Final questionnaire

1. What sort of mechanism is economy?

2. What is economy?

3. What sort of issues must all societies deal with?

4. What is economics?

5. What subjects were taught in the universities in 1500^th?

6. What was the answer to question “Why am I poor?” in Pre-Enlightenment period?

7. What word does the word “economics” derive from?

8. What does Greek word “oikonomika” mean?

9. Who made the extraordinary contributions to economics?

10. Whose contributions to economics are considered the most important?

11. What did Adam Smith’s work “The Wealth of Nations” found?

12. Which Adam Smith’s work founded economic science?

13. What major economic thinkers do you know?

14. When did Karl Marx’s work “Capital” appear?

15. What did Karl Marx proclaim in his work “Capital”?

16. Name five tangible and intangible things.

17. How do things get to us?

18. What constrains does every society face at any moment in time?

19. How are societies differ in terms of constrains (limits) provided by nature and previous

generations?

20. Why are some countries rich and why are some poor?

21. What do young people discover when they grow older?

22. Why do we have to limit our choice to one or two things on sale?

23. What answer will most people give to question “Why are there so many wants and needs

that we cannot satisfy?”

24. Is shortage of money the real economic problem?

25. If the government decides to print more money will it solve the economic problem of

a country?

26. Does printing more money produce more goods and services?

26. What will happen if the government decides to print more money and thus to double all

of the incomes of everybody?

27. What is the real cause of shortage of goods and services in a country?

28. How many factors of production are there? What are they?

29. What people do we call entrepreneurs?

30. What economic problem arises because the factors of production are limited in supply?

31. Why do we have to make choices every day?

32. What do all choices involve?

33. What would happen if the factors of production were not scarce?

34. In what case could we have everything we wanted?

35. What is “opportunity cost”?

36. What problem does economics deal with?

37. Is the problem of scarcity faced by only poor societies?

Unit 3 theories of economics

Text 1

The first modern economists

Vocabulary

to argue -доказывать

a merchant – купец, торговец

compete – соревноваться, конкурировать

profit–прибыль,доход

designed-предназначенные

production costs – затраты на производство

to exceed - превышать

excess–избыток,излишек

supply-запас

hoard –запас

mother country-метрополия

to provide-обеспечивать

to enact–вводитьзакон

to promote-продвигать

government-правительство

to restrict-ограничивать

true source of wealth – истинный источник благосостояния

to increase - увеличивать

The Mercantilists. Between the 16^thand 18^thcenturies, the major countries of Europe believed in the economic theory of mercantilism. Mercantilists argued that nations should behave as if they weremerchantscompetingwith one another forprofit. Accordingly, governments should support industry by issueing lawsdesigned to keep labour and otherproduction costslow, and exports high. In this way the nation could achieve what is calleda favourable balance of trade.

«Favourable balance of trade» describes a situation in which export exceedsimport. Theexcesswould result in an increase in the nation'ssupplyof gold or silver. And, as most people agreed in those days, the true measure of a nation's wealth was itshoard of gold and silver.

To achieve favourable trade balances, the major European countries acquired colonies. Colonies could providethe«mother country»with cheap labour, raw materials and a market for its manufactured goods. In order to achieve these goals in their American colonies, the British, for example,enactedtheNavigation Acts.

The Navigation Acts protected British industry by forbidding the colonies to produce certain goods like hats, woolen products and others. The laws also listed certain articles (mostly raw materials) which could not be sold to buyers in countries other than England. Today there are people who still argue that the country should promotea «favourable balance of trade», that the federalgovernmentshould do what it canto restrictimports and promote exports. For that reason, they are often calledneo-mercantilistsor «new» mercantilists.

The Physiocrats. For some philosophers and economists of 18^th-century France the suggestion that the nations should protect business and industry made no sense at all. These were the physiocrats. They argued that the products of agriculture and other natural resources were thetrue source of wealth. Since they were God-given, it made little sense for government to help business and industryincreaseprofits. For similar reasons, they opposed government efforts to promote a “favourable balance of trade”. In other words, since real wealth came from the land, the government should keep its hands off business and let nature take its course. This idea was expressed in the slogan«laissez faire», (let people do as they choose).

The 200-year-old argument between those supporting government regulation of the economy and those supporting «laissez faire» is still with us.

WORD STUDY

Ex. 1. Find the words in the text to complete the following expressions.

the government should keep ___________________________________

the nation’s supply of ________________________________________

“favourable ________________________________________________

true source of _______________________________________________

the slogan “_________________________________________________

since they were ______________________________________________

support industry by ___________________________________________

physiocrats opposed __________________________________________

hoard of _____________________________________________________