17. What is an economic system?

Societies have an economic system or an organized way of providing for the wants and needs of their people. The type of economic system is determined by the way in which the decisions concerning What, How and for Whom to produce are made.

There are three major kinds of economic systems: traditional, command and market. In a society with a traditional economy nearly all economic activity is the result of ritual and custom. Habit and custom also prescribe most social behaviour.

Other societies have a command economy — one where a central authority makes most of the What, How and for Whom decisions.

In a market economy, the questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests. In economic term a market is an arrangement that allows buyers and sellers to come together to conduct transactions.

18. What are the major kinds of economic systems?

All societies have an economic system or an organized way of providing for the wants and needs of their people. The way in which these decisions are made will determine the type of economic system they have. There are three major kinds of economic systems: traditional, command and market.

In a society with a traditional economy nearly all economic activity is the result of ritual and custom.

Individuals are not free to make decisions based on what they want or would like to have.

They know what goods and services will be produced, how to produce them, and how such goods and services will be distributed.

Other societies have a command economy — one where a central authority makes most of the What, How and for Whom decisions.

In a market economy, the questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests.

19. What is a command economy?

There are three major kinds of economic systems: traditional, command and market.

Some of societies have a command economy — one where a central authority makes most of the What, How and for Whom decisions.

Economic decisions are made at the top and people are expected to go along with choices made by their leaders. It means that major economic choices are made by the government. It decides goals for the economy and determines needs and production quotas for major industries. If the planning body wants to stress growth of heavy manufacturing, it can shift resources from consumer goods to that sector. Or, if it wants to strengthen national defence, it can direct resources from consumer goods or heavy manufacturing to the production of military equipment and supplies.

20. What disadvantages does the command economy have?

The major disadvantage of the command system is that it does not always meet the wants and needs of individuals.

The second disadvantage of the command economy is the lack of incentives that encourage people to work hard. In most command economies today workers with different degrees of responsibility receive similar wages. In addition, people seldom lose their jobs regardless of the quality of their work. As a result, there is a tendency for some to work just hard enough to fill production quotas set by planners.

The command economy requires a large decision-making bureaucracy. Many clerks, planners, and others are needed to operate the system. As a result, most decisions cannot be made until a number of people are consulted, or a large amount of paperwork is processed. This causes production costs to increase and decision-making to slow down. Thus, a command system does not have the flexibility to deal with day-to-day problems.

21. What is a market economy?

There are three major kinds of economic systems: traditional, command and market.

In a market economy, the questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests. In economic term a market is an arrangement that allows buyers and sellers to come together to conduct transactions¹.

Since consumers like products with low prices and high quality, producers in a market economy will try to supply such products. Those who make the best products for the lowest prices will make profits² and stay in business³. Other producers will either go out of business or switch to⁴ different products consumer can buy.

A market economy has several major advantages. First, a market economy is flexible and can adjust to change over time. The second major advantage of the market economy is the freedom that exists for everyone involved. The third advantage of the market economy is the lack of significant government intervention.

22. What advantages does a market economy have?

A market economy has several major advantages that traditional and command economies do not have. First, a market economy is flexible and can adjust to change over time.

The second major advantage of the market economy is the freedom that exists for everyone involved. Producers are free to make whatever they think will sell. They are also free to produce their products in the most efficient manner. Consumers on the other hand are free to spend their money or buy whatever goods and services they wish to have.

The third advantage of the market economy is the lack of significant government intervention. Except for national defence, the government tries to stay out of the way⁵. As long as there is competition among producers, the market economy generally takes care of itself.

The final advantage of the market economy is the incredible variety⁶ of goods and services available to consumers. In fact, almost any product can and will be produced so long as there is a buyer for it.

23. What is a modern market?

The term market, as used by economists, is an extension of the ancient idea of a market as a place where people gather to buy and sell goods. In former days part of a town was kept as the market or marketplace, and people would travel many kilometres on special market-days in order to buy and sell various commodities.

Today, however, markets such as the world sugar market, the gold market¹ and the cotton market do not need to have any fixed geographical location. Such a market is simply a set of conditions permitting buyers and sellers to work together.

Whenever people who are willing to sell a commodity contact people who are willing to buy it, a market for that commodity is created. Buyers and sellers may meet in person, or they may communicate in some other way: by telephone or through their agents. In a perfect market, communications are easy, buyers and sellers are numerous and competition is completely free. There are, however, no really perfect markets.

24. How do economists classify markets?

Economists classify markets according to conditions that prevail in them. They ask questions like the following: How many supplies are there? How large are they? Do they have any influence over price? How much competition is there between firms? What kind of economic product is involved? Are all firms in the market selling exactly the same product, or simply similar one? Is it easy or difficult for new firms to enter the market? The answer to these questions helps to determine market structure, or the nature and degree of competition among firms operating in the same market.

In short, markets can be classified according to certain structural characteristics that are shared by most firms in the market. Economists have names for these different market structures: pure competition¹, monopolistic competition², oligopoly, and monopoly.

25. What is pure competition?

markets can be classified according to certain structural characteristics that are shared by most firms in the market. Economists have names for these different market structures: pure competition¹, monopolistic competition², oligopoly, and monopoly.

An important category of economic markets is pure competition. This is a market situation in which there are many independent and well-informed buyers and sellers of exactly the same economic products. Each buyer and seller acts independently. They depend on forces in the market to determine price. If they are not willing to accept this price, they do not have to do business. individual participants have no affect on market price and quantity. Pure competition characterized by free flow of information, and free entry and exit. Agricultural products such as potatoes and wheat are examples of competitively sold products.

26. What is monopolistic competition?

markets can be classified according to certain structural characteristics that are shared by most firms in the market. Economists have names for these different market structures: pure competition¹, monopolistic competition², oligopoly, and monopoly.

all the conditions of pure competition may be met except that the products for sale are not exactly the same. By making its product a little different, a firm may try to attract more customers and take over the economic market⁶. When this happens, the market situation is called monopolistic competition.

The one thing that separates monopolistic competition from pure competition is product differentiation⁷. The differences among the products may be real, or imaginary. If the seller can differentiate a product, the price may be raised a little above the market price, but not too much.

27. What is monopoly?

In some markets there may only be one seller or a very limited number of sellers. Such a situation is called a monopoly, and may arise from a variety of different causes. It is possible to distinguish in practice four kinds of monopoly.

State planning and central control of the economy often mean that a state government has the monopoly of important goods and services. Some countries have state monopolies in basic commodities like steel and transport, while other countries have monopolies in such comparatively unimportant commodities as matches.

A different kind of monopoly arises when a country, through geographical and geological circumstances, has control over major natural resources or important services. Such monopolies can be called natural monopolies.

They are very different from legal monopolies, where the law of a country permits certain producers, authors and inventors a full monopoly over the sale of their own products.

28. What is demand?

Most people think of demand as being the desire for a certain economic product. That desire must be coupled with¹ the ability and willingness to pay. Effective demand, that is desire plus ability and willingness to pay, influences and helps to determine prices.

In economic theory, demand means the amount of a commodity or service that economic units are willing to buy, or actually buy, at a given price. In economic theory, therefore, demand is always effective demand, i.e., demand, supported by purchasing power¹, and not merely the desire for a particular commodity or service.

In economics the relationship of demand and price is expressed by the Law of Demand. It says that the demand for an economic product varies inversely² with its price. In other words, if prices are high the quantities demanded will be low. If prices are low the quantities demanded will be high.

29. How do prices affect the quantities demanded?

In economics the relationship of demand and price is expressed by the Law of Demand. It says that the demand for an economic product varies inversely² with its price. In other words, if prices are high the quantities demanded will be low. If prices are low the quantities demanded will be high.

The demand for some products is such that consumers do care about changes in price when they buy a great many more units of product because of a relatively small reduction in price. The demand for the product is said to be elastic⁴.

For other products the demand is largely inelastic. This means that a change in price causes only a small change in the quantity demanded.

A higher or lower price for salt, for example, probably will not bring about⁵ much change in the quantity bought because people can consume just so much salt.

30. What factors is demand influenced by?

Demand is influenced by price. In economics the relationship of demand and price is expressed by the Law of Demand. It says that the demand for an economic product varies inversely² with its price. In other words, if prices are high the quantities demanded will be low. If prices are low the quantities demanded will be high.

Demand is not only influenced by price, but also by many other factors, such as the incomes of the demanders and the prices of substitutes. In economic analysis, these other factors are frequently assumed to be constant. This allows one to relate a range of prices to the quantities demanded in what is called the demand function and to graph this relationship in the demand curve.

The demand curve² is the graphical representation of the demand function. It tells us how many units of a particular commodity or service would be bought at various prices, assuming that all other factors remain unchanged.

31. What is supply?

Business people think of demand as the consumption of goods and services. At the same time, they think of supply as their production. As they see it, supply means the quantity of a product supplied at the price prevailed at the time. In economic theory, the term «supply» denotes the amount of a commodity or service offered for sale at a given price. Economists want to know how much of a certain product sellers will supply at each and every possible market price. Supply may be defined as a schedule of quantities that would be offered for sale at all of the possible prices that might prevail in the market. Everyone who offers an economic product for sale is a supplier.

The law of supply states that the quantity of an economic product offered for sale varies directly with its price. If prices are high suppliers will offer greater quantities for sale. If prices are low, they will offer smaller quantities for sale.

32. What factors is supply determined by?

The law of supply states that the quantity of an economic product offered for sale varies directly with its price. If prices are high suppliers will offer greater quantities for sale. If prices are low, they will offer smaller quantities for sale.

supply is determined also by factors other than price, the most important being the cost of production and the period of time allowed to supply to adjust to a change in prices. In economic analysis, these other factors are frequently assumed to be constant. This assumption enables supply and price to be related in what is called the «supply function». The supply curve is the graphical representation of the supply function, i.e., of the relationship between price and supply. It shows us how many units of a particular commodity or service would be offered for sale at various prices, assuming that all other factors (such as the cost of production, the period of time involved) remain constant.

33. What role do prices play in a market economy?

In economics, the term «price» denotes the consideration in cash (or in kind) for the transfer of something valuable, such as goods, services, currencies, securities, the use of money or property for a limited period of time, etc.

Prices play an important role in all economic markets. If there were no price system, it would be impossible to determine a value for any goods or services. In a market economy prices act as signals. A high price, for example, is a signal for producers to produce more and for buyers to buy less. A low price is a signal for producers to produce less and for buyers to buy more. Prices serve as a link between producers and consumers. Prices, especially in a free market system, are also neutral. That is, they favour neither the producer nor consumer. Prices perform two important economic functions: they ration scarce resources, and they motivate production.

34. How do sellers and buyers use prices?

Prices play an important role in all economic markets. If there were no price system, it would be impossible to determine a value for any goods or services. In a market economy prices act as signals. Prices serve as a link between sellers and buyers.

Prices come about¹ as a result of competition between buyers and sellers. The price system in a market economy is surprisingly flexible. Unforseen events such as weather, strikes, natural disasters and even war can affect the prices for some items. When this happens, however, buyers and sellers react to the new level of prices and adjust their consumption and production accordingly². Before long³, the system functions smoothly again as it did before. In economic markets, buyers and sellers have exactly the opposite hopes and intentions. The buyers come to the market larger to pay low prices. The sellers come to the market hoping for high prices. For this reason, adjustment process must take place when the two sides come together.

35. Why do buyers and sellers have the opposite intentions and hopes?

In economic markets, buyers and sellers have exactly the opposite hopes and intentions because the buyers come to the market larger to pay low prices instead the sellers come to the market hoping for high prices.

In a market economy prices act as signals. A high price, for example, is a signal for producers to produce more and for buyers to buy less. A low price is a signal for producers to produce less and for buyers to buy more. Prices serve as a link between producers and consumers.

Prices, especially in a free market system, are also neutral. That is, they favour neither the producer nor consumer. But it must be kept in mind that a consumer always wants to get the better product for the lowest price. At once the product will be produced only if its price satisfies the producer or the seller.

36. What is market equilibrium?

In economic markets, buyers and sellers have exactly the opposite hopes and intentions. The buyers come to the market larger to pay low prices. The sellers come to the market hoping for high prices. For this reason, adjustment process must take place when the two sides come together. This process almost always leads to market equilibrium — a situation where prices are relatively stable and there is neither a surplus nor a shortage in the market.

But such situation is impossible on the practice: many factors have influence on demand (for instance, incomes, substitutes) and on supply (production costs, productivity). That’s why equilibrium always changes in dynamics.

When the price is above the equilibrium point there is a surplus of supply; when the price is below the equilibrium point there is a shortage in supply. Different supply curves and different demand curves have different points of economic equilibrium.

37. What messages do price increases and decreases send to producers of goods and services?

Price increases and decreases send messages to suppliers and potential suppliers of goods and services. This situation is known as the production-motivating function of prices. As prices rise, the increase serves to attract additional producers. The higher price in a short period of time means larger profit on conditions that production costs remain stable. The profit is enough in order to stay in business. Similarly, price decreases drive producers out of the market. The lower profit lead to severe competition among the sellers and only the strongest ones will survive. In this way prices encourage producers to increase or decrease their level of output.

The second important economic function of prices is rationing of scarce resources: the more scarce something is, the higher its price will be, and the fewer people will want to buy it.

38. What is money?

Basically, money is what money does. This means that money can be any substance that functions as a Medium of Exchange, a Measure of Value, and a Store of Value.

As a medium of exchange, money is something generally accepted as payment for goods and services. As a measure of value, money expresses worth in terms that most individuals understand. Money also serves as a store of value. This means goods or services can be converted into money that is easily stored until some future time.

The most familiar forms of money are coin and currency. The term coin refers to metallic forms of money. The term currency refers to paper money issued by government. Modern money has the same characteristics that primitive money had. Modern money is very portable, durable, doesn’t go out of circulation unless it is lost, rates high in divisibility, isn’t stable in value.

39. What forms of money are in use in the world today?

The different forms of money are in use in different countries today. The most familiar are coin and currency. The term coin refers to metallic forms of money. The term currency refers to paper money issued by government. Coins and paper money are called cash. A share of cash in gross money turnover isn’t more than 10-30 per cent in highly-developed countries because dominant position is occupied by electronic money.

Money functions as a Medium of Exchange (something generally accepted as payment for goods and services), a Measure of Value (it expresses worth in terms that most individuals understand), and a Store of Value (goods or services can be converted into money that is easily stored until some future time).

Modern money has the same characteristics that primitive money had. Modern money is very portable, durable, doesn’t go out of circulation unless it is lost, rates high in divisibility and isn’t stable in value.

40. What does the term currency refer to?

The different forms of money are in use in different countries today. The most familiar are coin and currency. The term coin refers to metallic forms of money. The term currency refers to paper money issued by government.

Paper money is one of the most liquidity forms of money. At the same time it has no value itself. A bank-note costs only the production costs of it. But people accept this bank-note as medium of exchange – something generally accepted as payment for goods and services. The main disadvantage of currency as paper money is impossibility to act out of the society.

Coins and paper money are called cash. A share of cash in gross money turnover isn’t more than 10-30 per cent in highly-developed countries because dominant position is occupied by electronic money. Electronic money is the higher form of progressive development of finance.

41. What are the most important characteristics of modern money?

Modern money has the same characteristics that primitive money had. The first, it is very durable. Metallic coins last a long time under normal use and generally do not go out of circulation unless they are lost. Paper currency also is reasonably durable. The second, modern money also rates high in divisibility. The penny which is the smallest denomination of coin, is more than small enough, for almost any purchase. In addition, checks almost always can be written for the exact amount. The third, it is not as stable in value. The fact, that the money supply often grew at a rate 10 to 12 per cent a year was considered as major cause of inflation.

At present there is a tendency of gradual forcing out cash by electronic money.

42. What is a progressive tax?

There are three types of taxes: proportional, progressive and regressive.

A progressive tax is one that imposes a higher percentage rate of taxation of people with high incomes than on those with low incomes.

For example, individuals with yearly income from $1,000 to $9,999 ought to pay 40 per cent of it; the taxpayer with income from $10,000 to $49,999 – 50 per cent; and others - income is more than $50,000 – should pay 60 per cent. Thus progressive tax system discourages a lot of producers to increase their level of output and to get the bigger earnings. Progressive taxes are used as often as in highly-developed countries with relatively high rate of development but it isn’t used in such economies as Ukrainian’s: it can cause a high level of shadow sector.

43. What is the main source of government revenue?

A major source of revenue is the property tax — a tax on real property and tangible or intangible personal property. Real property includes land, buildings, fixtures and anything else permanently attached to them. Tangible property is all tangible items of wealth not permanently attached to land or buildings, such as furniture, automobiles, tools, equipment, the stock of goods in retail stores and clothing. Intangible personal property includes stocks, bonds, mortgages, copyright, trademarks, patents and bank accounts.

The main problem with personal property as a source of revenue is that many things that should be taxed never are. Another problem is that some property is very hard to evaluate fairly.

A sales tax is a general tax levied on consumer purchases of nearly all products. It is added to the final price paid by the consumer. The sales tax is a very effective means of getting revenue for states and cities.

44. What is the difference between tangible and intangible property?

A major source of revenue is the property tax — a tax on real property and tangible or intangible personal property. Real property includes land, buildings, fixtures and anything else permanently attached to them. Frequently real property is called real estate. Tangible property is all tangible items of wealth not permanently attached to land or buildings, such as furniture, automobiles, tools, equipment, the stock of goods in retail stores and clothing. Intangible personal property includes stocks, bonds, mortgages, copyright, trademarks, patents, intellectual property rights, goodwill and bank accounts.

Some property, despite being physical in nature, is classified in many legal systems as intangible property because the rights associated with the physical items have greater significance than the physical properties.

For example, the owner of a copyright can control the printing of books, but the book itself is personal property which can be bought and sold without concern over the rights of the copyright holder.

45. What is a tax assessor?

A tax assessor is a specialist who calculates the value of property. The main problems assessor faces with are: 1) many items are not always brought to his attention, that’s why a lot of things that should be taxed never are; 2) some property is very hard to evaluate fairly. The value calculated by the assessor is then used as the basis for determining the amounts to be paid for tax purposes.

The property tax — a tax on real property and tangible or intangible personal property. Real property or real estate includes land, buildings, fixtures and anything else permanently attached to them. Tangible property is all tangible items of wealth not permanently attached to land or buildings, such as furniture, automobiles, tools, equipment, the stock of goods in retail stores and clothing. Intangible personal property includes stocks, bonds, mortgages, copyright, trademarks, patents, intellectual property rights, goodwill and bank accounts.

46. What is the main purpose of a business organization?

One of the major economic institutions is the business organization that serves as the main link between scarce resources and consumer satisfaction. These businesses compete with one another for the chance to satisfy people’s wants.

The main purpose of a business organization is earning a profit. If its activity is not successful it suffers losses.

There are three major kinds of business organizations: the sole proprietorship, the partnership and the corporation.

The most common form of business organization is the sole proprietorship — a business owned and run by one person. A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit. As corporations are the most powerful form of doing of business, they may attract a large amount of capital and can invest it in plants, equipment and research.

47. What are the major types of business organizations?

There are three major kinds of business organizations: the sole proprietorship, the partnership and the corporation.

The most common form of business organization is the sole proprietorship — a business owned and run by one person. They have minimal legal restrictions and do not have to pay the special taxes placed on corporations.

A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit. Partnerships are most common in such professional fields as medicine, law, accounting, stockbroking, but they are also found in manufacturing, wholesale and retail trade.

As corporations are the most powerful form of business organizations, they may attract a large amount of capital and can invest it in plants, equipment and research. That’s why they have great capacity for growth and expansion.

48. What is a sole proprietorship?

The most common form of business organization is the sole proprietorship — a business owned and run by one person. The main advantage of a sole proprietorship is that it is the easiest form of business to start and run.

The second advantage is that it has minimal legal restrictions and doesn’t have to pay the special taxes placed on corporations. Sole proprietorships are generally found in small-scale retail and service businesses.

The major disadvantage of a sole proprietorship is the unlimited liability that each proprietor faces. Since the business and the owner are legally the same, the owner is liable for all financial losses and debts of his business. This could mean the loss of personal property such as automobiles, homes and savings.

A second disadvantage of the sole proprietorship is that it has limited financial resources. The money that a proprietor can raise is limited by the amount of savings and ability to borrow.

49. What is a partnership?

A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit.

The most common form of partnership is a general partnership. General partners own the business, work in it and share the profits and losses. They are responsible for the management of the business and usually agree with each other before making any major decisions.

Limited partnership is a special type of partnership. Limited partners are only liable for the amount they have invested in the business. They are usually not involved in the management of the firm.

Like sole proprietorship they are easy to form and often get tax benefits from the government. The major disadvantages of partnership are: 1) unlimited financial liability – each partner is legally responsible for all debts and the whole business; 2) partners’ disagreement with each other causing management conflicts.

50. What type of economy does the USA have?

The USA has a developed free enterprise economy in which people are able to own capital and property and to run their own businesses for making profit. Most economic decisions in the country are made in the marketplace.

Despite the fact that the US has a free enterprise system, government’s role in the economy is so important that economists describe it as a mixed economy. It is an economic system that combines elements of public ownership of the means of production with private ownership, and elements of free enterprise with government participation and control.

The USA is a country with a highly developed economy. It produces 25 per cent of the world’s industrial products, agricultural goods, and services.

The United States owes its high level of economic development to its great wealth of minerals and fertile farm soil, together with a moderate climate.

51. What role does international trade play in the US economy?

The US is the world's largest trading nation. Since it is the world's leading importer, there are many US dollarsin circulation all around the planet. The dollar is also used as the standard unit of currency in international markets for commodities such as gold andpetroleum. Large foreign economies such asChina,Japan,Arab states of the Persian Gulf, and the European Union own huge dollar reserves (especially as the US is more in debt) so there is a fear that they will move away from the dollar.

In 2008 the US had $144.1 billion surplus on trade in services and $821.2 billion deficit on trade in goods. In order to fund the national debt(also known as public debt), the United States relies on selling UStreasury bondsto people both inside and outside the country, and in recent times a growing percent of buyers are international.

52. Why are transportation-related businesses considered to be an important part of the service industry?

Transportation is the movement of people and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space.

It is almost universally accepted that transport has played a predominant role in the economic development of all modern civilizations. All modern economies are dependent upon transportation of some form to move people and goods to and from other economies. Access to other economies enables trade and facilitates the specialization of labor and capital, leading to greater productivity growth and higher wages. Without such access, many productivity-improving developments would not occur, resulting in lower average productivity and lower wages. This is because isolated areas would be focused on local needs, production volumes would be low, specialized goods and innovation from outside the area would be unavailable, and there would be no or limited demand for goods (or services) in which the isolated area could specialize.

52. What can you say about the US agriculture?

Agriculture is a major industry in the United States and the country is a net exporter of food. Farms are owned by the people who operate them and by business corporations. Farming is largely mechanized and scientifically controlled.

The dominant trend in American agriculture can be summarized in two words — increased productivity. American agriculture produces more food products than any other capitalist country.

The principal crops grown in the country are: corn, wheat, soy-beans, sugar-cane and sugar beets, sunflower, tobacco, rice, cotton. The United States harvests a lot of vegetable. Florida and California are famous for their fruit production.

Animal husbandry is also developed in the country. The highlands in the West of the country are famous for their dairy and beef cattle breeding, pig raising, sheep farming. Wool production, leather and textile industries are also developed there. Poultry-farming and vegetable growing are concentrated in the countryside.

52. What place does the United Kingdom hold in the world and in Europe?

The United Kingdom of Great Britain and Northern Ireland is a sovereign state located off the northwestern coast of continental Europe. It is a developed country, with the sixth largest economy by both nominal GDP and purchasing power parity in the world and the third largest in the Europe.

It was the world’s first industrialized country and the world’s foremost power during the 19th and early 20th centuries, but the economic and social cost of two world wars and the decline of its empire diminished its leading role in global affairs.

The UK nevertheless remains a major power with strong economic, cultural, military, scientific and political influence. It is a recognized nuclear weapons state and has one of the highest defence spending in the world. It is a Member State of the European Union, a member of the G8, NATO, OECD and the World Trade Organization.

52. What type of the economy does Great Britain have?

The United Kingdom is the sixth largest economy in the world by both nominal GDP and purchasing power parity (PPP).

The UK’s economy is primarily based on private enterprises and free market. The questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests. Producers are free to make whatever they think will sell. Consumers are free to spend their money or buy whatever goods and services they wish to have.

However, some industries were nationalized after World War II. Now the country has a mixed private- and public-enterprise economy. The government controls the coal-mining and electric power industries, ferrous metallurgy and shipbuilding. Part of public transport, civil aviation and national bank are also managed by the state.

So, today we can define The UK’s economy as a limited regulated free market economy, somewhere between the US and continental Europe.

52. What is the basic unit of currency in Britain? What did the British government decide about euro?

The Pound Sterling, commonly called the pound, is the official currency of the United Kingdom, its Crown dependencies and the British Overseas Territories. It is subdivided into 100 pence.

Relatively recently there was debate over whether or not the UK should abolish its currency Pound Sterling and join the Euro. The British Prime Minister, Gordon Brown, pledged at the time to hold a public referendum based on certain tests he set as Chancellor of the Exchequer.

When assessing the tests, Gordon Brown concluded that while the decision was close, the United Kingdom should not yet join the Euro. In particular, he cited fluctuations in house prices as a barrier to immediate entry. Public opinion polls have shown that a majority of Britons have been opposed to joining the single currency for some considerable time and this position has now hardened further.

52. What are the main branches of Ukrainian industry?

Industry is the most important area of Ukraine’s economy. In the current structure of Ukraine’s industry a great proportion is occupied by heavy industry, especially the steel, machine-building and coal industries.

A considerable part is played by the food and light industries. About two-fifths of Ukraine’s people work in industry, and about a fifth work in agriculture. Most other Ukrainians have jobs in service industries.

Many of Ukraine’s heavy industries are concentrated in the Donbas region. A large industrial output is yielded by the mining, ferrous metallurgy, chemical and machine-building industries.

The machine-building is presently the largest branch of industry. Automobiles and buses, locomotives and railway cars, airplanes and ships, machine tools and metallurgical equipment are produced at Ukraine’s plants and factories.

However, today’s industries are unable to satisfy the consumers’ wants because of different reasons. All the problems must be solved in the course of new economic reforms.

52. Why is steel industry the most important sector of the national economy?

Ukraine has strong preconditions for the steel industry development, among them the most important one – the presence of rich deposits of iron ore. As result now Ukraine’s iron and steel industries are very important segments in the economy.

First of all, steel is used as resource in many national industries: metallurgy, machine-building, construction, transport and others. Relatively cheap domestic steel helps these industries to decrease their production costs and remain competitive in the home and world market.

Second reason of being so important is that steel industry is a great consumer of fuel, energy and water and influences greatly on Ukrainian fuel and power complex.

Finally, Ukraine is one of the world top 10 steel exporters. Steel accounts for about 40 per cent in Ukrainian export and helps the country to take its niche in the world trade system and to bring foreign currency necessary for payments for imported goods.

52. What does Ukraine import?

Ukraine encourages foreign trade and investment and takes active part in world trading process.

Imports of goods and services to Ukraine over the last five years grew significantly. Ukraine imports commodities that are necessary both for national production and final consumption. The structural composition of Ukrainian imports brings homogeneous and stable character. The largest shares of goods imported belong to energy resources (from 25 to 30%), machinery and equipment (18-20%), chemical products (about 14%). Rapid growth of vehicles imported is also observed.

Imports of energy is explained by the lack of own power carriers while imports of machinery is the result of the focus of national economy on raw materials processing. The growth of vehicle imports is the result of increasing in revenues and needs of households, as well as inability of domestic producers to meet demand both in quality and quantity.

The main services imported are transportation, financial and consulting services.

52. Why is Ukraine dependent on energy imports?

Energy issues play the largest role in the Ukraine’s daily economic and political life. Ukraine’s energy situation since independence has been characterized first by two elements: first, the country’s dependency on imported energy sources – especially on Russian ones – and, second, its low levels of energy efficiency.

Energy resources are one of the major factors in production of GDP. The greatest consumer is Ukrainian industry. Both Ukraine’s energy production system and its economy as a whole are sorely outdated making the process of energy consumption too intensive and inefficient. As a result, despite having a population of only 47 million, Ukraine is the seventh largest gas consumer in the world.

The output of own energy resources is far not enough to satisfy the needs of economy. That’s why Ukraine imports above 40% of energy resources used in production. So, Ukrainian economy is highly dependent on energy imports and if it stopped the state would be destroyed.

52. What factors make Ukraine’s agriculture one of the key economic sectors?

Ukraine has very favourable conditions for the development of agricultural production: fertile soils, temperately warm climate, a well-developed industry processing agricultural raw materials. Ukraine is one of the world’s most productive farming regions and is known as the breadbasket of Europe. About 20% of Ukrainian people work in agriculture.

There are two main branches of agricultural production in Ukraine: crop production1 and animal husbandry. Crop production includes: grain and industrial crops, meadow culture, fruit and vegetable raising. Almost half of the cropping area is occupied by cereals. Among the industrial crops the leading position is occupied by sugar beet. Close to 40 types of vegetable crops are grown in Ukraine.

Animal husbandry is the practice of breeding of farm animals and their use. The most widespread branches of animal husbandry are: dairy and beef cattle breeding, pig raising, sheep farming and bee-keeping. The poultry industry is spread through all the provinces.

52. What products does Ukraine export?

Ukraine encourages foreign trade and investment and takes active part in world trading process.

Well-developed industry, especially steel industry, and agricultural sector are main suppliers of exported goods. The structure of export is characterized with predominance of raw materials while final goods are in minority. That shows Ukrainian inefficiency in world trade process and its dependence on developed countries with new technologies.

The largest share of exports belongs to ferrous metals and nonferrous metals (over 45%). Other Ukraine’s main exports are fuel and petroleum products, chemicals, machinery and transport equipment, food products. Agricultural products take the second place in the exports structure account for 15% of Ukraine’s exports. In general, there is a tendency of industry products to grow in exports structure (totally almost 85%).

The main trade partners of Ukraine are the CIS and Baltic States, Russia, USA, Germany, China, Italy, France, Poland, Turkey.

52. What criteria do you think people use when they choose their future profession?

There are several factors that influence the decision of young people to make their choice that concerns material and spiritual aspects of the future profession.

It is generally believed that professions should be both prestigious and interesting. Everybody wants to benefit from the social privileges provided by the profession. At the same time other factors are important. Much depends on the inclinations and interests of the person.

Another important factor is social environment. The profession of the parents often in this or that way influences the future profession of their children. Today we have dynasties of physicians, historians, lawyers, economists, pilots and military officers. It is impossible to forget about the material aspect of the future profession. It indicates the level of the society’s values. Today all professions can be classified as prestigious or not prestigious. The problem of prestige is subjective. All the professions are very useful.

52. What has inspired you to choose this speciality?

Four years ago I entered Kyiv National Economic University to study economics and management. In fact, my dream was and still is to have an enterprise or a firm of my own. To my mind to be a good leader of the company means to be competent in current economic processes.

A businessman should understand the reasons of economic problem and be able to discover the ways of their working out. It is not an easy task in the country with such unstable economy as economy in Ukraine.

I want to be a company leader who is not afraid of innovations, who is ready to consider the business experience of other companies – both Ukrainian and foreign, a leader who is interested in the prosperity of my own company as well as in prosperity of my country.

So, I hope I made excellent choice and after graduating from the university I’ll have an interesting job.

52. What is your future speciality?

Four years ago I entered Kyiv National Economic University to study economics and management. I chose the speciality of economy of enterprise. My speciality occupies the field of economy of enterprise and is almost universal. It includes studying of decision-making, financial analysis, human resources, marketing, statistics, management and planning.

After graduating the university I’ll have enough knowledge in economics, finance and marketing to work as economist or manager. But with no experience it is hard immediately to get very good job. So, I can start working as assistant of an economist or a financier, or an accountant, or a marketer.

Later making my carrier I can become Chief Executive Officer or Chief Financial Officer. In fact, my dream was and still is to have an enterprise or a firm of my own. So, getting enough theoretical knowledge and practical skills I can make my dream become true.

52. How long does the course of study last in your university?

Kyiv National Economic University offers a wide choice of programmes and courses for the students: Bachelor’s programmes in economics and management, Master’s programmes, postgraduate and doctorate programmes. They are aimed to develop individual and professional abilities of the students and represent different level of academic achievement.

Bachelor’s degree programmes in economics and management are profession-oriented and require four years of study. The first two years (the freshman year and sophomore year) are aimed at providing general education and preparing for more special studies. The last two years (the junior and senior years) are devoted almost entirely to the majors. The undergraduates major in those subjects which are essential for their future activity.

The Master’s degree programmes require one or two years of study beyond baccalaureate. The Master’s degree candidate follows a rather specific course of study, usually in a single field.

52. What subjects do you consider to be the most important for you to gain your professional skills?

All subjects necessary for gaining professional skills in field of management and economics are studied in Kyiv National Economic University. To my mind the most important subject for my future profession is the economy of enterprise also called business economics. This is many-sided course which includes studying of all aspects of the effective firm’s activity from attraction of resources to sales of final production.

General economic education occupies studying of statistics, probability theory, microeconomics, macroeconomics, economic-mathematical modelling, finance, marketing and others. The course of specialized subjects of Bachelor’s degree programmes include economic analysis, organization of production, cost management, innovation management, strategic planning, project analysis, potential of enterprise. The Master’s degree programme follows a rather specific course of study including financial management, human resources management, business evaluation and others.

Finally, it is impossible to select few important disciplines because good economist or manager must have all-round knowledge to be able to solve any problem.

52. What position would you like to hold?

Four years ago I entered Kyiv National Economic University to study economics and management. In fact, my dream was and still is to have an enterprise or a firm of my own. To my mind to be a good leader of the company means to be competent in current economic processes.

A businessman should understand the reasons of economic problem and be able to discover the ways of their working out. It is not an easy task in the country with such unstable economy as economy in Ukraine. However, it is especially important for our country to develop business and raise the economy of Ukraine on a higher level.

I want to be a company leader who is not afraid of innovations, who is ready to consider the business experience of other companies – both Ukrainian and foreign, a leader who is interested in the prosperity of my own company as well as in prosperity of my country.

52. Are people who have economic training in demand in modern society?

Today we can observe the growth of demand on computer professions like engineers, programmers, and on semiskilled professions. Does it mean that economic professions are not necessary for modern society? I think no because those who have economic training don’t need ready fish, they know how to get it.

Economists know how to survive and prosper. Their knowledge can be applied in almost any kind of business in the field of organization management. Besides, financiers, marketers, accountants, brokers are still very important in running the business. But now they theoretical and practical skills are much more improved than ones of previous generation.

Moreover, global competition makes people think as if everyone were an economist. That’s why basis knowledge in economics is important for every person who wants to succeed in his or her carrier and everyday life.

So, influenced by total globalization people have to get economic training to provide their living in comfort and prosperity.

52. Why is the economist’s education never really finished?

The world is changing dramatically every day. Globalization and competition act as drivers of modern economy. To survive and prosper both people and businesses have to adapt and develop in reaction to the changes.

Economists are not the exception; moreover they are the first to change and update their knowledge and skills. Economics is a practical science and any changes in real business life affect it greatly. In real world there is no permanent balance because innovative entrepreneurs want to win in strict competition and invent new products and technologies, organizational forms, ways of sale and distribution. All of this changes and improves economic concepts.

There is also the opposite process when scientists find new theories that are applied to everyday business life.

Therefore, economists are to study continuously both with new theoretical ideas and practical innovations because their success and survival depend on the level of updated knowledge.