What economics is about

In a general way we all know what economics is about. It is concerned with the production, distribution, and use of goods. It deals with the activities of businesses, workers and households that produce and consume output of the country. As Adam Smith said, economics is ‘ an inquiry into the nature and causes of the wealth of nations’.

There are several key aspects of economics. First, there are two main branches of economics: microeconomics and macroeconomics. Microeconomics holds a microscope over some portion of the economy - a particular industry and kind of work or geographic area. It examines how consumers choose among jobs, how a business decides what to produce and what production methods to use.

Macroeconomics looks at totals for the economy as a whole: total output and income, the level of employment, the amount of money in circulation, the level of prices. Microeconomics and macroeconomics must be related, since they deal with the same body of experience. The questions which lie at the core of microeconomics, are a necessary foundation for microeconomics as well.

Economics also focuses on the production of goods and on the income generated in the course of production. It deals with goods and the resources needed to produce them. These resources are scarce, and this raises problems of choice for individuals and for the whole economy.

Economics is a special way of thinking that uses simplified models to explore reality. The use of such models to explore reality, to explain and predict economic events is called positive economics. Economics is also a policy science, with important applications to government. Positive economics can clarify policy alternatives, but choice among these alternatives involves what is called normative economics.

Comprehension:

1. What is economics concerned with?

2. What are the two main branches of economics?

3. Why and how are these two branches of economics related?

4. What kind of models are used in economics and what for?

5. In what way do positive and normative economics differ?

IX. a) Remember the following:

1.Goods товары и услуги (Use of goods)

Business

a) Бизнес, дело, предпринимательство

b) Сделка, торговая операция

c) Деловые круги, деловая жизнь, экономическая деятельность.

d) Компания, предприятие, фирма.

e) Заказ, объем производства.

f) Профессия, занятие.

2.Individual

g) Человек, лицо

h) Отдельный товаропроизводитель.

i) Личный, индивидуальный.

b) In what meaning(s) are these words used in the text? Find, read, and translate the sentences with these words.

c) Translate the sentences given below. Pay attention to the word ‘business’:

1. We mean business. 2. Mind your own business. 3.Many businesses in the USA are small firms. 4.What is your business? 5.Business in Russia is stagnating at present. 6.It’s none of your business. 7.Most goods are produced by businesses. 8. I am thinking of starting my own business.

X. Analyze the following text. Answer the questions to different parts of the text.

ECONOMICS: THE MAIN TERMS AND CONCEPTS

Some terms of economics define themselves. Microeconomics analyzes details of the economy, the bahaviour of individuals and businesses in a particular market or set of retailed markets. Macroeconomics analyzes relations among aggregates, such as total output, employment, money supply, and the price level.

What branch of economics analyzes employment?

Economics deals with the production, distribution and use of goods, including material goods or commodities and intangible goods or services. A good is a free good if there is so much of it that people can have all they want at zero price. Water in a mountain stream is an example. A good is an economic good if there is not enough of it for everyone to have all they want at zero price. Coffee on the supermarket shelf is an example. Economics deals only with scarce goods.

What good is an economic good?

The Western /American economy is usually called a private enterprise economy. Government produces some goods: police and fire protection, public education, streets and highways, but most goods are produced by private businesses. We use this term in a broad sense. A farm is a business. So is the office of a doctor, lawyer, or other professional person.

Why is the Western/American economy called ‘a private enterprise

economy’?

In order to carry on production, a business needs inputs, also called factors of production. The most important inputs are labour and capital, which have a special meaning in economics. Labour means any kind of physical or mental effort exerted in production. It includes the work of the corporation executive, lawyer, or college teacher as well as that of the farmer, salesclerk, or plumber.

What does a business need to carry on production?

The term ‘ capital ’ is especially confusing. In everyday speech it is often used to mean a sum of money representing the assets of a corporation or an individual. We say that a company has a capital of $52 billion or that a person is worth $200,000. Such sums of money are important; but when that is what we mean, we should be careful to say ‘ financial capital’.

What term is especially confusing?

In economics the term ‘ capital’ used alone means physical capital, or instrument of production. Machinery in an automobile assembly plant is capital. So is the building that houses the machinery. So is any building used for production: a department store, an office building, a hotel. Raw materials and semi-finished goods in the hands of producer are also capital. The factors of production are owned by individuals.

How is the term ‘ capital ’ understood in economics?

XI. Revise special words and expressions.

a)Give Russian equivalents of the following words and expressions: Microeconomics, intangible goods, aggregates, money supply, salesclerk, a lawyer, inputs, financial capital, a department store, to be worth $1, corporation executive, semi-finished goods, markets, the asset of a corporation.

b)Translate from Russian into English: Макроэкономика, поведение, частнопредпринимательский, общественное образование, скоростное шоссе, особое значение, сумма денег, оборудование, сырье, уровень цен, безработица.

c)Give synonyms for the following: Material goods, intangible goods, inputs, a sum of money, instruments of production.

d)Give antonyms for the following: A particular market, an economic good, physical capital, details of the economy.

XII. Find proper definitions to the following terms:

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