Практический курс английского языка = Practical Course of English for Students of Economics. Учебное пособие для студентов экономических специальносте

19. Complete the sentences, using a Gerund.

1.Is she in the habit of …? 2. The old gentleman is in danger of … .

3.He stopped me when I was just on the point of … . 4. She went white at the thought of … . 5. Is there any hope of …? 6. There was no possibility of … . 7. You need have no fear of … . 8. He left home with the idea of … . 9. I had no intention of … . 10. He took a special pleasure in … .

11.I was faced with the prospect of ... . 12. It’s no use pretending you are taking no interest in … .

20.* Translate from Russian into English, using a Gerund.

1.Чтение прессы – неотъемлемая часть его утреннего ритуала.

2.Они обсуждали эти вопросы, не зная еще последних новостей.

3.Он не мог не ответить на это предложение. 4. Я предпочитаю личную встречу телефонному разговору. 5. Она не одобряет сверхурочную работу. 6. Мы настаиваем на выплате комиссионных немедленно. 7. Каждый из нас заинтересован в получении этого контракта. 8. Он не очень силен в принятии тактических решений.

9.Мы с нетерпением ждем встречи с вами. 10. Я стараюсь избегать обсуждения таких вопросов с незнакомыми людьми. 11. Я помню, что разговаривала с ней по телефону. 12. Я думаю, они не будут возражать против подписания этого соглашения уже на этой неделе.

21.Work with a good law dictionary and match the Latin and Russian equivalents.

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;Speaking

1.Work with good dictionaries and propose some definitions of law. Choose the best one from your point of view. Explain your choice.

2.What are the purposes of law?

3.Do you thing that law fulfills its purposes? Explain.

4.What is the relationship between law and morality?

5.“Law is ineffectual unless the society develops a legal system”. Prove it.

6.Give your own examples to prove that not only law affects the operations of business but business also influences the development of the law.

7.The law often has been described as a “seamless web” Why? Try to explain.

8.“No aspect of modern life is free from contractual relationships” Prove it.

9.“Law and justice are not synonymous” Explain.

10.Explain why Product Liability Law is a concern of business law.

11.Prepare a short report (4–5 minutes) on one of the following topics:

a)“Law and ethics in governing the conduct of all members of society”

b)“The morals provide an informal basis for standard of conduct.”

;Writing

1.Choose one of the following statements as the topic of your essay. “Law is a Bottomless-Pit, it is a Cormorant, a Harpy, that devours

everything”. (John Arbuthnot).

“If there were no bad people, there would be no good lawyers”. (Ch. Dickens)

“Law means good order”. (Aristotle)

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“It is better that ten guilty persons escape than one innocent suffer”. (W. Blackstone)

“The people’s good is the highest law”. (Cicero)

“A verbal contract isn’t worth the paper it is printed on”. (S. Goldwyn) “Wherever law ends, tyranny begins”. (John Lock)

“Ignorance of the law excuses no man”.

2. “Cultural mores are sources of law”. Analyze this statement. Give an example of such a custom that is strongly ingrained in any society.

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SUPPLEMENTARY READING

PART I

Unit 1

E C O N O M I C S

Text 1

The Rise of Keynesian Economics

When John Maynard Keynes responded to popular demand for an alternative policy to laissez-faire. In his book, The General Theory of Employment, Interest, and Money, he gave people both an alternative explanation of the depression and a suggestion of what to do about it that didn’t rely upon cutting wages. While there were many dimensions to Keynes’s ideas, their essence was that Say’s law (supply creates its own demand) was wrong. Keynes argued that Thomas Malthus was right— general gluts could exist (and certainly did exist in the 1930s).

Keynes (a shrewd investor who was extremely active in the financial sector) argued that the financial sector didn’t work the way Say’s law assumed it did. It didn’t translate savings into investment fast enough to prevent a general glut in output. According to Keynes, the level of savings did not determine the level of investment. Instead the level of investment would change the level of income and thereby change the level of savings. Let’s consider an example. Say that a large portion of the people in an economy suddenly decide to save more and consume less. Consumption demand would decrease and savings would increase. If those savings were not immediately transferred into investment (as the Classicals assumed they would be), investment demand would not increase by enough to offset the fall in consumption demand and aggregate demand would fall. There would be excess supply. Faced with this excess supply, firms would cut back production, which would decrease income. People would be laid off. As people’s incomes fell, their desire to consume and their desire to save would decrease. (When you’re laid off you don’t save.) Eventually income would fall far enough so that once again savings and investment would be in equilibrium, but that equilibrium could be at a lower income level at a point below full employment. In short, what Keynes argued was that the economy could get stuck in a rut.

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Once the economy got stuck in a rut with a glut, it had no way out. The government had to do something to pull the economy out of the rut. Keynes and his followers presented a set of models and arguments to explain their views. Those models, which were aggregate models, became the central macroeconomic models.

Keynesian ideas spread like wildfire among the younger economists. By the 1950s Keynesian economics became accepted by most of the profession. The policies that came to be associated with Keynesian economics were monetary policy and fiscal policy. Monetary policy meant varying the money supply to affect the level of spending in the economy. Fiscal policy meant varying the government budget deficit or surplus (by varying government expenditures and taxes) to control the level of spending. Together they were supposed to provide a steering wheel by which economists could control the economy, keeping it free of business cycles.

Text 2

Famous Economists

Jean Baptiste Say. Supply creates its own demand.” This was the famous Law of Markets expounded by the French economist Jean Baptiste Say in his Treatise on Political Economy (1803). This work was the first popular and systematic presentation of Adam Smith’s ideas. As a result, it established Say as one of the leading economists of the early nineteenth century. Say’s Law became central to classical economic thinking. In modern language the Law meant that the level of aggregate output (GNP) always equaled the level of aggregate income (GNI). This income enabled society to buy the output produced. Therefore, general overproduction of goods (due to a deficiency in aggregate spending) was impossible.

But what if businesses misjudged the markets for their goods? In that case, the classicists contended, unprofitable overproduction of specific commodities could and would occur. But such errors would be temporary and would be corrected as entrepreneurs strove to fulfill consumers’ preferences by shifting resources out of the production of unprofitable goods and into the production of profitable ones.

Say’s law is central to the Classical vision of the economy. It says that there can never be a general glut of goods on the market; aggregate demand will always be sufficient to buy what is supplied. Not all Classical economists initially accepted Say’s law. The most spirited argument against it was put forward by Thomas Malthus, a preacher. Malthus argued that when people saved, part of their income would be lost

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to the economy and that there wouldn’t be as much aggregate demand out there as aggregate supply. According to Malthus, Say’s law did not necessarily hold true.

Say and Ricardo rejected Malthus’s argument. They argued that people’s savings were not lost to the economy. When people saved, they did it by lending their savings to other individuals. The people who borrowed the savings would spend what they borrowed on investments. Classical economists argued that the interest rate would fluctuate to equate savings and investment. If people’s desire to save increased, the interest rate would fall and the quantity of investment would increase. So any savings seemingly lost to the system would be actually translated into investment, making aggregate demand (total buying power in the economy) equal to aggregate supply (total production), through either a direct route (consumption) or an indirect route (investment by way of savings). Aggregate demand (investment plus consumption) always equaled aggregate supply.

Thomas Malthus. As the eighteenth century drew to a close, England found itself facing grave social problems. Among them were widespread poverty, the growth of urban slums, and severe unemployment. These social problems resulted from economic dislocations caused by years of war with France. In addition, the factory system of production had begun and was displacing numerous workers. It fell to a hitherto unknown English clergyman, Thomas Robert Malthus, to explain these problems. In his famous Essay on Population , (1803), he expounded the belief that population tended to outrun the food supply. The result would be bare subsistence for the laboring class. This prophecy has become a stark reality in many of the overcrowded poor countries of the world.

Malthus also contributed significantly to economic thought, anticipating certain concepts that became important in twentieth-century thinking. In his Principles of Political Economy (1820), he developed the concept of “effective demand,” which he defined as the level of demand necessary to maintain full production. If effective demand fell short, he said, overproduction would result. Malthus thus disagreed with Say on the Law of Markets.

David Ricardo. Generally considered to be the greatest of the classical economists, David Ricardo was the first to view the r economy as an analytical model. That is, he saw the economic system as an elaborate mechanism with interrelated parts. His task was to study the system and to discover the mechanisms that determine its behavior. In so doing, Ricardo formulated theories of value, wages, rent, and profit. These theories, although not entirely original, were for the first time stated completely, authoritatively, and systematically. Portions of them became the

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basis of many subsequent writings by later scholars. Some of Ricardo’s ideas still remain pillars of economics.

Ricardo, an English businessman rather than an academician, wrote a number of brilliant papers. His ideas were largely incorporated in his work Principles of Political Economy and Taxation (1817). The book was an immediate success, and it attracted many disciples. As a result, Ricardo’s influence became pervasive and lasting. Indeed, Ricardian economics became a synonym for classical political economy (or “classical economics,” as we call it today). Like his predecessors, Ricardo was mainly concerned with the forces that determine the production of an economy’s wealth and its distribution among the various classes of society. He also made major policy recommendations to Parliament concerning the dominant social and economic problems of his day.

John Stuart Mill. Known equally well as a political philosopher and as an economist, the Englishman John Stuart Mill was the last of the major “mainstream” classical economists. His great two-volume treatise Principles of Political Economy (1848) was a masterful synthesis of classical ideas. The book became a standard text in economics for several decades. Numerous students in Europe and America learned about economics from this basic work. So, too, did a number of American presidents—including Abraham Lincoln—although they did not always correctly apply the principles they learned.

Mill’s major objective was economic reform. Although he believed in laissez-faire, he went beyond the “natural law of political economy.” He did so by advocating worker education, democratic producer cooperatives, taxation of unearned gains from land, redistribution of wealth, shorter working days, improvements in working conditions, and government control of monopoly. These measures, Mill felt, would ensure workers the benefits of their contributions to production without violating the “immortal principles” of economics. It is easy to see why contemporaries of Mill often labeled him a socialist. But he believed too strongly in individual freedom to advocate major government involvement in the economy. By today’s standards, Mill probably would be classified as a moderate conservative.

Irving Fisher. Irving Fisher, professor of economics at Yale University, was one of America’s foremost economists prior to World War II. A mathematician and inventor as well as an economist, he was a profound scholar and a prolific writer. In addition to twenty eight published books, he wrote dozens of articles in professional journals. Because of their high quality and enduring value, some of Fisher’s publications are frequently referred to by scholars today. Fisher’s major interests were the study of money and prices. In a book entitled The Purchasing of Money

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(1911), he stated the equation of exchange—which subsequently became known as the Fisher equation. A modernized version of the equation is expressed in this way, the equation encompasses transactions for jinal goods, and thus uses readily available GNP data. (Such data did not exist in Fisher’s time, causing him to use a less practical equation.) The equation explains a cause-and-effect relationship between the quantity of money and the price level.

Milton Friedman. A Nobel laureate (1976) and professor emeritus at the University of Chicago, Milton Friedman is perhaps best known for his approach to money and his unique position as America’s leading monetarist. Using carefully documented research going back to the late nineteenth century, he argues that the crucial factor affecting economic trends has been the quantity of money, not government fiscal policy. Accordingly, he opposes the use of discretionary monetary policy by the Federal Reserve (Fed) to achieve economic stability. Friedman advocates instead a money-supply rule —an expansion of the nation’s money supply at a steady rate in accordance with the economy’s growth and capacity to produce.

Friedman cites the past performance of the Fed as one of the major reasons for this view. Throughout its history, he says, the Fed has proclaimed that it was using its monetary powers to promote economic stability. But the record often shows the opposite. Despite the Fed’s wellintentioned efforts, it has been a major cause of instability by causing the monetary growth rate to expand and contract erratically. Therefore, the urgent need is to prevent the Fed from being a source of economic disturbance.

Is the adoption of a money-supply rule technically feasible? Friedman claims that it is. Although he admits that the Fed could not achieve a precise rate of growth in the money supply from day to day or from week to week, it could come very close from month to month and from quarter to quarter. If and when it does, he says, it will provide a monetary climate favorable to economic stability and orderly growth. And that, Friedman concludes, is the most we can ask from monetary policy at our present state of knowledge.

Alfred Marshall. In the last quarter of the nineteenth century, there arose in Europe and America a system of ideas known as neoclassical economics. One of the leaders of neoclassicism was Alfred Marshall, a British scholar whose landmark treatise, Principles of Economics (1890), will forever be regarded as a masterwork. The book, which went through eight editions, was a leading text in economics for over forty years. Among the major contributions of this and other works by Marshall were the distinction between the short run and the long run, the extensive use

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of diagrams and models to describe economic behavior, and the equilibrium of price and output resulting from the interaction of supply and demand. Marshall also systematized the use of elasticity, the distinction between money cost and real cost, and many other ideas.

In short, almost everything we read today pertaining to supply and demand analysis, equilibrium, and related notions was originally formulated precisely and definitively by Marshall. Few students today realize or appreciate the significant role that Marshall’s ideas play in their economics education. By the time he retired from his professorship at England’s Cambridge University, Marshall had trained several generations of eminent economists. These disciples went on to assume major positions in universities and government service. One of them was the famous British economist John Maynard Keynes whose ideas are studied in macroeconomics. Keynes referred to his former teacher as “a scientist . . . who, within his own field, was the greatest in the world in more than a hundred years.”

Paul Anthony Samuelson. Paul Samuelson is probably the world’s most widely known economist. Several generations of college students in the U.S. and abroad took their first course in economics using his introductory textbook. Millions of readers of American and foreign newspapers and magazines have seen his articles on current economic policies. Professional economists throughout the world have studied, and have been stimulated toward further research by the extraordinary range of his scientific work. This includes hundreds of profound papers and several books dealing with theoretical topics in many areas of economics.

In his Foundations of Economic Analysis (1947), which immediately established Samuelson’s reputation as a highly creative economist, he presented a systematic analysis of static and dynamic economic theory. He described, in mathematical form, the “state” of an economic system in equilibrium and the process or path of adjustment from one state to another. He then linked statics and dynamics by what he called the correspondence principle. This is one of the most fundamental concepts in the Foundations. The proposition demonstrates that, before comparative statics (the comparison of equilibrium positions in static states) can be meaningful, it is first necessary to develop a dynamic analysis of stability.

In general, Paul Samuelson’s scientific contributions – developed in precise mathematical rather than literary form—have greatly deepened our understanding of how the economic system works. He has shown the general applicability of the concept of maximization, subject to constraints, to many branches of economics. In recognition of his extraordinary contributions to economics, he became, in 1970, the first American to receive the Nobel Prize in Economic Science.

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Leon Walras, Vilfredo Pareto, Gerard Debreu. Leon Walras’s fame rests on his formulation of the theory of general equilibrium, which he developed rigorously through the use of mathematics. He thus became one of the founders of mathematical economics, which has flourished to this day. While serving as a professor at the University of Lausanne, Switzerland, Leon Walras published his great work, Elements of Pure Economics (1874). In this book he showed how a system of simultaneous equations could be used to describe an economy in general equilibrium. The “description,” however, is given in a formal theoretical sense only. The necessary data cannot be obtained, and the number of simultaneous equations that would have to be solved is virtually infinite. Nevertheless, this does not destroy the value of general-equilibrium theory. The virtue of the concept lies in the precise way in which it demonstrates the mutual interdependence of economic phenomena.

Walras was succeeded at Lausanne by Vilfredo Pareto, an Italian scholar. In his major work, Manual of Political Economy (1909), Pareto, like Walras, formulated concepts of general equilibrium under static conditions. However, Pareto was also concerned with the problem of how to maximize total satisfactions in an economy. He developed the concept now commonly referred to as Pareto optimality – a notion that is fundamental to modern welfare economics. It should be noted that Pareto also made notable contributions to sociology. In fact, his reputation in that field is as strong as his reputation in economics. Together, Walras and Pareto constitute what is known as the “Lausanne School” of economic thought. The influence of this school on subsequent writers – especially in mathematical economics, general-equilibrium theory, and welfare economics—has been enormous.

Gerard Debreu is a contemporary scholar following in the Lausanne tradition. A mathematician and economist at the University of California, he was awarded the 1984 Nobel Prize in Economic Science for helping to “prove” the theory of general equilibrium.

Text 3

Economic Data

You cannot be successful in economics unless you can use data. It is through data that we observe the real world. It is in data that we discover the subject matter of economics, and it is in data that we come to confront our economic theories with reality. Only by doing this we can be sure that the theories make sense. Data handling is therefore a crucial skill for the economist.

Data are not just numbers. Anything that provides information about the economic world constitutes data to an economist. Data are the raw

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