12. Read the text and answer the questions:

1. What are the ways of looking at economics and the economy?

2. What does macroeconomics deal with?

3. What is microeconomics?

Macroeconomics and Microeconomics

Economists have two ways of looking at economics and the economy. One is macro approach, and the other is the micro. Macroeconomics is the study of the economy as a whole. Microeconomics is the study of individual consumers and the business firm. As its name implies microeconomics is connected with small parts of the economy and the interrelationship between these parts, while macroeconomics is connected with the behaviour of broad aggregates affecting the whole economy. Macroeconomics examines questions such as how fast the economy is running, how much overall output is being generated; how much total income is. It is also seeks solutions to macroeconomic problems such as how employment can be increased, and what can be done to increase the output of goods and services. Microeconomics examines cause-and-effect relationships that influence choices of individuals, business firms and society. It is concerned with things such as scarcity, choice and opportunity costs, and with production and consumption. Principal emphasis is given by microeconomists to the study of prices and their relationship to units in the economy.

12. Read and remember some English idioms useful for businessmen:

1. A black economy - that part of a country's economy which is carried out without the knowledge of the authorities for the purpose of avoiding tax; тіньова економіка.

2. A suitcase economy - an economy that suffers from raging inflation; економіка, що потерпає від високого темпу інфляції.

3. Candle-end economies – small paltry economies that serve no purpose; економія на сірниках, тобто економія на витратах, яка не дає ніякого результату.

Lesson 2

I. Read the following words and word combination and learn their meanings by heart:

A function - функція; poverty - бідність; inflation - інфляція; unemployment - безробіття; to make decisions - приймати рішення; a growth - приріст; increase - зростання; to increase - зростати; an economic - growth - економічне зростання; Gross Domestic Product - валовий національний продукт; total - загальний; an indicator - показник, ознака; an improvement - поліпшення, to take into account - брати до уваги; transition - перехідний; decline - занепад, спад; погіршуватись.

II. Read and translate the text: the functions of every economic system

There are many economic problems - poverty, inflation, unemployment, etc. People in different modern societies solve this problems in different ways.

The great American economist Paul Samuelson said that every economic society has to answer three main questions:

1. What to produce? 2. Mow to produce? 3. Who gets the product?

The way in which a society goes about answering these fundamental questions is known as its economic system.

So, these questions are universal and true for any economic system that has the three functions.

The first function is to make a right decision what goods we are going to produce with the given resources — clothes, food, cars, television sets, books, etc.

The second function is to decide how we are going to produce goods and services with the basic recourses of labour, land, etc. What methods are best and the most effective is an important question here.

Once we have produced goods and services we now have to decide how these will be divided, distributed among the people in the economy. So, it is the third function.

Economic system may be classified as traditional, command or market one. Resources are allocated (distributed) in a traditional economy in accordance with traditions and in a command economy by government planners. Resources in a market economy are allocated in accordance with the laws of supply and demand.

When we speak of economic growth we mean an increase in the GDP of a nation. The Gross Domestic Product is the total value of all production in an economy in a year. The GDP is the basic indicator of how well a country's economy performs. The main features that cause such growth are the following: 1) increases in natural resources; 2) increases in the production of goods and services; 3) improvements in technology; 4) improvements in human resource.

However, there is a difference between real and nominal increases.

For example, between 1968 and 1989 the GDP of the UK increased from $ 38 billion to 439 billion. It means an increase of 1045 per cent. But if we take into account inflation an increase is only about 60 per cent.

Many examples of this kind may be given concerning Eastern European countries during their transition period.

The GDP is also affected by the indicator of population growth. Say, the GDP grows at 5 per cent and the population grows at 10 per cent. In this case the GDP is declining.

3. Retell the text according to the following questions:

1. What are the main economic problems of nowadays?

2. What are three questions true for any economic system?

3. Name three functions of an economic system.

4. What is the Gross Domestic Product?

5. What does it show?

6. What causes economic growth?

7. Why is there the difference between real and nominal increases?

8. What is the GDP affected by?

4. Learn the following groups of:

1. synonyms:

Increase - growth, to take into account - to take into consideration, country – state - nation, to grow - to increase, products – goods - articles.

2. antonyms:

Employment - unemployment, best - worst, universal -local, poverty-wealth, growth-decline.

5. Translate from English into Ukrainian. State the functions of "to have":

1. Your work is wrong, you have to remake this work again. 2. How many classes do you have today? 3. This word has many different meanings. 4. He has made decisions in time. 5. We have different indicators of unemployment. 6. This week economists have discussed the problem of inflation. 7. This year the level of inflation has increased. 8. We have to take into account how well a country's economy performs.