Text 2. Microeconomics and Macroeconomics

Understanding how various economies work is the basic purpose of studying economics. We seek to know how an economy is organized, how it behaves, and how successfully it achieves its basic objectives. Then if we are lucky, we try to discover better ways of attaining those same objectives.

Four major economic goals are generally accepted. These goals are:

- full employment

- price stability

- economic growth

- an equitable distribution of income.

In each case, the goal itself is formulated through the political process. The economist's job is to help design policies that will allocate the economy's resources in ways that best achieve these goals.

The study of economics is typically divided into two parts: macroeconomics and microeconomics. Macroeconomics focuses on the behavior of an entire economy - "the big picture". In macroeconomics we worry about such national goals as full employment, control of inflation, and economic growth, without worrying about the well-being or behavior of specific individuals or groups. The essential concern of macroeconomics is to understand and improve the performance of the economy as a whole.

Microeconomics is concerned with the details of this "big picture". In microeconomics we focus on the individuals, firms, and government agencies that actually comprise the larger economy.

The distinction between macro- and microeconomics is a matter of convenience. In reality, macroeconomic outcomes depend on micro behavior, and micro behavior is affected by macro outcomes. Hence one cannot fully understand how an economy works until one understands how all the participants behave and why they behave as they do.

Our interest in microeconomics is motivated by more than our need to understand how the larger economy works. The "parts" of the economic engine are people. To the extent that we care about the welfare of individuals in society, we have fundamental interest in microeconomics behavior and outcomes. In this regard, we examine the goal of individual consumers and business firms, seeking to explain how they can maximize their welfare in the economy. In microeconomics, for example, we spend more time looking at which goods are produced, who produces them, and who receives them. In macroeconomics we tend to focus only on how much is produced, or how many people are employed in the process. There are only some aspects of economics as a science.

 

Exercise 10 . Translate the following words and word-combination into Ukrainian.

To achieve basic objectives, to discover better ways of attaining objectives, generally accepted economic goals, full employment, price stability, economic growth, an equitable distribution of income, to be formulated through the political process, to allocate the economy’s resources, to focus on the behavior of an entire economy, macroeconomic outcomes, to depend on micro behavior, to be motivated by more than our need, to understand how the larger economy works, to care about the welfare of individuals in society, to have fundamental interest in microeconomics behavior and outcomes, to examine the goal of individual consumers and business firms, to be employed in the process.

Exercise 1 1 . Match the word from the left column and its meaning in the right.

1. motivate	a. concentrate on something
2. fundamental	b. act or react in the specific way
3. equitable	c. the effect or result of an action or event
4. welfare	d. essential, necessary
5. focus	e. become or make something better
6. attain	f. cause somebody to act in a particular way
7. behave	g. achieve something especially with effort
8. employment	h. the good health, happiness, comfort etc. of a person or group
9. outcome	i. fair and just reasonable
10. improve	j. work especially in return for regular pay

 

Exercise 1 2 . Match up the verbs on the left with an appropriate word or phrase on the right:

1. to spend	a. on the behavior of an entire economy
2. to allocate	b. basic objectives
3. to help	c. the economy’s resources
4. to focus	d. design policies
5. to be affected	e. about the welfare of individuals
6. to depend	f. the performance of the economy as a whole
7. to care	g. on micro behavior
8. to formulated	h. through the political process
9. to improve	i. by macro outcomes
10. to achieve	j. more time

          

Exercise 1 3 . Supply the statements with necessary details:

1. If we are lucky we try to ________ better ways of the (discover, objectives, attaining). 2. Four major economic _______are generally ______ (accepted, goals). 3. The economist's job is to help _____ policies that will ________ economy's resources in ways that best _______ these _____ (achieve, goals, design, allocate). 4. ______ focuses on the _______of an entire economy - "the big picture" (behavior, macroeconomics). 5. The____ ____of macroeconomics is to understand and ______ the _______of the economy _____ ______ _____ (improve, performance, as a whole, essential concern) 6. The _____ between macro- and microeconomics is a _____ _____ ____ (distinction, matter of convenience). 7. Macroeconomic outcomes _____ _____ micro behavior, and micro behavior is ______ by macro ____ (outcomes, behavior, depend on, affected).8. _____ one cannot fully understand how an ______ works until one understands how all the ______ behave and why they _____ as they do (participants, behave, hence, economy). 9. ______ ______ ______ _____ we care about the _______ of individuals in ______ , we have -_____ ______ in microeconomic behavior and outcomes (fundamental interest, welfare, to the extent that, society).

 

Exercise 1 4 . Find in the text and translate all sentences with Passive Voice; define the tense-form of the verbs.

 

Exercise 1 5 . Discuss the text “Microeconomics and Macroeconomics” with your partner using the following questions:

1. What is the basic purpose of studying economics? 2. What four major economic goals are generally accepted? 3. What is the role of economists in the political process? 4. What two parts is the study of economics typically divided into? 5. What does macroeconomics focus on? 6. What is the essential concern of macroeconomics? 7. What is microeconomics concerned with? 8. What is the distinction between macroeconomics and microeconomics? What is their dependence upon each other? 9. Under what conditions can one only understand how the economy works? 10. What is particular motivation in studying microeconomics? 11. Are microeconomic behavior and outcomes interesting to us? To what extent?

 

Exercise 1 6. Learn the following words and word combinations.

economics	– економічна наука, економіка
economic	– економічний, економічно-вигідний, рентабельний
economical	– економний, ощадливий, економічний
economist	– економіст
economize	– економити, економно використовувати або витрачати
economy	– економіка господарства
command economy	– централізовано-керована економіка, неринкова економіка
free market economy	– вільна ринкова економіка
mixed economy	– змішана економіка
demand	– вимога, попит, потреба
demand for something	– попит на щось
be in high / low demand	– користуватись великим / невеликим попитом
consumption	– споживання
make a decision	– приймати рішення
entirely	– повністю, зовсім
at a certain level	– на певному рівні
allocate	– виділяти, розміщати, асигнувати
restriction	– обмеження
former	– колишній, попередній
(the) former	– перший
(the) latter	– останній
regulation	– регулювання
resource(s)	– ресурси, кошти

 

Exercise 1 7 . Read, translate and give the gist of text 3.

Text 3. Types of Economy

Economics is a science that analyses what, how, and for whom society produces. The central economic problem is to reconcile the conflict be­tween people's unlimited demands with society's ability to produce goods and services.

In industrial Western countries markets are to allocate resources. The market is the process by which production and consumption are coordinated through prices.

In a command economy, a central planning office makes decisions on what, how, and for whom to produce. Economy cannot rely entirely on com­mand, but there was extensive planning in many Soviet block countries.

A free market economy has no government intervention. Resources are allocated entirely through markets.

Modern economies in the West are mixed and rely mainly on the market but with a large dose of government intervention. The optimal level of gov­ernment intervention remains a problem which is of interest to economists.

The degree of government restrictions differs greatly between coun­tries that have command economies and countries that have free market economies. In the former, resources are allocated by central government planning. In the latter, there is not any government regulation of the con­sumption, production, and exchange of goods. Between the two main types lies the mixed economy where market and government are both of importance.

 

Exercise 1 8. Give English equivalents.

 Неринкова економіка, вільна ринкова економіка, змішана економіка, користуватись великим (невеликим) попитом, розподіляти ресурси, приймати рішення, на певному рівні, обмеження, державне втручання, державне регулювання, споживання, виробництво, обмін товарами, координуватись цінами, державне центральне планування, мати значення, покладатись на, ціна на товар, за високими (низькими) цінами.

 

Exercise 1 9. Translate the following sentences into Ukrainian. Put questions to any two of them.

1. The government plays an important role in allocating resources in the economy. 2. A government planning office decides what will be produced, how it will be produced, and for whom it will be produced. 3. Resource allocation decisions are being made in every city, mostly through the mechanisms of markets and prices. 4. Grain markets have greatly changed over the 25 years in the United States and Europe. Both have high levels of government intervention in their agriculture. 5. The problem with government regulation of markets is to control how government restriction work in real life. 6. Governments are to regulate or plan production and consumption. The former is typical of mixed economics, the latter is typical of command economics. 7. In many countries there was a large dose of central regulation and planning. 8. All-round planning is not an easy task, and there is not any command economy that relies entirely on planning for all resources allocation decisions.

 

Exercise 20. Choose the appropriate word from the variants given in brackets.

1. (Economics / economy) studies how markets and prices allow society to solve problems of what how and for whom to produce.

2. (A command economy / free economy) is society where the government makes all decisions about production and consumption.

3. Every economist sees (the restriction / the importance) of the question of what, how, and for whom to produce.

4. Nations have different (consumption / levels) of farm production.

5. When (the price / the importance) of some goods grows, people will try to use less of them but producers will want to produce more of them.

6. After years of competition between command and market economies (the former / the latter) gave way in many countries of the world to (the former / the latter).

7. In (mixed / both) countries, Canada and the USA, structural changes in the agricultural sector of economy have become of interest to economists and general public in the 80s and 90s of the 20^th century.

 

Exercise 2 1. Put the verbs in brackets into the correct form.

There (to be) various forms of government restrictions and regulations in economies. For example, Turkey and Norway both (to limit) profits of firms, the latter also (to control) prices and wages; in Bolivia the tin mines (to nationalize); in China communes (to establish); in Cuba the government (to own) many industries and firms; and in Britain eight basic industries (to nationalize).

A free market economy (to be) rare in the world.

The level of economy regulation (to be) different in different countries. In some countries it (to grow) in recent years, in others more freedom (to grant) to firms and individuals. But the general tendency (to be) to keep government regulation at quite a high level.

 

Exercise 2 2. Complete the sentences below by inserting the words: economy, economics, economist, economic, economize, economical.

1. The national … is the system of the management and use of resources of a country. 2. You can … if you compare the prices of goods before buying them. 3. An early definition of … was “an inquiry into the nature and causes of the wealth of nations”. 4. J.M. Keynes was a famous … . 5. Inflation may cause a bad … state in a country. 6. If you’ve got a large family, it’s more … to travel by car than by train.

 

Exercise 23. Translate into English.

1. Розвинуті країни досягають економічного успіху через спеціалізацію. 2. В економіках змішаного типу є урядові обмеження щодо того, що виробляти і як виробляти. 3. Кожний менеджер приймає рішення як розподілити обмежені ресурси найефективнішим способом. 4. За умов ринкової економіки регулювання виробництва і споживання здійснюється через ціни. 5. Економісти контролюють ціни і рівні споживання різних товарів і послуг. 6. Якщо ми асигнуємо досить коштів на розвиток господарства, ми одержимо високий рівень виробництва. 7. Рекомендації економістів можуть мати важливе значення для урядів, але вони не завжди на них покладаються. 8. Проблемою державного регулювання ринків є контроль за тим, як урядові обмеження працюють в реальному житті.

 

Exercise 2 4. Discuss the text “Types of Economy” with your partner using the following questions:

1. What is the central economic problem of a society? 2. What is the market? 3. What is the function of the market in an industrial country? 4. How are decisions made in a command economy? 5. In what way does a free market economy differ from a command economy? 6. To which type do most economies in the West belong? 7. To which type does the economy of present day Ukraine belong? 8. Is the level of government regulation growing or falling in Ukraine’s economy now?

Exercise 25. Learn the following words and word combinations.

equal	– рівнятися
favorable	– сприятливий
output	– продукція, випуск
iron ore extraction	– видобування залізної руди
cast iron	– чавун
mineral fertilizers	– мінеральні добрива
coal mining	– видобуток вугілля
concrete	– бетон
crossroads	– перехрестя
ramified network	– розгалужена мережа
attendant branches	– обслуговуючі галузі
ferrous metallurgy	– чорна металургія
mineral deposits	– мінеральні поклади
dyes	– барвники
canned	– консервований
highway	– шосе
design	– розроблювати
encourage	– підтримувати
be targeted	– бути націленим на

   

Exercise 26. Read, translate and give the gist of text 4.

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