Text-study
Learn the following words
contract – сокращать(ся), заключать договор
to dismiss – увольнять, распускать
earnings – заработанные деньги, заработок, прибыль
employer – предприниматель, работодатель, наниматель
employment – служба, работа, занятость
interest – доля, выгода, проценты ( на капитал)
investment – вложение, помещение денег, инвестиция, вклад
marginal – предельный
productivity - производительность, продуктивность, выработка
to suffer losses – нести потери
unemployment - безработица
wages – заработная плата
Answer the following questions
What does the term "national wealth" mean?
What is called national income?
Which factors of production do you know?
What does the modern theory of wages state?
What conditions does the supply of labour depend on?
Why is the supply of labour in skilled professions limited?
How should the wages be paid?
How does price depend on the wages?
When does unemployment occur?
III. Suggest the Russian equivalents for the words and word-combinations given below
Capital goods, internal debt, national income, factor of production, human being, supply of labour, training for the job, productivity of labour, net result of fixing minimum wages, marginal productivity.
IV. Find in the text synonyms for the following words.
Capital, liabilities, revenue, salary, gainful, job, discharge, production, work, close up.
V . The table shows how words are formed around the verb to produce.
e r
Produc t
iv(e) ity
Ion 
Use these words in the suitable blanks in the sentences below:
The company _____a new commodity every year.
The company's newest_____________ is a special perfume.
The_________of plastic utensils met last year to discuss prices.
That plant is not so__________now as it was 5 years ago.
The ________of that factory has gone down over the last 5 years.
The manager of the plant has decided that they must increase ________of their cars.
VI. Fill in the gaps with the words and expressions given below.
Production, interest, investment, factors of production, unemployment, national income
At that time, total spending declines as income falls and _________ rises.
This was because fewer people borrowed money from banks, thus denying them the opportunity to earn ________ on loans.
They tell us whether the economy is working at full capacity using all resources of labour, machinery and other ________ or whether these resouces are being under-utilized.
In each case, we look at four measures of government spending as a percentage of _______ .
They also decide its total income and its total level of _________ of goods and services.
_____________ is expenditure on productive capital goods.
Unit 2.3. Demand and Supply
Read the text to fulfil the tasks
Imagine that the winter is drawing to a close. In that case many clothing stores find that their stocks of winter clothes are too large. How can you get people to buy ski clothing and other winter items in March and April? Did you say "Run a sale?" That is a good suggestion. People will often buy winter clothing in spring because of low prices.
Demand is a consumer's willingness and ability to buy a product or service at a particular time and place. If the price changes demand also changes. Demand expands when prices fall and it contracts when prices rise. There are however some exceptions to this rule. If for example, the price of food increases our demand for it doesn't decline. Instead of eating less we will be spending less money on luxuries and buying the same amount of food at a higher price. Demand behaves the way that it does for some of the following reasons.
More people can afford to buy an item at a lower price that at a higher price
At a lower price some people will substitute a particular item for others thereby increasing the level of demand.
At a higher price some people will substitute other items for this particular one.
Finally, when we have reached a level of satisfaction derived from a good or service, the level of satisfaction will begin to diminish. Economists describe this effect as diminishing marginal utility. Diminishing marginal utility helps to explain why lower prices are needed to increase the quantity in demand.
Sometimes things happen that change the level of demand for an item at each and every price. When this occurs it leads to an increase or decrease in the level of demand. What are some of the factors that cause the demand for any product to increase or decrease at each and every price?
Substitutes. When two goods satisfy similar needs, they are called substitutes. A change in the price of one item will result in a shift in the demand for a substitute. Black and brown shoes are close substitutes. If the price of black shoes goes up, then people will tend to substitute brown shoes for black shoes, and the demand will go up to a very high price and vice versa.
Complementary goods. Goods that are separate but that are used together, like cars and petrol, are complements. The following is a brief list of factors that affect the level of demand.
Change in the environment (weather, seasons, etc.).
Change in the item's usefulness.
Change in income.
Change in the price of substitute products.
Change in the price and availability of complementary products.
Change in the style, taste, habits, etc.
The degree to which price changes affect demand will depend on the elasticity of demand for particular item.
Supply. We have discussed the effect of prices on buyers. But it takes two parties to make a sale: buyers and sellers. Supply refers to the numbers of items that a seller will offer for sale at different prices at a particular time and place.
The law of supply. It states that sellers will offer more of a product at a higher price and less at a lower price. Why does the quantity of a product change if its price rises or falls? The answer is that producers supply things to make a profit. The higher the price, the greater the incentive to produce and sell products. Sellers will be offering either more (if supply increased) or less (if supply decrease) of an item at every possible price.
Supply and demand tells us how many items buyers will purchase and how many items sellers will offer at different prices. The interaction of supply and demand will result in the establishment of an equilibrium or market price, i.e. the price at which supply exactly equals demand.
Government regulates demand and supply by quoting ceiling prices (maximum prices) and floor prices (minimum prices), and adding its own demand to the demand of the private sector.
A price ceiling set below the equilibrium price results in a shortage of the goods. A price floor set above the equilibrium price results in a surplus. Price controls lead to non price rationing and changes in quality and black markets.