An Economy

An economy is the way in which people use their environment to meet their material needs. It includes the production, exchange, distribution, and consumption of goods and services. A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, among other factors. These factors give context, content, and set the conditions and parameters in which an economy functions.

Consumption, saving and investment are core variable components in the economy and determine market equilibrium.

In modern economies, there are four main sectors of economic activity:

Primary sector of the economy involves the extraction and production of raw materials, such as corn, coal, wood and iron.

Secondary sector of the economy involves the transformation of raw materials into goods e.g. manufacturing steel into cars, or textiles into clothing.

Tertiary sector of the economy involves the provision of services to consumers and businesses, such as baby-sitting, cinema and banking.

Quaternary sector of the economy involves the research and development needed to produce products from natural resources. Education is sometimes included in this sector.

There are a number of parameters to measure economic activity of a nation. They include:

• Consumer spending

• Exchange Rate

• Gross domestic product

• GDP per capital

• GNP

• Stock Market

• Interest Rate

• National Debt

• Rate of Inflation

• Unemployment

• Balance of Trade

The GDP - Gross domestic product of a country is a measure of the size of its economy. It should be noted that GDP only includes economic activity for which money is exchanged.

Vocabulary

consumer spending – потребительские

расходы

gross domestic product – валовой

внутренний продукт

gross national product – валовой

национальный продукт

interest rate – ставка процента

balance of trade – торговый баланс

8. Give Russian equivalents:

production	manufacturing
evolution	provision
endowment	research
consumption	exchange rate
extraction	stock market

9. Choose words from the list to fill in the gaps, then use them to make sentences:

variable, technological, interest, raw, secondary, gross domestic, economic, consumer

1. _____ materials	5. _____ rate
2. _____ sector	6. _____ activity
3. _____ spending	7. _____ components
4. _____ evolution	8. _____ product

10. Answer the questions:

1) What is an economy?

2) What does an economy include?

3) What factors does an economy involve?

4) How do these factors influence an economy?

5) What are the core components in the economy?

6) What are the four main sectors of economic activity?

7) What do they involve?

8) How is economic activity of a nation measured?

9) What is GDP?