1. Ответы на вопросы к тексту по специальности

1. What is money used for?

2. What is barter? Is it satisfactory system?

3. What is easier to handle – coins or paper money?

Supply, demand and market price

What? How? Who?

Every society must provide answers to the same three questions:

• What goods and services will be produced?

• How will those goods and services be produced?

• Who will receive them?

Societies and nations have created different economic systems to provide answers to these fundamental questions. Traditional economies look to customs and traditions for their answers while others, known as command economies, rely upon governments to provide the answers. In free enterprise systems, market prices answer most of the What, How and Who questions.

Because market prices play such an important part in free enterprise systems, those systems are often described as «price directed market economies». Supply and demand are the forces that determine what prices will be.

Prices in a Market Economy

Prices perform two important economic functions: They ration scarce resources, and they motivate production. As a general rule, the scarcer something is, the higher its price will be, and the fewer people will want to buy it. Economists describe this as the rationing effect of prices.

In a market system goods and services are allocated, or distributed, based on their price.

Price increases and decreases also send messages to suppliers and potential suppliers of goods and services. As prices rise, the increase serves to attract additional producers. Similarly, price decreases drive producers out of the market. In this way prices encourage producers to increase or decrease their level of output. Economists refer to this as the production-motivating function of prices. But what causes prices to rise and fall in a market economy? The answer is Demand!

1. Ответы на вопросы к тексту по специальности

1. What questions must every society answer?

2. What functions do prices perform?

3. In what way do prices encourage producers to increase or decrease their level of output?

The sources of income

It is necessary to say that income is the amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments. Before people can consume anything, however, they must do two things. First they must earn the income to buy the things they want. Then they must decide how the money will be spent. There are two ways to earn income: from work and from the use of wealth.

Income From Work

Most of the income comes from work. In return for working, people receive a wage or a salary. The term «wage» typically refers to the earnings of workers paid by the hour or unit of production. «Salary» refers to earnings paid on a weekly or monthly basis. How much you earn will depend on the kind of job, the abilities, the performance, and a number of other factors.

Income From Wealth

Wealth can be expressed as the value of the things you own. Adding the value of all your possessions, bank accounts, savings, and the like will give you the total amount of your wealth.

Used in certain ways, wealth can earn income. If you owned a house, you might be able to let others use it for a fee. In that instance economists would say that you used your wealth to earn «rent». Wealth, in the form of money that is loaned to others or deposited in a savings account, will earn interest. As you can see, interest and rent are two forms of income that can be earned by wealth.

Other types of income are dividends and capital gains that can be generated from the wealth.