What an Economy Is

(1) An economy is the wealth-producing segment of society. Wealth is defined as the total produce of agriculture and manufacturing. Without products there can be no wealth. This means, of course, that money is not wealth. Money is a means of exchange and may be called the economic equivalent of wealth.

(2) Economies exist because all human beings have needs and desires. All human physical needs are the same: food, clothing, and shelter. Desires, on the other hand, are virtually infinite. No one actually needs a television set, automobile, stereo set, or microwave oven. But such commodities have become so common in modern industrialized societies that few people would do without them. The needs of society are satisfied by the production of goods – society’s wealth. The desires are satisfied in the same way.

(3) Wealth – all products taken together – is produced by labor. This type of labor can therefore be called productive labor. Much of society’s labor does not create wealth. It is thus called nonproductive labor. To say that it is nonproductive is not to say something negative about it. Most forms of nonproductive labor are necessary in civilized societies. The labor of those who work in government, education, religion, athletics, some of the arts, and the military does not produce products. Therefore it does not create wealth to add to the prosperity of a nation. But these services are needed because no society is entirely economic in its nature, though most modern societies are basically economic units or collections of such units.

(4) The products that are wealth serve to create money. Without products there would be no need for money. If every family grew its own food, built its own housing, and made its own clothing, it would have no need for money – unless, of course, it had desires that it could not satisfy within the household. Money emerges as a product substitute, a means by which unlike products can be exchanged for each other. It is much easier to use money to buy a pair of shoes than to trade a cow for 20 pairs of shoes that are not needed. Money facilitates the movement of goods. It becomes a standard that people in a society use in exchange for what they need and want. It also helps keep production going. The person who produces shoes and sells them obtains money to buy more leather and to make more shoes.

(Britannica Student Encyclopedia Library)

1. Определите, является ли утверждение:

Non- productive labour is not very important because it doesn’t make anything useful for prosperity of the society.

a) истинным

b) ложным

c) в тексте нет информации

2. Определите, является ли утверждение:

People in every society have much more desires the society can offer.

a) истинным

b) ложным

c) в тексте нет информации

3. Определите, является ли утверждение:

The quantity of manufactured goods depends on human requirements.

a) истинным

b) ложным

c) в тексте нет информации

4. Определите, является ли утверждение:

Money is not necessary in the household capable to satisfy all its needs and desires.

a) истинным

b) ложным

c) в тексте нет информации

5. Укажите, какой части текста (1, 2, 3, 4) соответствует следующая информация:

Both productive and non-productive labour play an important role in the life of the society.

a) 1

b) 2

c) 3

d) 4

6. Укажите, какой части текста (1, 2, 3, 4) соответствует следующая информация:

The prosperity of the society depends on proper combination of all branches of industry and farming.

a) 1

b) 2

c) 3

d) 4

7. Ответьте на вопрос:

What is the main purpose of economy?

a) It satisfies the needs and desires in the same way.

b) It exists only to provide basic needs – shelter, food, clothing.

c) It helps to produce such commodities as a TV set, an automobile or a microwave oven.

d) It serves to satisfy the needs and desires of all human beings in every society.

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