Economic systems

An economic system is the way in which a society uses its available scarce resources (natural resources, labour resources and capital resources) to satisfy the demands of its citizens for goods and services. The more goods and services are produced from the country’s limited resources the higher the standard of living of its citizens. Economists distinguish between three main economic systems: planned, market and mixed.

Planned economy is sometimes called ‘command’ economy because the state (government) commands the use of resources that go into the production of goods and services as it owns factories, land and natural resources. Planned economy involves central planning and direction, when the government takes all decisions concerning production and consumption. There is no state which is completely a command economy; the actual system varies from state to state.

Market economy is the system based on private enterprise with private ownership of the means of production and private supplies of capital. The government plays no role in the management of the economy. There exist no examples of pure market economy as it necessarily contains some businesses owned and run by the state. In a market economy it is the consumers who decide what is to be produced. A cornerstone of the market economy is quick response to changing demands. Private entrepreneurs accept the risks of introducing new products and new production processes. If they succeed, they hope to earn large profits, if they fail, they expect to make losses. Thus innovation is the engine of long-term growth of living standards. Since all businesses are privately owned they try to be highly competitive and make largest profits.

In practice most countries have what is called a mixed economic system – a combination of free markets plus government allocation of resources. Mixed economy contains elements of both market and planned economies. In a mixed economy the government and the private sector interact in solving economic problems. The state controls the output through taxation and intervenes to supply essential goods and services such as health, education and defense, while private businesses provide consumers with a wide range of different products and services.

Exercise 3. Answer the following questions:

1. What is defined as an ‘economic system’?

2. What are the three main economic systems?

3. Why is planned economy sometimes called “command”?

4. What is the role of the government in command economies?

5. What is market economy based on?

6. How does the government act in a market economy?

7. Who decides what is to be produced in market economy?

8. What is a cornerstone of market economy?

9. What risks are involved in the introduction of innovations?

10. Who accepts these risks?

11. What is called a mixed economy?

12. How do the government and private businesses interact in a mixed economy?

13. Are there examples of ‘pure’ command/market economies in real life?

Exercise 4. Translate into English.

Задовольняти попит; чим більше товарів та послуг виробляється, тим вищий рівень життя; система, що базується на приватній власності; не відігравати жодної ролі в управлінні економікою; швидкий відгук; ризики, пов’язані з впровадженням нових товарів; контролювати випуск продукції через оподаткування.

Exercise 5. Translate into Ukrainian.

Resources that go into the production; the actual system varies; private supplies of capital; pure market economy; it necessarily contains; it is the consumers who decide; new production processes; the long-term growth; to be highly competitive; both…and; essential goods and services.

Exercise 6. Match and learn the synonyms.

A: actual, to vary, to run smth, to contain, to control, to hope, to intervene, response, different;

B: to operate, to manage, to expect, to interfere, to differ, real, various, answer, to include.

Exercise 7. Match and learn the opposites.

A: private, quick, long-term, different, wide, response, profit, succeed;

B: similar, short-term, narrow, fail, question, slow, state, loss.

Exercise 8. Complete the sentences using the words from ex.7 (the first letter is given).

1. Mixed economy is characterized by p… and s… forms of ownership. 2. He gave no r… to my q… 3. Everybody wants to s…, not to f… 4. The aim of any business is to make p… 5. Risky business involves the possibility of p… or l… 6. Manufacturers supply a w… range of d… goods to the market. 7. Competitors are producers who provide s… products. 8. In command economies the s… develops l…-t… plans for industries.

Exercise 9. Complete the sentences with the proper words from the list below:

in response to, through the system of taxation, innovations, planned economy, owned, varies

1. In … the government usually plans five years ahead. 2. The actual system of economy … from state to state. 3. In mixed economies some resources are controlled by the government while others are used by private businesses … consumers’ demands. 4. The government controls the output … 5. In real life market economies always contain businesses … by the state. 6. Introduction of… can lead to unemployment.

Grammar points: * Emphatic structures. *Comparative structures.

Numeral (p.128-130)

The Past Indefinite Tense: Active and Passive Forms (p.135)

*The structure It is/was… that/who… can be used to emphasize almost any part of the sentence (except for the predicate). Compare:

He proposed an alternative plan at the meeting yesterday.

1. It was he who proposed an alternative plan at the meeting yesterday.

2. It was an alternative plan that he proposed at the meeting yesterday.

3. It was at the meeting yesterday that he proposed an alternative plan.

4. It was yesterday at the meeting that he proposed an alternative plan.

Exercise 10. Emphasize the subject in the following sentences.

1. The government and private businesses interact in a mixed economy. 2. Producers supplied different goods to the market. 3. Consumers made their choice concerning our products.

* The structure The…the… (with two comparatives) is used to say that one thing depends on the other.

Exercise 11. Combine the following sentences into one using the model: The more you have, the more you want.

The more you practice English the better the service.

The more skilful you are the higher the quality of life.

The more goods you produce the higher you reward is.

The better resources are allocated the faster you’ll learn it.

The more expensive the hotel the more profit you’ll make.

Exercise 12. Translate into English.

1.Чим більше ми виробляємо, тим більше ми споживаємо. 2. Чим більші затрати, тим дорожчий продукт. 3. Чим рідкісніші ресурси, тим вищі виробничі затрати. 4. Чим нижчі зарплати, тим менший прибуток сім’ї. 5.Чим вищий рівень життя, тим багатше суспільство.

Exercise 13. Read the following.

Numbers: ½; ⅔; 1 ¼; 0.739; 2.25; 3,247,068; 20%; 6+28=34; 25∙4=100; 33:11=3; 85 – 29 =56; 5ⁿ; dates: 07.01.1999; 20. 12.1765; 09.05.2005; time: 7.30; 12.50; 17.15; 12.00; 23.45.

Exercise 14. Translate into English.

Другий партнер; третій сорт; восьме завдання; дванадцятий поверх; двадцять шоста вулиця; сто перша річниця; п’яте жовтня; одна п’ята; сім восьмих; одна ціла і одна друга; сорок відсотків.

Exercise 15. Read a sentence about Ann’s daily routine and write a corresponding sentence in the past as is shown below:

Usually Ann gets up rather early. – Yesterday Ann got up later than usual.

1. Ann usually gets to her work by bus.-Yesterday…

2. Ann is never late for work. – Yesterday …

3. Ann works from 10 to 19. – Yesterday…

4. Ann has a break for lunch at 14. – Yesterday…

5. In the evening Ann usually meets her friends and goes out with them. -…

Exercise 16. Insert one of the following verbs in the past form in each sentence:

be, buy, cost, make, sell, spend, teach

1. Ann … a lot of money yesterday. She … a dress which …$50. 2. I badly needed some money so I … my car. 3. He … me how to drive when I … 18. 4. Last year the company … a big profit.

Exercise 17. Give two passive variants of the following sentences as in the model: This company sold us some new equipment. - 1. We were sold some new equipment by this company. 2. Some new equipment was sold to us by this company.

1. He told us an interesting episode from his life. 2. She gave them the most complete information. 3. He presented our plan to the management. 4. Businesses provided consumers with a wide range of goods and services. 5. We supplied our customers with high quality products.

Exercise 18. Choose the proper form of the verb to complete the sentence.

1. His decision (based/was based) on a carefully calculated plan. 2. We (expected/were expected) a letter from our friend. 3. Our business (managed/was managed) quite successfully. 4. All risks (accepted/were accepted) by our partners. 5. They (made/were made) their products highly competitive. 6. Their products (made/were made) of high quality components. 7. The company (owned/was owned) a few factories in this part of the country. 8. The company (owned/was owned) by a successful entrepreneur. 9. She (accepted/was accepted) the changes in our plan. 10. The process (controlled/was controlled) at each step.

Exercise 19. Add question-tags to the following statements:

1.They have partners in all European countries, …? 2. You are here for the first time, …? 3. He didn’t earn much for this project, …? 4. Their tools were the best in the world market, …? 5. Private ownership is a cornerstone of a market economy,…? 6. They were elected to the Parliament, …? 7. These products are not imported from Europe,…?

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