Economy in Transition

Миколаївський державний гуманітарний університет імені Петра Могили Г.С. Дімант ECONOMY IN TRANSITION Рекомендовано Міністерством освіти і науки України як навчальний посібник для студентів вищих навчальних закладів Миколаїв Видавництво МДГУ ім. П. Могили 2002 ББК 81.2 Англ. Д 46 УДК [811.111:330](075.8) Рекомендовано Міністерством освіти і науки України як навчальний посібник для студентів ВНЗ (лист 14/18.2-1875 від 11.10.2002 р.) Друкується згідно з рішенням Вченої ради МДГУ ім. П. Могили (протокол № 11(61) від 13.06.2002 року). Рецензенти: Ю.Ю. Верланов, к.е.н., доцент Т.П. Мироненко, к.пед.н., доцент Дімант Г.С. Д 46 Перехідна економіка: Навчальний посібник. – Миколаїв: Вид-во МДГУ ім. П. Могили, 2002. – 304 с. – Англ. ISBN 966-7458-54-7 ББК 81.2 Англ. Даний навчально-методичний посібник призначений для викладан- ня англійської мови студентам-економістам на просунутому етапі на- вчання. Ціль даного посібника – не тільки покращити і збагатити англій- ську мову студентів, а також допомогти їм увійти до світу бізнесу. Різно- манітні тексти, які пов’язані з мікро- та макроекономікою, фінансами, банківською справою, маркетингом, біографії видатних економістів минулого та сучасності, їх теорії, словник термінів та граматичний довід- ник стимулюють усне та письмове мовлення на основі розширення і збільшення словникового запасу студентів. Вправи, які подані після кожного тексту, також сприяють досягненню цієї мети. ISBN 966-7458-54-7 © МДГУ ім. П. Могили, 2002 Introduction This book is intended for students who study economy. The purpose of this publication is not only to enrich and improve their English but also help them enter the world of economics which is changing to reflect the shifting trends in economic affairs, in the world economy, and in society at large. This book evolves along with the science it surveys. Every chapter has moved forward in time to keep pace with economic analysis and policy. In doing this book emphasizes the basic economic concepts, describes the development of several countries with economies in transition. There is also the chapter which gives an impartial review of the thinking of the intellectual giants of economics – from Adam Smith, and David Ricardo to Milton Friedman and Paul Samuelson. There are a certain number of vocabularies that can be described as special “business” vocabulary which will help students understand many complicated economic concepts and develop their language skills using these terms in different business situations which the students can practise so that they can become more confident, fluent and accurate. This book contains the basic business English which includes reading, listen- ing and writing tasks as well as discussion, problem – solving and role play. This book also contains grammar reference and grammar exercises. Dimant G. Цей підручник призначається для викладання економіки для студентів економічного факультету на просунутому етапі навчання. Він забезпечує широкий вибір ділових ситуацій, які дозволяють студентам бути більш впев- неними, вільно розмовляти на економічні теми, закріпити у студентів теоре- тичні знання з граматики, а також стимулювати усне та письмове мовлення на основі розширення і збільшення словникового запасу студентів. 1. Basic concepts 1.1. The First Modern Economists THE MERCANTILISTS. Between the 16-th and 18-th centuries, the major countries of Europe believed in the economic theory of mercantilism. Mercantilists argued that nations should behave as if they were merchants competing with one another for profit. Accordingly, governments should support industry by enacting laws designed to keep labor and other production costs low, and exports high. In this way the nation could achieve what was called a “favorable balance of trade”. “Favorable balance of trade” described a situation in which exports ex- ceeded imports. The excess, which was like profits to a merchant, would result in an increase in the nation’s supply of gold or silver. And so most people agreed in those days, the true measure of nation’s wealth was its hoard of gold and silver. To achieve favorable trade balances, the major European powers sought to acquire colonies. Colonies, it was thought, could provide the “mother country” with cheap labor, raw materials and a market for its manufactured goods. In an effort to attain these goals in their American colonies, the British, for example, enacted the Navigation Acts. The Navigation Acts protected British industry by prohibiting the colonies from producing certain goods like hats, woolen products and wrought iron. The laws also listed certain “enumerated arti- cles” (mostly raw materials) which could not be sold to buyers in colonies other than England. Resentment towards the Navigation Acts was so great that they are regarded as one of the principal causes of the Revolutionary War. Today there are people who still argue that their country should promote a “favorable balance of trade” that their national government should do what it can to restrict imports and promote exports. For that reason, they are often described as neomercantilists or “new” mercantilists. THE PHYSIOCRATS. For one group of 18-th century French philosophers and economists, the suggestion that nations should go out of their way to protect business and industry made no sense at all. These were the physiocrats. The physiocrats argued that the products of agriculture and other natural resources were the true source of wealth. Since these were God – given, it made 4.1. BasicSupplement concepts 5 little sense for government to go out of its way to help business and industry increase profits. For similar reasons, they opposed government efforts to promote a “favorable balance of trade”. In other words, since real wealth came from the land, it followed that the wis- est thing government could do would be to 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). Interestingly, the 200 – year – old argument between those favoring regulation of the economy and those supporting laissez faire is still with us. Whether the problem involves individuals (like those living in poverty and unemployment or institutions (such as a rising tide of business or bank failures, there are those who find the solution in government intervention, and others who favor “laissez faire”, letting natural economic forces take their course. Answer the following questions. 1. What two groups are discussed? 2. How were they different from each other? 3. What is a “favourable balance of trade”? 4. What is “laissez faire” and with which group is the term associated? Define the following words and expressions. Argue wealth resentment increase compete hoard (of gold) promote unemployment export acquire restrict bank failure import government intervention business 6 Economy in transition 1.2. WHAT IS ECONOMICS? All your life – from cradle to grave – you will run up against the brutal truths of economics. As a voter, you will make decisions on issues – on the government budget, regulating industries, taxes and foreign trade – that cannot be understood until you have mastered the rudiments of this subject. Choosing your life occupation is the most important economic decision you will make. Your future depends not only on your own abilities but also upon how economic forces affect your wages. Of course, studying economics cannot make you a genius. Economics is exciting and important. Anyone who thinks otherwise has failed to realize that economic ideas have moved people to rebellion, and nations to war. The great problems that surround us today-among them international conflict, unemployment, inflation, poverty, discrimination, and environmental pollution- have economic roots. Even the small problems – impossibility to find a parking space, the high price of goods and products in our stores are economic in nature. ECONOMICS IS THE STUDY OF HOW SOCIETIES USE SCARCE RESOURCES TO PRODUCE VALUABLE COMMODITIES AND DISTRIB- UTE THEM AMONG DIFFERENT PEOPLE. Notice that “scarcity” in the economic sense doesn’t refer directly to quantity of a resource. The earth has a great deal of land, yet most of the earth land is scarce because it has alternative uses. If land is used for a college campus, that same land isn’t available for a shopping mall or a park. All societies confront the problem of scarcity which implies the existence of alternatives; choices must be made among those alternatives. The ways in which the choices are made, are determined by a society’s laws, customs and practices. These constitute a society’s economic system. Today, the two major types of economic systems are capitalism and socialism. MICRO AND MACRO Beginning courses in economics are traditionally divided into two compo- nents: microeconomics and macroeconomics. The two branches of economics contain some differences in viewpoint as well as some similarities. Microeconomics is concerned with the specific parts or economic units that make up an economic system and with the relationships between those parts. The main emphasis is placed on understanding the behavior of individ- ual households, firms and industries, and the ways in which such entities interact. 4.1. BasicSupplement concepts 7 Macroeconomics is concerned with the economy as a whole, or the large seg- ments of it. Macroeconomics focuses on such problems as the rate of unemployment, the changing level of prices, the nation’s total output of goods and services, and the ways in which government raises and spends money. In simple words microeconomics tries to explain what the trees are, while macroeconomics tries to explain what the forest is. Answer the following questions 1. What is your main concern being a voter? 2. What is the most important decision in your life? 3. Why is economics so important? 4. What is economics? 5. How do you understand the word “scarcity”? Define the following words and expressions. cradle affect scarcity alternative brutal truth rebellion college campus entity issue inflation available segment to master the rudiments discrimination confront total output ability economic roots imply service 1.3.

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