (do)? She's not in her
office and nobody has seen her since lunch.
5 Could you help me? I ____ (try) to translate this letter from a
Spanish client and I don't know what this word __ (mean).
6 I ______(apply) for a transfer to our London office, but I don't know if
I'll be successful. It all ______(depend) on whether or not they have
any vacancies.
7 Their new 'Own brand' instant coffee _____ (taste) very good, so it's
not surprising that it _______(become) more and more popular.
Production
Task 1
Make up sentences using the following prompts. The first verb should be in
the present simple, and the second verb in the present continuous.
1 come from/but/live
I come from Austria, but at the moment I'm living in Switzerland.
Task 2
2
speak/and/learn
3
normally/like my work/but/not enjoy
4
go on a lot of training courses/and/do a course in CAD
5
work from 9 to 5/but/stay late
6
travel a lot/and/visit Australia
7
have several subsidiaries in Europe/and/set up another one in Brussels
8
normally/export a lot to Greece/but/not get many orders
Make questions to go with the answers. Use either the present simple or
present continuous.
1
I
Where do you come from?
come from a little town called Zug, near Zurich.
2
_________________________________________________
I'm writing to Markson's to ask for an up-to-date catalogue.
3
_________________________________________________ ______
I think he's a consultant.
4 ________________________ ________________________________
I usually cycle in, but sometimes I bring the car.
5
6
_________________________________________ _______________
Our Sales Director goes abroad about three or four times a year.
_____________________________________________________ ___
No, not at all well. In fact, the factory is doing a three-day week.
7 ____________________________ _______________________
Yes, very well. We met in 1980.
8 ________________________________________________________
No, not at the moment. But we'll start taking on new staff again in May.