Economics for a Beginning Student (110

IV. Check up the pronunciation of unfamiliar words in a dictionary and read Text 2 aloud.

Demand, Supply, and Equilibrium (Text 2)

1. Demand is not a particular quantity, such as six bars of chocolate. 2. It is a full description of the quantity the buyer would purchase at each and every price. 3. Supply is not a particular quantity. 4. It is a complete description of the quantity that sellers would like to sell at each and every possible price. 5. We must notice the distinction between demand and the quantity demanded. 6. Demand describes the behaviour of buyers at every price. 7. The term “quantity demanded” makes sense only in relation to a particular price. 8. A similar distinction applies to supply and quantity supplied. 9. The demand schedule and the supply schedule are each constructed on the assumption of “other things equal”. 10. In the demand for football tickets, for example, one of the “other things” is whether or not the game is being shown on television. 11. We must examine how the price adjusts to balance the quantities supplied and demanded. 12. Let us think about the market for chocolate. 13. Other things equal, the lower the price of chocolate, the higher the quantity demanded. 14. Other things equal, the higher the price of chocolate, the higher the quantity supplied. 15. Thus dentists may warn of the effect of chocolate on tooth decay. 16. This information would change the “other things” relevant to the demand for chocolate. 17. Negative changes would reduce the demand for chocolate, reducing the quantities demanded at each price. 18. Cheaper cocoa beans would change the “other things” relevant to the supply of chocolate bars. 19. They would tend to increase the supply of chocolate bars, increasing the quantity supplied at each possible price.

V.Write out from text 2 the English equivalents for the following words and

expressions:

1. спрос, особое количество; 2. полное описание, покупатель, покупать; 3. предложение; 4. полное описание, продавец, продавать; 5. заменить, раз-

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личие; 6. описывать, поведение; 7. термин, иметь смысл, особая цена; 8. подобное различие, относиться; 9. таблица спроса, строить, предложение, при прочих равных условиях; 10. билет, ли, игра, показывать; 11. рассмотреть, приспосабливать, уравновешивать; 12. думать, рынок шоколада; 14. чем ниже…, тем выше; 15. так, стоматологи, предупреждать, воздействие, разрушение зубов; 16. изменять, относящийся; 17. негативные изменения, уменьшать; 18. какао, боб, изменять, относящийся к спросу; 19. иметь тенденцию, увеличивать, возможный.

VI. Translate Text 2 into Russian (in writing).

VII. Translate the Russian version of Text 2 into English (orally).

VIII. Make up meaningful phrases with the following.

1. demand, not to be a particular quantity; 2. it, to be a full description, the buyer, to purchase; 3. supply, not to be a particular quantity; 4. it, to be a complete description, sellers, to sell; 5. we, no notice the distinction, demand, the quantity demanded; 6. demand, to describe, the behaviour;7. the term, to make sense, in relation to; 8. a similar distinction, to apply to; 9. the demand schedule, to be constructed, the assumption; 10. football tickets, one of the “other things”, to be, whether, to show on television; 11. we, to examine, how, the price, to adjust, to balance; 12. to think about, the market for; 13. the lower (the price)…the higher (the quantity); 14. the higher (the price)… the higher (the quantity); 15. thus, dentists, to warn, the effect of chocolate, tooth decay; 16. their information, to change the “other things”, relevant to; 17. negative changes, to reduce, the demand for; 18. cheaper cocoa beans, to change the “other things”, relevant to; 19. they, to tend, to increase, the supply of, increasing, the quantity supplied.

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IX. Discuss Text 2 in pairs in the following way. One of the students puts a question to the first sentence. His partner answers the question, says next two sentences and puts a question to the fourth sentence and so on. Add the following expressions when it is appropriate: to my mind, in my opinion, as far as I know, as a matter of fact, the fact is that, according to the author, by the way, etc. Use the previous exercise as a plan for your dialogue.

X.Replace the Russian words and expressions with their English equivalents.

1.(Спрос) is not a particular quantity, such as six bars of chocolate. 2. It is (полное описание) of the quantity the buyer would purchase at each and every price. 3. We must notice (различие) between demand and the quantity demanded. 4. The demand schedule and (таблица предложения) are each constructed on the assumption of “other things equal”. 5. We must also (рассмотреть) how the price adjusts to balance the quantities supplied and demanded. 6. Let us think about (рынок) for chocolate. 7. (При прочих равных условиях), the higher the price of chocolate, the higher the quantity supplied. 8. Other things equal, (чем ниже цена) of chocolate, the higher the quantity demanded. 9. Thus dentists may (предупреждать) of the effect of chocolate on tooth decay. 10. This information would change the “other things” (относящиеся) to the demand for chocolate. 11. (Негативные) changes would reduce the demand for chocolate, reducing the quantities demanded at each price.

XI. Summarize in 9 sentences the contents of Text 2.

XII. Translate into Russian the passage of Text 1 beginning with “Let us think again about the market for chocolate. Other things equal, the lower the price of chocolate…” and up to the end of the text.

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XIII. Speak about a market, using the following words.

1. the interplay between demand and supply, to determine the quantity and the price of the goods; 2. as, we, to know, markets, to be arrangements, through which prices, to guide resource allocation; 3. we, may adopt, a narrower definition; 4. a market, to be a set of arrangements, by which, buyers and sellers, to be in contact, to exchange goods and services; 5. price and quantity, cannot be considered separately; 6. the essential features of a market, to be demand and supply; 7. they, to be based on, the behaviour of buyers and sellers; 8. to study the interaction of these forces, to be, to see how a market, to work in practice.

UNIT 3

Pre-reading task

I.Answer the questions.

1.What is inflation characteristic of?

2.How much of the popular dislike of inflation do you think is due to illusion?

II.Read Text 1.

Inflation (Text 1)

In the 1980s President Reagan, Mrs Thatcher, Chancellor Kohl, and many other national leaders named inflation as public enemy number one. Getting inflation down became their top priority.

Inflation is a rise in the average price of goods over time. Pure inflation is the special case in which all process of goods and factors of production are rising at the same percentage rate.

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Persistent inflation over many years is in fact quite recent phenomenon. Before 1950, prices tented to rise in some years but fall in other years. In the UK the price level – the average price of goods as a whole – was no higher in 1950 than it had been in 1920. The UK price level fell quite sharply during some of the interwar years when inflation was negative. Yet since 1945 there has not been a single year in which the price level fell. Since 1950 the price level has increased by a factor of ten, more than its increase over the previous three centuries. This broad picture applies not only in the UK but also in most of the advanced economies.

We shall try to explain why inflation is thought to be so bad as to justify its title of public enemy number one. Inflation does have bad effects, but we shall see that some of the popular criticisms of inflation are based on spurious reasoning. It requires some care to distinguish between the good and bad arguments about why inflation is costly for the economy as a whole.

To understand the costs of inflation we need to understand the effects of inflation. But these effects may depend on what is causing the inflation in the first place. We examine the causes of inflation. Monetarists such as Milton Friedman say that inflation is caused by too much money chasing too few goods. And they attribute this excess demand for goods to an increase in the nominal money supply. Friedman has asserted that “inflation is always and everywhere a monetary phenomenon”. Thus we begin by examining the link between the money supply and the price level. And we take this argument a stage further by asking whether it is large budget deficits that lead the government to print large quantities of money in order to finance these deficits.

We then turn to the consequences of inflation. How does it effect the markets for goods and labour? Is high inflation bad for output and employment? And does it matter whether the inflation was previously expected or whether it takes people by surprise?

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Finally we distinguish the costs that inflation might impose on individuals and the costs it might impose on society as a whole. We conclude by considering what the government can do about inflation.

III. Answer the questions.

1.What phenomenon does the author analyze referring to the previous three hundred years?

2.How many consequences of inflation are mentioned in the text? What are they?

IV. Check up the pronunciation of unfamiliar words in a dictionary and read Text 2 aloud.

Inflation (Text 2)

1. In the 1980s many national leaders named inflation as public enemy number one. 2. Inflation is a rise in the average price of goods over time. 3. Pure inflation is a special case. 4. Then all prices of goods and factors of production are rising at the same percentage rate. 5. Persistent inflation over many years is quite a recent phenomenon. 6. Before 1950, prices tended to rise in some years but fall in other years. 7. Since 1950 the price level has increased by a factor of ten. 8. This broad picture applies in most of the advanced economies. 9. We must explain why inflation justifies its title of public enemy number one. 10. Some of the popular criticisms of inflation are based on spurious reasoning. 11. Why is inflation costly for the economy as a whole? 12. We need to understand the effects of inflation. 13. But these effects may depend on what is causing the inflation in the first place. 14. We must examine the causes of inflation. 15. Milton Friedman says that inflation is caused by too much money chasing too few goods. 16. He attributes this excess demand for goods to an increase in the nominal money supply. 17. Friedman

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examines the link between the money supply and the price level. 18. We ask whether it is large budget deficits that lead the government to print large quantities of money. 19. We then turn to the consequences of inflation.

20.Finally we distinguish the costs that inflation might impose on individuals and on society as a whole. 21. We conclude by considering what the government can do about inflation.

V.Write out from Text 2 English equivalents for the following words and expressions:

1.национальные лидеры, называть, инфляция, враг номер один; 2. повышение средней цены, течение времени; 3. чистая инфляция, особый случай; 4. факторы производства, на тот же самый процентный уровень ; 5. постоянная инфляция, совершенно новое явление; 6. иметь тенденцию, падать; 7. уровень цен, увеличивать в 10 раз; 8. общая картина, прилагать, передовые экономики; 9. объяснять, оправдывать, название врага номер один; 10. критика, основывать, ложные рассуждения; 11. дорогой, экономика в целом; 12. воздействие инфляции; 13. зависеть, вызывать, во-первых; 14. рассматривать, причины; 15. слишком много денег, гнаться, слишком мало товаров; 16. приписывать, чрезмерный спрос, номинальный запас денег; 17. связь, денежная масса и уровень цен; 18. спрашивать, ли, большой дефицит бюджета, вести, печатать, большие количества; 19. обратиться, последствие; 20. в заключении, различать, расходы, налагать, индивид, общество в целом; 21. заканчивать, рассматривать, правительство.

VI. Translate Text 2 into Russian (in writing)

VII. Translate the Russian version of Text 2 into English (orally)

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VIII.Make up meaningful phrases with the following:

1. many national leaders, to name inflation, enemy; 2. inflation, to be a rise, the average price; 3. pure inflation, to be; 4. all prices of goods, to be rising, at the same percentage rate; 5. persistent inflation, to be, a phenomenon; 6. prices, to tend, to rise, to fall; 7. since 1950, the price level, to increase; 8. this broad picture, to apply, the advanced economies; 9. we, to explain, why, inflation, to justify; 10. the popular criticisms, to be based; 11. why, inflation, to be costly; 12. we, need to understand, the effect; 13. these effects, may depend, what, to cause; 14. we, must examine; 15. Milton Friedman, to say, inflation to be caused, too much money; 16. he, to attribute, excess demand, an increase; 17. Friedman, to examine the link; 18. we, to ask, whether, it, to be budget deficits, to lead the government; 19. we, to turn the consequences; 20. finally, we, to distinguish, inflation, might impose; 21. we, to conclude by considering, the government, to do.

IX. Replace the Russian words and expressions with their English equivalents.

1.In the 1980s many national leaders named inflation as (враг номер один).

2.Pure inflation is (особый случай). 3. Before 1950, prices (иметь тенденцию) to rise in some years but fall in other years. 4. Since 1950 the price level (увеличиваться) by a factor of ten. 5. This broad picture applies in most (передовые экономики). 6. We must explain why inflation (оправдывать) its title of public enemy number one. 7. Why is inflation costly for (экономика в целом)? 8. We need to understand the effects of (инфляция). 9. We must examine (причины) of inflation. 10. Friedman (рассматривать) the link between the money supply and the price level. 11. We then turn to (последствия инфляции). 12. Finally we (различать) the costs that inflation might impose on individuals and on society as a whole.

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X. Make the following sentences into question

.

Example: In 1982 many national leaders named inflation as public enemy number one.

When did many national leaders name inflation as public enemy number one.

1.Inflation is a rise in the average price of goods over time. A rise in what over time is ……………………………..?

2.Pure inflation is a special case.

What inflation is ……………………..?

3.Then all prices of goods and factors of production are rising at the same percentage rate.

What percentage rate are all prices of goods and factors of production………..?

4.Persistent inflation over many years is quite a recent phenomenon. What inflation over many years is …………………?

5.Since 1950 the price level has increased by a factor of ten. Since what time has the price level…………………?

6.This broad picture applies in most of the advanced economies. Where does this broad picture ……………………..?

7.We must explain why inflation justifies its title of public enemy number one.

What must we …………………………..?

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8.Milton Friedman says that inflation is caused by too much money chasing too few goods.

What does Milton Friedman ………………………..?

9.He attributes this excess demand for goods to an increase in the nominal money supply.

What demand does he ……………………?

10.Friedman examines the link between the money supply and the price level.

Who examines ………………………?

11.We conclude by considering what the government can do about inflation

How do we …………………?

XI. Summarize in 10 sentences the contents of Text 2.

XII. Translate into Russia the fifth paragraph of Text 1.

XIII.Show why the following statements are incorrect:

A)Getting inflation down is the only way to cure high unemployment.

B)Inflation stops people savings.

C)Inflation stops people investing.

D)Without a budget deficit, there could be no inflation.

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