Reading

Date: 2015-10-07; view: 420.

Pronunciation

Legendary people

MODULE 2

Writing

30. Write 8 – 12 sentences about one of these questions.

1.What skills do you need if you want to make a good economist?

2.What responsibilities will you perform as a future economist?

3.Does economics prepare people to be more knowledgeable participants in the economy?

1. Read the words and find the word in each line with a different sound.

abroad source because saw

amount could without around

growth flow gold how

bought other country enough

2. Before you read try to answer these questions.

a.Can you name any world famous economists?

b.Can you name any famous Russian economists?

c.Do you know anything about the first schools of economic theory?

3. This chronicle traces the development of the major schools of economic thought through the work of a few important economists. These economists were the leading exponents of their schools, and their ideas represent the major contributions to economic thought made by each school. Read this text and complete it with a suitable word in the box.

1. Mercantilism was the economic philosophy adopted by merchants and statesmen during the16th and 17th centuries. Mercantilists believed that a nation's wealth came primarily from the accumulation of gold and silver. Nations without mines could obtain gold and silver only by selling more goods than they bought from abroad. Mercantilism represented the elevation of commercial interests to the level of national policy.

2. Physiocrats, a group of 18th century French philosophers, developed the idea of the economy as a circular ¹_____ of income and output. They opposed the Mercantilist policy of promoting trade at the expense of agriculture because they believed that agriculture was the sole source of wealth in an economy.

3. The Classical School of economic theory began with the publication in 1776 of Adam Smith's monumental work, The Wealth of Nations. The book identified land, labor, and capital as the three factors of production and the major contributors to a nation's wealth. In Smith's view, the ideal economy is a self-regulating ² _____ system that automatically satisfies the economic needs of the populace. He described the market mechanism as an “invisible hand” that leads all individuals to produce the greatest benefit for society as a whole.

4. While Adam Smith emphasized the production of income, David Ricardo focused on the distribution of income among landowners, workers, and capitalists. Ricardo saw a conflict between landowners on the one hand and labor and capital on the other. He posited that the growth of population and capital, pressing against a fixed supply of land, pushes up rents and holds down wages and profits.

5. Thomas Robert Malthus used the idea of diminishing ³_____ to explain low living standards. Population, he argued, tended to increase geometrically, outstripping the production of food, which increased arithmetically. The force of a rapidly growing population against a limited amount of land meant diminishing returns to labor. The result, he claimed, was chronically low ⁴_____, which prevented the standard of living for most of the population from rising above the subsistence level.

6. Alfred Marshall emphasized that prices also depend upon the level of demand, which in turn depends upon the amount of consumer satisfaction provided by individual goods and services. He provided modern macroeconomics with the basic analytic tools of demand and supply, and consumer utility.

7. The Marxist School challenged the foundations of Classical theory. Writing during the mid - 19th century, Karl Marx saw capitalism as an evolutionary phase in economic ⁵_____. He believed that capitalism would ultimately destroy itself and be succeeded by a world without private ⁶_____.

8. The publication of the General Theory of Employment, Interest, and Money made John Maynard Keynes the most notable economist of the twentieth century. He insisted that direct government intervention was necessary to increase total spending. Keynes' arguments proved the modern rationale for the use of government spending and taxing to stabilize the economy. Government would spend and decrease taxes when private spending was insufficient and threatened a recession; it would reduce spending and increase taxes when private spending was too great and threatened inflation. His analytic framework, focusing on the factors that determine total spending, remains the core of modern macroeconomic analysis.

Economic theories are constantly changing. Troubling ⁷_____ and lagging ⁸_____ make economists look for new solutions and new theories.

4. Match the underlined words from the text with their definitions.

1._________ production

2.__________ the owner of a retail business

3.__________ not enough

4.__________ advantage

5.__________ decrease the amount of something

6.__________ plenty of money

7.__________ money to finance public expenses

8.__________ an increase in size

5. Read the text again and do the tasks.

5.1. Is this statement …

The Classical School was for minimal government interference in the economy.

a.true b. false c. there is no information

5.2. Is this statement …

Keynes fiercely advocated interventionist government policies which were responsible for causing worldwide inflation, depressions and recessions.

a.true b. false c. there is no information

5.3. Is this statement …

Adam Smith's idea was that there were market forces that operated on and affected both an individual and a society as a whole.

a.true b. false c. there is no information

5.4. Is this statement …

The market system works on the basis of supply and demand: if there is a lot of something without much demand for it the price will be lower; if something is scarce and in high demand, the price will be higher.

a.true b. false c. there is no information

5.5. Which paragraph (1,2,3,4,5,6,7,8) contains the following idea?

He thought that the earth would run out of food and other resources quite soon because of the problem of overpopulation.

5.6. Which paragraph (1,2,3,4,5,6,7,8) contains the following idea?

This theory rejects the capitalistic market system in favor of one in which everything is owned by the state.

5.7. Choose the answer for the question: Who was known as “the father of macroeconomics”?

a.Adam Smith b.John Maynard Keynes c. Alfred Marshall

5.8. Choose the sentence which reveals the main idea of the text:

a.Economic theories are constantly changing.

b.Only a few economists made important contributions in economics.

c.Each school of economic thought played a great role in the development of economic theory.

d.Each school was developing its own economic theory.

6. Match the famous economists to the contributions they made in economics.