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Oral topic № 7

The subject of economics. Economics as an academic discipline is relatively new: the first major book on economics Adam Smith's "The Wealth of Nations" was published in 1776. Since that time the subject has developed rapidly and there are now many

branches of the subjects such as microeconomics, macroeconomics, international economics and econometrics.

Economics is essentially a study of the ways in which people apply their knowledge, skills, and efforts to the gifts of nature in order to satisfy their material wants. Any definition should take account of the guiding idea in economics which is scarcity. Thus when we use the word 'scarcity' we mean that:

All resources are scarce in the sense that there are not enough to fill everyone's wants to the point of satiety.

And now we can assemble all definition of economics in full definition. Economics is -

The human science which studies the relationship between scarce resources and the various uses which compete for these resources.

Microeconomics deals with the behavior of individuals, consumers, companies, trades.

Microeconomics and Macroeconomics. Microeconomics deals with the behavior of individuals, consumers, companies, trades. Macroeconomics focuses on aggregates such as level of income in an economy, the volume of total employment, and flow of investment

Three economic issues. Every economic society has to answer three fundamental questions, What, How and For whom?

What? Which goods shall be produced and in what quantities?

How? Most goods can be produced by a variety of methods. We have basic resources of labor, land, how should we combine them to produce the goods and services which we want?

For whom? Once we have produced goods and services we then have to decide how to distribute them among the people in the economy.

Economic systems: market economy, command economy, mixed economy.

There are 3 types of economy in modern society: command economy, market economy and mixed economy.

The command economy is a kind of economy where the government takes all the decisions. The example of these types of economy is USSR.

Economy in which government do not intervene are called free markets economy. In these types of economy individual people are free pursue their own interests. People make money without any government help.

The third type of economy is a mixed economy. In this type government and private sector interact in solving economic problems. The government controls a share of output through taxation, transfer payment and providing services such as police. Most countries in a world are mixed economy.

The role of money in economy: a brief history and functions of money.

At first people use animal skins, cocoa beans, rats, stones and other different objects as money.

First coins were made in Lydia and it called staters. They were produced around 2,700 years ago. They were made of electrum (a mixture of silver and gold) and had a lion's head stamped on them.

The first paper money appeared in Chinese 1,200 years ago.

Money has four functions: a medium of exchange or means of payment, a store of value, a unit of account and a standard of deferred payment.

Money as the medium of exchange is believed to be used in one half of almost all exchange. Workers exchange labour for money, people buy or sell goods in exchange for money as well.