VIII. Read the words and word-combinations to the text. Pronounce them correctly after the teacher or read the transcription if your work on your own. Learn their Russian equivalents:

labour - труд

society – общество

economic system – экономическая система

traditional economy – традиционная экономика

market economy – рыночная экономика

command economy – командная экономика

own – владеть

economic growth – экономический рост

individual – личность, человек

basic resources – основные ресурсы

natural resources – природные богатства

advantage – преимущество

disadvantage – недостаток

capital goods – средства производства

increase – увеличивать

run the economy – управлять экономикой

market – рынок

producer - производитель

be involved in – быть вовлеченным в

developed country – развитая страна

Different economic systems (Part 1)

Economy is the mechanism which uses labour, land and equipment to satisfy all needs and wants of those who live in society.

Every country has an economic system - that is a way of making economic choices and decisions. No two economic systems are exactly alike. Which system a country follows depends on:

• Who owns and controls the basic resources needed to produce goods and services.

• Who makes the basic economic decisions.

There are three basic economic systems. They are:

• Traditional Economies

• Command Economies

• Market Economies

No nation in the world uses one of these systems. Every nation, including the United States and Russia, use a mix of economic systems. Most nations use more of one system than of another.

For the most of human history, people have used the tra­ditional economic system. In a traditional economy, things are done the way they have always been done. Tools, land and equipment are owned by families and tribes. The basic decisions were made in the distant past. Goods and ser­vices are produced according to age-old habits and customs. The amount produced, how it is produced and the right mix of factors of production are set by ancient practice. In a tra­ditional economy, the son usually does what his father did. The daughter follows the example set by her mother. No one asks the basic economic questions because the answers are always the same. There is a little or no economic growth in such a system. Every generation does things exactly the same way the previous generation did them. There is no in­vestment in new or more efficient machinery. Any changes that do take place are too small to notice. A great-great-grand­child would feel right at home in the world of great-great-grandparents.

Traditional economy has both advantages and disadvantages. The advantages include the fact that:

• A traditional economy is very stable and people know what to expect.

• Everyone has a place in the economy. No one is left out.

Here are some disadvantages:

• Individuals don't have much choice in the type of work they do. Their roles are based on custom.

• Change comes very slowly.

Today, traditional economies are common only among agri­cultural societies in Latin America, Asia, and Africa.

As the civilization grew up in Egypt, in China, and in other places, their rulers wanted to increase their wealth. To do this, they needed to protect their people's food supply, to promote trade and growth, to defend themselves, and to make war on other countries. So they took control of the economy as well as the government of their state. An economic sys­tem in which the decisions are made by a central authority like a king, a dictator, or a powerful political party is called a command economy.

In a command economy, land and capital goods are owned and controlled by the central authority. The central decision­-makers, also called planners, decide what will be produced, how it will be produced, how much will be produced, and how it will be distributed. Individuals are expected to follow the decisions of the central planners. The ancient examples of command economies were societies built on agriculture. A more recent example of a command economy in an indus­trial society was the Soviet Union.

And here is the list of some disadvantages of the com­mand economy:

• Individuals are not encouraged to develop new ideas and have few incentives to work hard.

• The needs and wants of individuals are not always met.

• Day-to-day decision-making is sometimes very slow be­cause a large number of people, called a bureaucracy, are involved in making decisions.

• Power is kept in the hands of a few people - nobles or a single political party - who often abuse the power for their own benefits.