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Economic Systems

Look through the list of English words and their Russian equivalents before reading the text:

1.organized way of providing for smth.

организованный способ обеспечения

чего-либо

2. problem of scarcity (n)

проблема нехватки, дефицита

3. to draw up (v)

cocтавлять

4. to change direction drastically (v)

изменить направление решительно

5. lack of incentives (n)

недостаток стимулов

6. to adjust to changes over time (v)

приспосабливаться к изменению времени

All societies have an economic system or organized way of providing for the wants and needs of their people. The survival of any society depends on its ability to provide food, clothing and shelter for its people. However, all societies face the problem of scarcity of resources and unlimited wants of their people. Many different economic systems have been used in attempts to solve the problem of scarcity. So every society must answer the following questions: What goods and services must be produced? How must those goods and services be produced? For whom must they be produced? The way in which decisions concerning what, how and for whom to produce are made, determines the type of economic system.

There are three major kinds of economic system. They may be classified as traditional, command and market.

In a society with a traditional economy nearly all economic activity is the result of ritual and custom. The answer to the what, how and for whom questions are decided by tradition and custom in such societies. People always know what goods and services will be produced, how to produce them and how to distribute them. The main advantage of a traditional economy is that everyone has a role in it. There are several disadvantages in the society with a traditional economy. This economic system tends to discourage new ideas, punishes people for breaking rules or doing things differently.

In some societies government plays a big role in answering the fundamental economic questions. An economy where a central authority draws up a plan that determines what will be produced, how it will be produced and who will get it is called a command economy. The control of most production is in the government hand. The major advantage of a command economy is that it can change direction drastically in a relatively short time. The main disadvantages are as follows: it does not always meet people’s wants and needs. There is a lack of incentives that encourage people to work hard.

In a market economy the basic economic questions are answered without the necessity of a central government plan and directives. The basic coordinating mechanisms in a market economy are competition and price. The competition among individuals and firms dictates what goods to produce, how to produce them and who will use these goods.

A market economy has several advantages that traditional and command economies do not have. A market economy is flexible. It can adjust to changes over time. The second is the freedom that exists for everyone involved. It means that each individual may make a choice what to produce and what to buy. The third advantage is the lack of significant government interference.

There are no purely command economies and no purely market economies. All economies are mixed.

Ex.1. Match the English words with the appropriate Russian equivalents:

1.survival

a) рыночная экономика

2.unlimited wants

b) центральная власть

3.advantage

c) подвижный

4.market economy

d) выживание

5.to determine

e) неограниченные потребности

6.a central authority

f) преимущество

7.flexible

g)определять

Ex.2. Give English equivalents from the text:

Экономическая система, общество, удовлетворять потребности, производить товары, конкуренция, распределять товары и услуги, традиционная экономика, командная экономика, правительство, делать выбор, вмешательство правительства, смешанная экономика, потребности, рыночная экономика, преимущество, недостаток.

Ex.3. Say whether these statements are right or wrong:

1. The survival of any society doesn’t depend on its ability to provide food, clothing and shelter for its people.

2. There are four major kinds of economic system.

3. All societies face the problem of scarcity of resources and unlimited wants of their people.

4. The main disadvantage of a traditional economy is that everyone has a role in it.

5. The major advantage of a command economy is that it can change drastically in a relatively short time.

6. In a market economy the basic economic questions are answered without the necessity of a central government plan and directives.

7. The basic coordinating mechanisms in a market economy are a plan and a custom.

8. A market economy is not flexible.

Ex.4. Answer the questions:

1. What do all societies have in common?

2. What does the survival of any society depend on?

3. What do all societies face with in the process of providing people’s wants and needs?

4. What fundamental economic questions must every society answer?

5. What determines the type of economic system?

6. What is the main advantage of a traditional economy?

7. What are the disadvantages of a traditional economy?

8. What is a command economy?

9. What is the main advantage of a command economy?

10. How are the basic economic questions answered in a market economy?

11. What advantages does the market economy have?

Ex.5.Complete the sentences:

1. All societies have an economic system or …

2. However, all societies face the problem of…

3. Every society must answer the following questions…

4. The way in which decisions concerning what, how and for whom to produce are made …

5. People always know…

6. In some societies government plays…

7. The major advantage of a command economy is …

8. There is a lack of incentives that…

9. The basic coordinating mechanisms in a market economy are…

10. The advantages of a market economy are …

Ex.6.Make up a plan of the text and retell it.