I. Прочтите текст и укажите, какие утверждения соответствуют тексту т (True), а какие нет – f (False):

1. «The Wealth of Nations» written by Adam Smith was published in 1776.

2. In Smith's opinion, the land was the only source of wealth.

3. Smith believed that economy would work best if it functioned without government regulation.

4. Business firms produce only those products that consumers want and produce them at the highest possible cost.

5. Under the «invisible hand» Smith meant the economic forces that we today would call supply and demand.

6. Smith used the metaphor of the «invisible hand» to explain why all society benefits when the economy is free of regulation.

7. It was Adam Smith who compared the two economic forces to the blades of scissors.

8. Alfred Marshall explained the economic events in terms of the equilibrium market price resulting from the interaction of supply and demand.

Seventeen seventy-six, the year that we associate with the signing of the Declaration of Independence, also marked the publication in England of one of the most influential books of our time, The Wealth of Nations. Written by Adam Smith, it earned the author the title "The father of economics."

Smith objected to the principal economic beliefs of his day. He differed with the physiocrats who argued that land was the only source of wealth. He also disagreed with the mercantilists who measured the wealth of a nation by its money supply, and who called for govern­ment regulation of the economy in order to promote a "favorable balance of trade."

In Smith's view, a nation's wealth was dependent upon production, not agriculture alone. How much it produced, he believed, depended upon how well it combined labor and the other factors of production. The more efficient the combination, the greater the output, and the greater the nation's wealth.

The heart of Smith's economic philosophy was his be­lief that the economy would work best if left to function on its own without government regulation. In those cir­cumstances, self-interest would lead business firms to produce only those products that consumers wanted, and to produce them at the lowest possible cost. They would do this, not as a means of benefiting society, but in an effort to outperform their competitors and gain the greatest profit. But all this self-interest would ben­efit society as a whole by providing it with more and better goods and services, at the lowest prices.

To explain why all society benefits when the economy is free of regulation, Smith used the metaphor of the "invisible hand":

The "invisible hand" was Smith's name for the eco­nomic forces that we today would call supply and de­mand, or the marketplace. He disagreed with the mercantilists who called for regulation of the economy.

Instead, Smith agreed with the physiocrats and their policy of "laissez faire," letting individuals and businesses function without interference from government regula­tion or private monopolies. In that way, the "invisible hand" would be free to guide the economy and maxi­mize production.

The Wealth of Nations goes on to describe the princi­pal elements of the economic system. In a famous sec­tion, Smith demonstrated how the division of labor and the use of machinery in­creased output.

Similarly, other sections dealing with the factors of production, money and international trade are as mean­ingful today as when they were first written.

You can see, therefore, that Thomas Jefferson's Dec­laration of Independence and Adam Smith's The Wealth of Nations have more in common than a birthday. More importantly, both contain some of the best descriptions of the principles upon which our political and economic systems are based.

Alfred Marshall (1842 – 1924)

Alfred Marshall was one of the greatest economists of the 19 th century. He wrote his textbook Principles of Economics (1890), which became the stan­dard for the teaching of that subject until well into the 1940. Marshall spent most of his adult life as a profes­sor of economics at Cambridge University. His most famous pupil, John Maynard Keynes, described Mar­shall as the greatest economist of the 19th century." Despite the passage of 100 years since the publication of his Principles, his analysis of market forces is still relied upon to explain economic events.

In Marshall's world, economic events could be ex­plained in terms of the equilibrium market price result­ing from the interaction of supply and demand. One of Marshall's lasting contributions was differentiating be­tween supply and demand in the short run and the long run. Comparing the two forces to the blades of scis­sors, he argued that neither could function without the other. But, just as one blade can be more active than the other, so supply and demand vary in importance in the long and short run. In the short run, the quantity of available goods is more or less fixed (because crops have been planted, production schedules set, etc.). Therefore it is the demand for those items that will be most influential in determining their price. In the long run, he went on, the opposite is true. Both farmers and businesses can add to or reduce their production facilities as the needs dictate. In that way the supply side of the market be­comes most influential in determining price.