Методичка Усвят НД. Российской федерации гоу впо алтайский государственный университет международный институт экономики, менеджмента и информационных систем в экономик
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I VARIANT
Task 1. Read and translate the text. Economic thought goes back thousands of years. The ancient Greek, Xenophon, used the word oikonomikos (from oikos, meaning family, household, estate, and nomos, for usage, law). He was talking about skilful or clever ways to manage land and households. We could call many of Aristotle’s political writings economics, although he did not use the word. The English word economics first appeared in the 19th century – two and a half thousand years after Xenophon. Early economic thought was all about the meaning of wealth or being rich. These early thinkers asked, “what makes a state or a country wealthy?” For nearly 2000 years, the answer was very simple: gold. A country or nation’s wealth depended on its owning precious metals. This simple view of the economy remained until medieval times. During medieval times – roughly the period between 1100 and 1500 AD, trading between nations grew, and a new social class appeared. These were merchants, people who made their money through the buying and selling of goods, and they began to write their own thoughts on the economy. They saw the economy as a way to make the state strong. For them the nation’s wealth depended on stocks of gold and the size of the population. More people meant bigger armies and a stronger state. These were still simple ideas. However, daily experience had also taught people many basic economic concepts. For example, they understood the importance of trade with other states. They realized that scarcity makes things more expensive and abundance makes them cheaper. Modern economics was really born in the 19th century. At this time, thinkers like Adam Smith wrote down ideas that are still important today. Adam Smith is often called the Father of Modern Economics, although the science was called political economy then. Smith realized that a nation’s wealth depended on its ability to produce goods. The value of these goods depended on the cost of production. The cost of production depended on the cost of workers, raw materials and land. This was really the first example of macroeconomics. Smith and other classical economists were writing at a time of great change. The industrial revolution had begun. Paper money began to replace precious metals. The middle classes were growing stronger. Economists’ theories echoed these changes. They wrote about the division of labour (each worker taking their part in the production process). They discussed the problems of population growth. They influenced thinking about social classes. For classical economists, the value of goods depends on the cost of production. However, the price of goods is not always the same as their real cost. Later economists developed new theories to explain this weakness in classical economics. These are known as the neoclassical economists and they were writing at the end of the 19th and early 20th centuries. In neoclassical economics, supply and demand make the economy work. In other words, the price of goods depends on how much people want them and how easily they can be found. Consumers want satisfaction from their resources (time and money). Firms want profit. In neoclassical economics this is the basic relationship in the economy. These ideas are still the basis of economic thinking today. Task 2. Now read the text again and decide whether these statements are true or false.
Task 3. Complete each sentence with a word or phrase from the box.
 abundance, concept, consumer, firm, industrial revolution, population, precious metals, production process, profit, raw materials, satisfaction, scarcity Task 4.Give a two-minute talk on the history of economic thought. First, read text again and make notes below on the following
Writing In this unit you learnt about Adam Smith, a famous ‘thinker’ from Scotland. Who are the most famous ‘thinkers’ from your country? Magazine article Write a magazine article about one famous thinker from Russian history. Use the guide to help you organize your article. Title: …… Paragraph 1 Who is this thinker and what is he best known for? Paragraph 2 Biographical information: when and where born \family life\ important points in life. Paragraph 3 What was his\her message? What were his\her influential thoughts? Paragraph 4 Why do you think this person is important? Write 100-150 words. (Stolypin, Kondratyev, Lenin, Leontyev). II VARIANT
Task 1. Read and translate the text. The Russian empire grew enormously during the 19th century covering land from Poland in the West to the Pacific coast in the East. The population also grew quickly. In economic terms this meant an increase in two of the four factors of production: land and labour. You might think then that the Russian economy at this time was booming. But until the 1860s this was not true at all. Compared to other important powers like Britain, France and America Russia’s economy was hopelessly underdeveloped. Why was this so? The main problem was Russia’s feudal economic system. Almost 80 per cent of the population were peasants. They either worked on land owned by the state or they were serfs. Serfs worked land that belonged to a small number of wealthy landlords. In return for a small piece of land and a place to live serfs had to work for their landlords. In fact, the serfs didn’t just work for their landlords – they belonged to them. This system did not encourage economic growth. Peasants’ labour was used in subsistence farming for their families or working to maintain their landlord’s estate. Without surplus goods there were no profits or savings. With no savings domestic investment for growth was not possible. Russian agriculture still used the most basic technology and almost the whole workforce was unskilled and illiterate. In addition the empire’s industrial base was poorly developed. Before 1850 there were relatively few factories, mostly producing textiles. Some factories were run by the state but many were run on the estates of landlords. Industrial technology was basic and engineering education was not encouraged by the authorities. To make matters worse the Crimean Was from 1853 to 1856 had weakened the Russian economy even more. Eventually, the Russian authorities realized that they had to do something about the economy. The empire was now surrounded by modern industrial powers. Russia had to make an economic leap into a new age. The first step was the emancipation of the serfs. Tsar Alexander II finally made this happen in 1861. This meant that the population was no longer tied to the land and could provide labour for industry. With foreign investment Russia began to build up its industries. The iron and steel industries grew rapidly. Mining of raw materials increased and industrial centres developed along the Don and Dnepr rivers. The output of the iron and steel industries helped to build a huge railway network including the Trans-Siberian railway. Growth continued and by the 1890s the Russian economy was experiencing a real boom. From five per cent in the 1860s, annual growth reached nine per cent in the 1890s – higher than anywhere else in Europe at the time. However, much of the growth was built with foreign debt. Agricultural methods and technology were still primitive. And what about the economy’s human capital? The exploited serfs had now become exploited factory workers. The majority of the population remained totally illiterate and desperately poor. With the turn of the new century how much longer could the boom continue? Task 2. Now read the text again and answer these questions in your own words .
Task 3. Complete each sentence with a word from the box. Authorities, emancipation, engineering, estates, feudal, illiterate, landlord/landlady, peasant, serf, subsistence, textile
Writing Imagine that you are a factory inspector for the Russian government in 1890. You visit a textile factory and you are shocked by the conditions. Write a letter to the Finance Minister Sergei Witte telling him what you saw and what you want him to do about it. Letter from history Remember, this is a formal letter: Begin ‘Dear Sir’, and finish ‘Yours faithfully’ or ‘Dear Mr.Witte’, and finish ‘Yours sincerely’, Do not use contractions (eg. ‘is not should be used instead of ‘isn’t’) Use some or all of these words and expressions: I am writing in order to ….. Furthermore …. It was disgraceful to see ….. I would appreciate it if you could look into this matter. Greeting Paragraph 1 Say that you are writing to complain about conditions in the factories. Paragraph 2. Explain where you went and why. Say what you saw there (age of the workers, conditions of the factory, conditions of accommodation for workers). Paragraph 3. Explain more about the pay workers receive and the hours they have to work. Paragraph 4. Say what you want the Minister to do in order to improve conditions. Thank him and sign off. Write 150-200 words. Read for more information
Task 1. Read and translate the text. A recent survey compared the cost of living for expatriates in cities around the world. Not surprisingly, the top ten most expensive cities included Tokyo, London and new York. But more expensive than any of these was… Moscow! Less than two decades ago Moscow was the heart of the world’s biggest planned economy. There was no property for sale back then. The state-run shops had few consumer goods. Shortages for simple things like shoes were common. Today, things could not be more different. Moscow is the centre of a free market with some of the highest property prices in the world. The state-run shops have been replaced by expensive shopping centres and designer stores. But the change has not been easy. The figures for Russia’s real gross domestic product since 1991 when the economic reforms began show that the economy has been on quite a roller-coaster ride. In 1991 GDP was over $350 billion. That fell dramatically year after year until 1998 when GDP was just over $220 billion. However, the situation improved again from ’98. In fact Russia’s GDP increased steadily year after year from 1999 until 2006 when it reached around $740 billion. What caused such a change of fortunes? Changing over to a completely different economic system could never be painless. The Russian government of the early 1990s decided to use a shock therapy approach. They introduced severe fiscal and monetary policies. The government drastically reduced its spending. It cut subsidies to its crumbling state industries. Interest rates and taxes were raised. Government price controls on nearly all consumer goods were lifted. Only prices for staple goods like food and energy remained controlled by the government. New laws were introduced to allow private ownership and businesses to exist. All of these measures were intended to create conditions for a market economy to grow. However, they also caused great hardship for ordinary people. Most workers at that time were on fixed incomes. The measures caused the cost of living to rise but their salaries did not rise at the same rate. To make matters worse events in the banking system in 1992 caused the money supply to balloon. This resulted in hyperinflation levels of 2,000%. Despite Russia’s enormous reserves of oil and gas the economy went into a long and difficult depression. Finally in 1998 when an economic crisis hit the East Asian Tigers, oil prices began to fall around the world. For Russia it turned a depression into an economic crisis. However from 1999 world oil prices began to rise again. Mostly with money earned from energy exports Russia began to pay off its foreign debts. Inflation fell and the value of the rouble stabilized. The economy was recovering. GDP grew steadily year after year and foreign investors began to show confidence in investing in the country. Moscow’ place at the top of the list of the world’s most expensive cities is not enviable. However it is a clear sign that the Russian economy has survived a difficult time. Task 2. Now read the text again and match each paragraph with the correct heading. Paragraph 1 …………. Paragraph 2 …………. Paragraph 3 …………. Paragraph 4 ………….
Task 3. Match the words and phrases with the definitions expatriate very high inflation consumer goods financial help from the government for a business state-run change hardship something that other people want reform managed by the government severe very strict or cruel subsidy basic things like food that everyone needs crumbling to grow very big very quickly staple goods things that people buy but don’t really need fixed incomes falling apart or collapsing to balloon very difficult times – poverty hyperinflation someone who lives and works away from their home country enviable salaries or pensions that do not grow with inflation stabilize become steady, unchanging Task 4. You are going to read about three persons expressing their views on the winners and losers in the Russian economic reforms. As you read, make notes in the table.
Speaker 1: Well, in my view the only real winners have been the big business people – especially in the early days after the fall of the old system. I mean if you were in the right place at the right time you made a fortune. But what about the ordinary people? The truth is that for most of us things have got worse. Inflation is still high. In the early days lots of older people saw their life’s savings disappear overnight. Education and the health service are also in a mess. Teachers’ and doctors’ pay has really fallen – lots of doctors have left to make a living somewhere else. No, I don’t think ordinary people have been the winners. Speaker 2: With the rise in oil prices Russia’s energy sector has really grown. I mean our resources of oil and gas are some of the biggest in the world and the new economic reforms have helped us to exploit that. At the same time, though, Russia’s other manufacturing industries have suffered. For example, we used to have a huge transport industry making aeroplanes, cars and ships – but this has almost collapsed. You see these industries used to be subsidized by the Soviet government. They were never able to compete on the world market. And now their equipment and other capital is old and inefficient. So in truth these industries are dying. Speaker 3: The new economic reforms have been great for the big Russian cities – especially Moscow. They’ve got new shopping centres and expensive shops and new supermarkets. And of course there are lots more tourists visiting those places. But if you go out of Moscow and go to the other regions of Russia things are very dif. Foreign investment goes mostly to Moscow or St.Petersburg – but in the provinces very little has changed. There are still a lot of ‘one-factory’ towns and there is still a lot of poverty.
Task 1. Read and translate the text. Do you agree with Keynes’s idea that the government should actively influence the economy? In the nineteenth century economists believed that there were limits to human wealth. In their opinion when one man became richer another grew poorer. If a country wished to improve its standard of living it had to export more than it imported. So in Britain the main argument in those days was about free trade and protectionism. The owners of textile factories naturally supported free trade. The farmers on the other hand were afraid of foreign competition. Free trade won because Britain at that time was able to import cheap raw materials from its colonies and re-export them as finished goods. If the government had introduced import controls at that time it would have damaged the position of Great Britain as the strongest manufacturing nation in the world. In America a similar belief in free trade eventually led to the Wall Street crash in 1929. People in the USA benefited from the expansion of the American economy in the First World War. They became convinced that money automatically made more money. If there had been no excessive speculation in stocks and if people had not become convinced that speculative investments were always profitable the effects of the “crash” would not have been so disastrous. Following the Wall Street crash the economist John Maynard Keynes introduced a new theory. In simple terms his solution to the problem was that there is no fixed limit to human wealth. He believed that if government helped factories, factories would create jobs, if factories paid good wages every worker would become a consumer, if people could afford to buy goods, factories would produce more. For a time, Keyne’s theory was successful. In the 1970s, however, people began to realize that the world’s resources were limited that they would be better off if they had economized. But it is difficult to persuade people to economise, especially when they are used to Keynes’s idea that the less we spend, the more unemployment we create. Perhaps time and further study will some day reveal whose economic concept are right. But it would be splendid if economists were able to diagnose and prescribe cures for economic problems more accurately. Economics and Its Great Men
Task 1. Sum up what you know about Adam Smith and his investigations Task 2. Pronounce correctly the following words: Economics, economy, economical, monopoly, competition, competitive, society, productivity, to export, to import, social, production, substitution, political, wealth, nation, industrialism Task 3. Write out:
Task 4. Read and translate the text. Economics is a social science concerned with how mankind organizes itself to accommodate scarce resources to their wants through the process of production, substitution and exchange. By the beginning of the eighteenth century economics had taken shape as an academic discipline, largely as a branch of political economy. It should be noted that the old name of economics was “political economy”. Adam Smith was the founding father of modern economics as an academic discipline. Adam Smith was born in 1723. For most of his life he was a professor of philosophy in Glasgow, Scotland. His first and only economics book, The Wealth of Nations, was not published until 1776, when he was 53. Smith’s purpose was to explain why some nations become wealthier than others. He was fascinated by the rise of industrialism in the England and Scotland of his time. Over his lifetime Adam Smith’s economic investigations ranged from the theory of trade to economic growth and an attempt to model the working of the economy. He believed that a free market would maximize the welfare of the population. It followed from his works that the role of government in the economy should be minimal. The government should provide defence, justice and public works. The only market intervention should be to prevent monopoly and to promote competition. Smith argued that competitive business was not just a possible way but the best way to increase the wealth of a nation. He thought government restraints on competition did more harm than good. Division of labour was seen by him as the source of society’s capacity to increase its productivity. According to Adam Smith technical progress and free trade between nations were central to economic growth. If a country wished to improve its standard of living it had to export more than it imported.
Task 1. Read the text and answer the questions in written form. David Ricardo, the greatest of the classical economists, was born in 1772. His father, a Jewish immigrant, was a member of the London stock exchange. Ricardo entered his father’s business at the age of 14. In 1973, he married and went into business of his own. The young Ricardo quickly made a large fortune. In 1799, Ricardo read Adam Smith’s “The Wealth of Nations” and developed an interest in political economy (as economics was then called). In 1809, his first writings on economics appeared. These were a series of newspaper articles on “The High Price of Billion”. In 1814 he retired from business to devote all his time to political economy. Ricardo’s major work was “Principles of Political Economy and Taxation”. This work contains, among other things, a pioneering statement of the principle of comparative advantage as applied to international trade. Ricardo showed why it was beneficial for both countries, for England tp export wool to Portugal and import wine in return< even though both products could be produced with less labour in Portugal. The book covers the whole field of economics as it then existed. Ricardo held that the economy was growing toward a future “steady state”. Ricardo’s book was extremely influential. For more than half a century thereafter, much of economics was an expansion of or a commentary on Ricardo’s work. Although Karl Marx eventually reached conclusions that differed radically from any of Ricardo’s views, his starting point was Ricardo’s theory of value and method of analyzing economic growth. 1. What was David Ricardo? 2. To what did he devote himself after retiring from business? 3. Ricardo’s works influenced the most famous economist Karl Marx, didn’t they? |
