1. Read sentences and decide if they are right or wrong according to the text

1. A command economy is a society where the government makes all decisions about pro­motion and consumption.

2. The state owns factories and land, and makes most important decisions on allocation of different recourses in command economy.

3. Consumers spend their incomes on the things that bring little satisfaction.

4. Although motivated by the government, you make society better off by creating new jobs and opportunities.

2. Answer the questions

1. How do we call a society where markets do not exist?

2. What kind of economy can we nominate as a command one?

3. How were the decisions made under the command economy in the former USSR?

4. What is a free market?

5. What kinds of problems does a free market economy solve?

6. Who and what was Adam Smith?

7. What was the famous idea of Smith about?

8. What are the features of mixed economy?

9. What is the way government controls the output?

10. What are the examples of mixed economies?

11. What type of economy does the USA have?

Speaking

1. Work in groups. Group A should think about advantages of market economy. Group B should speak about the disadvantages of this type of economy.

2. Make a 4 minute report on one of the following topics.

1. A market

2. Problems of what, how and for whom produce

3. Self-interest

4. Prices

5. The role of the government in a free market economy

6. Interaction of the government and the private sector

3. Work in pairs. Choose any country with command or mixed type of economy and define some of the features of the type a country belongs to.

Chapter 3. Macroeconomics and microeconomics

Section 1. What is macroeconomics?

Key vocabulary

1. Read and remember the following words

deliberately – умышленно, обдуманно

gross domestic product (GDP) - валовой внутренний продукт (ВВП) national income - национальный доход personal income - личный доход personal disposable income - личный доход после уплаты налогов business cycle - экономический цикл labor shortage - нехватка рабочей силы breakdown – распределение, классификация

bundle – набор, множество

aggregate – совокупный

on average - в среднем

reveal – показывать

2. Find the Russian equivalents to the following English word combinations

building blocks, consumer goods, aggregate price level, unemployment rate, labour force, landed gentry, aggregate unemployment

Text

1. Listen, read and translate the text

WHAT IS MACROECONOMICS?

Macroeconomics emphasizes the interactions in the economy as a whole. It deliberately simplifies the individual building blocks of the analysis in order to retain a manageable analysis of the complete interaction of the economy.

For example, macroeconomists typically do not worry about the breakdown of consumer goods into cars, TV sets, calculators. They prefer to treat them all as a single bundle called 'consumer goods' because they are more interested in studying the interaction between households' purchases of consumer goods and firms' decisions about purchases of machinery and buildings.

Because these macroeconomic concepts are intended to refer to the economy as a whole, they tend to receive more coverage on television and in the newspapers than microeconomic concepts, which are chiefly of interest to those who belong to the specific group in question. To give an idea of the building blocks of macroeconomics, we introduce three concepts which you have probably read about in the newspapers or seen discussed on television.

Gross domestic product (GDP) is the value of all goods and services produced in the economy in a given period such as a year. GDP is the basic measure of the total output of goods and services in the economy.

The aggregate price level is a measure of the average level of prices of goods and services in the economy, relative to their prices at some fixed date in the past.

There is no reason why the prices of different goods should always move in line with one another. The aggregate price level tells us what is happening to prices on average. When the price level is rising, we say that the economy is experiencing inflation.

The unemployment rate is the percentage of the labour force without a job.

By the labour force we mean those people of working age who in principle would like to work if a suitable job were available. Some of the landed gentry are of working age but have no intention of looking for work. They are not in the labour force and should not be counted as unemployed.

Already we can see two themes of modern macroeconomic analysis. Society reveals, both through statements by individuals and by the policy pronouncements of politicians who must submit themselves for re-election by the people, that it does not like inflation and unemploy­ment. Yet for most of the 1970s economic interactions within and between national econo­mies led to substantial inflation rates. In the 1980s, most Western economies faced sharp rises in the aggregate unemployment rate. Macroeconomists wish to understand how interactions within the economy can lead to these outcomes and whether government policy can make any difference.

Language practice

1. Fill in the table with the most important terms of macroeconomics and try to give the definitions

macroeconomics terms	definitions
1.
2.
3.
4.

2. Answer the following questions for general understanding

1. What does macroeconomics emphasize?

2. What do macroeconomists study?

3. Why do macroeconomics concepts receive more coverage in media?

4. What does a notion GDP mean?

5. What does the term “aggregate price level” denote?

6. What term do economists apply to name people of working age?