0 D Vocabulary

Complete each sentence with a word or phrase from the box.

advertise afford competition controlled costs incentive limit prepared profit raise reduce role street market theoretical

! Every Saturday this road becomes the local

. whore people come to buy fruit

and vegetables.

Businesses their products in the

media to attract more customers.

My in the business is to meet

customers and find out what they want.

Making money is the mam to work.

-) I bought tins old camera for €50 and sold it for €78. That's €25

If there's only one producer in the market, there's no

Production are the amount of

money companies spend to make a product.

The idea that life exists on other planets is Nobody knows for sure.

9 A economy is one where a

government decides what can be bought and sold and, or how it is done.

The speed on this road is 90

kilometres per hour.

When there is a demand we prices

but we thorn if we want to sell

something quickly

1 can't that car - it a far too

expensive

People are to pay a lot for services

16 HuMillta <*u*d« to ксояеши» Urm 1

if they are of a good quality.

The market economy

iiave- you ever walked through Л busy street market? People push their way through crowds of others in or tier to reach the stalls first The air is full ot deafening shouts. Stall owners yell to advertise their goods. Buyers cry out their orders It's hard to imagine, but behind this noisy confusion is a very logical economic theory llie marketeconomy.

The market economy is sometimes called the /не market.Л free market is not controlled in any way by a government. It is also free from the influence of custom or tradition. In a free market, the only reason why tilings are bought and sold is because there is a demand for them Prices

lor goods and services arc simply what people are prepared to pay. The market economy is not really controlled by anyone. It controls itself.

The street market where we began has many of the characteristics of the free market. Customers arrive at the market with a shopping list of things they need. They also come with an idea of how much they are prepared to pay Stall owners sell what customers demand, and try to gel the highest price they can for it Supply and demand control what is 011 the market and how much it sells lot. In the wider economy, we are all customers, and the stall owners are like companies.

The role of the company inthe free market is to supply what people want. However, companies need an incentive. The incentive is profit There are two ways for companies to make a prolit. The first way is to raise their prices. The second way is to reduce theii production costs. And this brings us totwo more features of the market economy • coinfh'titionand tcclmoloi>\-

Competition exists in a free market because, theoretically, anyone can lx- a producer. This means that companies have to compete with each other for a share of the market Competition is good for consumers because it helps to control prices ami quality If customers aren't happy with a product or service, or if they can't afford it. they will go to a competitor.

Technology exists in a free market because piodueers need ways to reduce their costs. They cannot buy cheaper raw materials. Instead, they must make better use of time and labour Technology is the use of tools and machines to do jobs 111 a better way This helps companies produce more goods in less time and with less effort. I'hc result: more prolit.

People often think that most economics are free markets. However, at the macroeeonomic level, a truly free market economy does not exist anywhere in the world. This is because all governments set limits in order to control the economy. Some governments set many limits, other governments set very few. but they all set some. For this reason, a true market economy is only theoretical. Nevertheless, many of the features of the market economy do exist in most societies todav.

Now read the text again and answer these questions in your own words in the space provided below.

Who controls a market economy?

Who decides what products are for sale in a free market?

What do companies want?

Why is competition a good thing?

Why does technology exist in the market economy?

Hit * an Ca.lf * i- mor ■ ■, Unn 3 17

Why are there no true market economies in the world today?

Notes:

Before you listen

Discuss these questions with your partner.

Do you think the free market is a good idea?

Is it good for society? Why / Why not?

! F Listening 4)))

Now listen and choose the correct answer.

Adam Smith's invisible handtheory:

1. People tire naturally selfish / helpful.

2. The free market only demands what is good for society / producers.

3. When people work for their own good, they do good for consumers / societyalso.

lit the real economy:

4. In the free market there is a demand for goods which are not expensive / necessary.

5. There is also demand for goods which are good / badfor us.

6. The market / Advertisingcan create demands that do not normally exist.

Discuss these questions with your partner.

Why do you think the traditional economy has almost disappeared?

Would you hke to live in a traditional economy? Why/Why not?

Task

You are the leader of a scientific expedition to the forests of Central Africa. You spend six months living with the Mbuti. Give a short presentation about your expedition. Use the space below to make your notes.

Talk about:

why you went

why the Mbuti are important people to study

ЙР G Speaking

what the environment is like the Mbuti lifestyle their economic system ' what we can learn from the Mbuti

Write an essay comparing the traditional economy with the market economy. Discuss the advantages and disadvantages of each economy. Decide which is best in your opinion.

Remember, you should organise your ideas logically.

These phrases will help you: firstly, secondly, furthermore, however, on the other hand

Discursive essay

PARAGRAPH 1

Introduce the subject by saying what a traditional economy is. and what a market economy is.

PARAGRAPH 2

Say what the advantages and disadvantages of the traditional economy are-

PARAGRAPH 3

Say vrhat the advantages and disadvantages oi the market economy are.

PARAGRAPH 4

Conclude by saying what you think the best system is.

H Writing

Write 200-250 words

Notes:

Pronunciation guide

Surplus ч :pbs Incentive insenm Deafening '<k-lnnj Competitor отix-iit.^i >

18 MatiniM»* Cutdt (в Eteaoairi Unit 3

1 ration show

solution very quickly

hoard money paid regularly for work

done

operate answer to a problem

wages , a system which tells us that

something bad is going to happen

Before you read

Discuss the following with your partner.

You learnt about the free market economy in the last unit.

Can you think of any disadvantages it may have?

With your partner, see rf you can think of any ideas for these points:

advertising

-» prices

-» junk food

f A Vocabulary

Match the words and phrases with the definitions.

Й Reading 1

The planned economy

In many ways, the pUttnud иччичпуis the direct opposite of the market economy In the market economy, the forces of supply and demand decide everything: what isproduced, how muchisproduced, the methods of production and the price. In the planned economy, all of this is decided bv the government. In every way that the market economy is/rn . the planned economy is oonfrolled.

rnlortunatelv, no economic system is perfect. If there was a perfect system, economists wouldn t have anything to argue alxait! Market

nllai C, _uэ • |A Itnioaifi Uait 4 19

commodity

standard

socialist

■dustry

S el indicate

warning system

shortage rapidly

when the government sets a limit on how much people can buy of something

I when there isnot enough of something

a strong metal made from iron

something you can buy or sell

what is usual or typical

all the businesses and companies involved in the production of heavy goods, food, technology, etc

describes someone / something aiming to share wealth equally

H secretly storing and hiding goods for use later

work

economieshave their strengths. 1 >in theyhave I hoi r problems, too. Planned economies try to provide solutions to these problems. For example, tin tree market supplies tin things that people want. However, what people want and what they need are not always the same Fast food is always in demand, but it's bad for us. In a planned economy, the government could decide to stop fast foodrestaurants operating in the market.

Л second problem with flee markets is that producers alway s want the highest price. ' )tten tin poor can't afford things In a planned economy, the government setsprices Theymake sure that everyone can afford basic commodities. This is one way that planned economies try to share things equally. Another is to control lmw much people gel paid

In a planned economy, workers wages depend on the service they provide to society. If people can hvt without theii service, you get paid less This is very different from the free market. In the free market, someones salary mostly depends on the demand for his or her work. If people like w hat you do. you get paid more.

before l')oo. there were few examples of planned economies. During the 2<>th century, however, tlu planned economy became the standard for s«4'iahst governments like tin I'SSR and China These countries experienced ama/ing economic growth in a very short time. In a market economy, it takes a long time for big industries to grow from small companies. In a planned economy, however, huge industries can grow overnight.

Thi' government simply decides to spend money on factories and factories appear Britain, for example, took centuries to develop her steel industrv in a 11ее market economy, t.hina dev eloped hers in a few decades.

20 и»г i »n <r. . б ■ to i • r>orn(i и • i *. *

but. as we said, no economic sy stem is perfect. The planned economy has many drawbacks. One of these drawbacks is problems with supply. It is difficult for governments of planned economies to know exactly how much to produce to meet demand. In a market economy, when the price of a commodity rises, this indicates a rise in demand Companies then supply more to the market. This warning system doesn't work in a planned economy because price is controlled by the government. The result is shortages.

When shortages happen, governments can do two things ration goods or raise juices In this situation, people then start to hoard tilings, and the problem gets even worse As the population yets bigger, shortages like this become more common For this reason. China - once the world's biggest planned economy - is rapidly moving towards another system: the mixedeeonomv.

Now read the text again and decide whether these statements are true or false.

In a planned economy, the government decides how products are made.

In a planned economy, suppliers can sell anything that is in demand.

In a planned economy, a doctor should get paid more than a footballer.

Planned economies grow more slowly than market economies.

In a market economy, greater demand for something makes it cheaper.

Planned economies are difficult to run in countries with large populations.

Before you listen

Discuss this question with your partner.

What everyday problems do you think people face in a planned economy?

BP С Listening Ц)))

Rita lives in a country with a planned economy. Listen to her talk about her life and the problems she faces.Tick the problems she mentions in the list below.Then listen again and check your answers.

Before you read 13

What does economics study? 17

What are 18

microeconomics and macroeconomics ? 18

Before you listen 20

Before you read 22

History of economic thought 23

Before you listen 26

Before you read 27

Econometrics 28

Before you listen 29

Before you read 33

The law of demand 34

Before you listen 35

Unit 40

Before you read 40

The traditional economy 40

Before you listen 41

Before you read 43

The market economy 43

Before you listen 44

The planned economy 46

Before you listen 51

Before you read 56

Before you listen 59

Revision Vocabulary Units 1 to 4 61

Before you read 63

Consumer choices 65

Before you listen 75

Before you read 77

Costs and supply 77

Before you listen 78

Unit 80

Before you read 80

Market structure and competition 80

Before you listen 81

Before you read 82

Monopolies 82

Unit 87

Before you read 87

The labour market 87

Before you listen 88

Before you read 89

Supply of labour 89

Before you listen 91

44Unit 93

45Before you read 93

70Factors of production 93

85Before you listen 95

Before you read 96

Division of labour 96

Before you listen 97

Revision Vocabulary Units 5 to 8 100

Before you read 100

Surplus 101

Before you listen 102

Before you read 104

Price discrimination 104

Before you listen 105

Welfare economics 107

Before you listen 108

Before you read 109

Government revenue and spending 109

Before you listen 110

Before you read 112

Wealth, income and inequality 113

Before you listen 115

Before you read 116

Poverty 117

Before you listen 121

Macroeconomics 124

Before you listen 125

Before you read 126

ф D Vocabulary 126

Aggregate demand and aggregate supply 126

BP E Comprehension 128

Before you listen 128

0 F Listening *))) 128

ff G Speaking 129

Task 129

Revision Vocabulary Units 9 to 12 131

Unit 132

Before you read 132

Money 132

^ В Comprehension 133

Before you listen 133

В с Listening Ц))) 133

Before you read 133

0 D Vocabulary 134

Banks 146

В E Comprehension 147

Before you listen 147

F Listening Ц))) 147

G Speaking 148

Unit 149

Before you read 149

ff A Vocabulary 149

Fiscal policy 149

P В Comprehension 150

Before you listen 150

С Listening 4))) 150

Before you read 151

0 D Vocabulary 151

Monetary policy 151

Before you listen 154

rehension 154

Before you read 157

A Vocabulary 157

Interest rates and the money market 157

В Comprehension 158

С Listening H))) 159

Before you read 160

fiJ D Vocabulary 160

Economic shocks 160

Before you listen 163

G Speaking 164

Before you read 165

fif A Vocabulary 165

Inflation 165

Before you listen 167

Before you read 169

ff D Vocabulary 169

Unemployment 169

Before you listen 170

F Listening H))) 170

E Comprehension 170

G Speaking 170

9 H Writing 171

Revision Vocabulary Units 13 to 16 172

Unit 173

Before you read 173

Economic growth 174

9 В Comprehension 176

Before you listen 176

ff С Listening Ц))) 177

Before you read 177

ff D Vocabulary 177

The business cycle 178

fi? E Comprehension 179

Before you listen 179

F Listening И))) 180

H Writing 180

Before you read 181

f A Vocabulary 181

The open economy 181

? В Comprehension 182

Before you listen 183

С Listening 4))) 184

Before you read 184

BP D Vocabulary 184

Exchange rates 185

0 E Comprehension 187

Before you listen 187

F Listening H))) 188

G Speaking 189

Task 189

Before you read 190

A Vocabulary 190

Exchange rate mechanisms 190

й В Comprehension 191

Before you listen 191

0 С Listening 4))) 191

Before you read 192

9 D Vocabulary 192

International trade 192

Before you listen 193

В F Listening 4))) 193

G Speaking 194

Task 194

Unit 195

Before you read 195

В A Vocabulary 195

Less developed countries 196

в В Comprehension 197

Before you listen 197

0 С Listening *))) 197

Before you read 197

В D Vocabulary 197

The Russian economy in the 19th century 198

fij E Comprehension 199

Before you listen 199

F Listening 4))) 199

Task 201

H Writing 201

A Vocabulary 201

в? В Comprehension 203

Before you listen 203

0 С Listening 4))) 203

Before you read 203

ff D Vocabulary 203

Russia's foreign trade 204

9 E Comprehension 205

Before you listen 205

Revision Vocabulary Units 17 to 21 207

Before you read

Discuss the following with your partner.

Can you actually think of any examples of countries with a completely free market or a totally controlled one?

-» Give any examples you can thmk of or say why you can't come up with any true examples.

P D Vocabulary

Complete each sentence with a word or phrase from the box.

agriculture ban efficiently free enterprise manufacturers monopoly private sector profit motivation public transport state sector ■ telecommunications trade

is when businesses are able to

trade without control from the government.

industries belong to and are run by

the government.

industries belong to and are run by

independent businesses.

Buses, trains and planes are examples of

is another word for farming.

produce new goods from

raw materials.

When a business works it runs

successfully without wasting resources.

Telephone and Internet systems are part of the industry

9is what drives businesses in the

market economy.

When the government puts a on

a commodity, people are not allowed to buy or own it.

If only one company controls part of the economy, they have a

12 When companies they do

business with each other.