Economics

  Ex.2 Complete the following sentences:

  1. Gross national product (GNP) differs from GDP by…

  2. Net national product (NNP) is the total income of…

  3. National income is the total income earned by…

  4. National income differs from net national product by…

  5. Personal income is the income that…

  6. Unlike national income, personal income excludes…

  7. Disposable personal income equals…

Ex. 1. Complete the following sentences, use the prompts below:

1. ________________ is the most widely used measure of a nation’s economic performance and is the market value of all final goods produced in the country during a period of time.
2. To avoid double counting. GDP does not include _________________.
3. The ___________________ sums the four major spending components of GDP consisting of: consumption, investment, government, and net exports.
4. GDP minus depreciation of fixed capital equals __________________.
5. _______________ is total income received by households and is calculated as national income minus corporate taxes, retained earnings, social security taxes plus transfer payments and net interest from government securities.
6. ________________ is personal income minus personal taxes.
7. ________________ measures all final goods produced in a given time period valued at the prices existing during the time period of production.
8. ________________ is the value of all final goods and services produced during any time period valued at prices existing in a base year.
9. ________________ is the market value of all final goods and services produced by a nation’s residents no matter where they are located.
10. ________________ are finished goods and services produced for the ultimate user.

11.The gross domestic product minus depreciation of capital work out in producing output is…

Words for reference: intermediate goods; net domestic product; personal income; disposable personal income; nominal GDP; real GDP; final goods; net domestic product; gross domestic product (GDP); expenditure approach; gross national product (GNP);

.

Text 3

While reading the text find the synonyms to the verbs ‘to increase’ and ‘to decrease’. Look up in a dictionary to continue the list.

Economic Growth

     Economic growth is defined as a real increase in the gross domestic product (GDP) of a country. This means that national income (adjusted for inflation) has increased and there has been a physical increase in economic activity. If real incomes rise, then consumers enjoy higher real spending power, so ultimately real economic growth transmits itself into greater demand for goods and services.

     Let us consider positive and negative implications of economic growth. Apart from inflation risks, economic growth is highly desirable for the business community as it generates many opportunities for firms and has a positive impact on national economy.

     First of all, as sales increase, profitability is likely to increase, enabling firms to report improved financial results to shareholders. In turn, investor confidence is likely to improve, making it easier for firms to issue new share capital.

     Secondly, expansion or economic growth is easier to manage due to rising shareholders’ and high banking confidence Growing sales across the economy reduce business failure rates and make corporate lending less risky. Higher returns on capital employed also provide a greater source of internal funds.

     Besides it, as consumers’ real incomes rise, this generates an ideal opportunity for firms to launch new, innovative products. Consumers, with greater prosperity and confidence, purchase more of new goods.

     Apart from that, the improved financial performance enables firms to direct more resources to reinforce fundamentals such as training, R&D and brand positioning.

     And finally, consumer price sensitivity is eroded to some extent during robust growth periods. With rising incomes, consumers are more casual about their spending decisions. This may provide an opportunity for firms subtly to increase prices.

     As for negative implications we should consider that economic growth can generate too much business optimism. Therefore, many consumers will spend above their means. If this continues, there is likely to be some ‘painful correction’ in the economy, although this time it will be in the personal rather than the corporate sector.

     A further problem arising from economic growth is the probable build-up of inefficiencies in business. Cost control becomes less important if sales rise healthily, as profits are likely to be increasing naturally. Managers may concentrate on expansion, investment and recruitment, leaving average costs to increase while productivity improvements decrease. Similarly, instead of working towards improvements in production techniques and systems, management’s attention may be directed towards expanding capacity to meet growing demand.

     Economic growth brings an entirely different set of problems to firms. Often these are ones that may not immediately threaten the survival of the business, but may start to breed a more *complacent culture, possibly leading to longer-term problems.

     Inevitably, in economic downturns, objectives will change. More emphasis is likely to be placed on budgetary control, productivity improvements and restructuring to squeeze costs lower, enabling firms to operate from a more competitive platform.

     Despite this, there is no doubt the business community would opt to have strong rather than negative growth in the economy – as this is the environment most favorable for profitability and growth objectives.

     Notes: * complacent adj- самодовольный

Ex.1 Identify the impacts of economic growth from the list below as positive or negative for the economy.

Ex.1 Answer the questions: 

1. What is economic growth?
2. In what way can too much business optimism be dangerous for a business?
3. What measures do governments take to avoid overheating of economy?
4. What aspects of production are likely to improve in the period of economic downturns?
5. What examples of economic overconfidence do you know?
6. What countries of the world are presently enjoying the highest rates of economic growth?
7. What is the present rate of economic growth in Belarus/the European Union/the USA?

WRITING

 

Using the information obtained from the previous text make its outline in writing. You may use the following clichés :The text deals with …. It draws our attention to … . Of special interest is the argument that …. . It is noted that … ; The author concludes by saying that … .

TRANSLATION

 

A. Translate from English into Russian.

  To understand how the economy is using its scarce resources, economists are often interested in studying the composition of GDP among various types of spending. To do this, GDP (which we denote as Y) is divided into four components: consumption (C), investment (I), government purchases (G), and net exports (NX):

  We have just seen an example of each component. Consumption is spending by households on goods and services, such as the Smiths' lunch at Burger King. Investment is the purchase of capital equipment, inventories, and structures, such as the General Motors factory. Investment also includes expenditure on new housing. (By convention, expenditure on new housing is the one form of household spending categorized as investment rather than consumption.) Government purchases include spending on goods and services by local, state, and federal governments, such as the Navy's purchase of a submarine. Net exports equal the purchases of domestically produced goods by foreigners (exports) minus the domestic purchases of foreign goods (imports). A domestic firm's sale to a buyer in another country, such as the Boeing sale to British Airways, increases net exports.

 

B. Translate from Russian into English.

  ВВП представляет собой годовую совокупную рыночную стоимость продукции материального производства и сферы услуг, независимо от национальной принадлежности предприятий, расположенный на территории данной страны. В отличие от этого, ВНП – это совокупная рыночная стоимость всего объема продукции и услуг за год независимо от местоположения национальных предприятий (в своей стране или за рубежом).

  Величина  ВВП может быть определена тремя методами.

  Во-первых, методом суммирования ДС по всем отраслям национальной экономики (ВВП по производству или отраслям).

  Во-вторых, методом измерения ВВП по расходам.

  В-третьих, методом измерения ВВП по доходам, включающим заработную плату работников, прибыли фирм и корпораций и т.д.

SPEAKING

1. Practicing Skills: Decision-making

A). Discuss these questions.

1. How important are rational and emotional factors when making decisions about the following?

2. Think of an important decision that you have made. How did you decide?
3. Do you think men and women have different ways of making decisions?
4. Who makes the big decisions in your household?

 

B)Which ideas below do you agree with? Which do you disagree with? Why?

1. Before making a decision it is advisable to:

1. write down the pros and cons.

2. take a long time.
3. have a sleep or a rest.
4. consult a horoscope.
5. consult as many people as possible.

2. If a choice has cost you a lot of time and money, stick to it.

3. Rely on the past to help you make a decision.
4. Reduce all decisions to a question of money.
5. Be totally democratic in group decision-making.

 

C)Listen to the management of a retail group discussing the problem of their store in Paris. Tick the expressions in the Useful language box that you hear.

 

Useful language

 

D)Listen to a marketing consultant presenting her report to the management of a retail group. Complete these extracts.

1. I ……… you review your product ranges as soon as possible.
2. What ……… is more knowledge of the youth market.
3. I think ……… a top executive to run that part of the business.
4. I’m ……… with the furniture department.
5. I just ……… it will ever make much money.
6. I also have ……… about your stationery department.
7. The answer ……… is to do something quickly.
8. So, this is ……… now. In my opinion reduce your range of products, cut out the loss makers.

 

E)Choose a section in the Useful language box for each of the missing words and phrases 1 to 8.

 

2. Summarize the information of the Unit to be ready to speak on Gross Domestic Product. Use the following prompts as a plan.

• Give the definition of GDP and explain it.

• Dwell on the components of GDP.
• Speak on other measures of income in short
• Dwell on indicators of the economic development of a society GDP encompasses.
• Explain what economic problems are left out of GDP.
• What’s the way GDP is measured in Belarus?
• Do you think it’s a good way to measure (estimate) a country’s wealth?
• Give the definition of economic growth.
• Comment on positive and negative impacts of economic growth.

VOCABULARY

 

adjust n – регулировать, налаживать

adjustable adj – регулируемый, подвижный

adjustment n – регулировка, приспособление

 seasonal ~ – поправка с учетом сезонных изменений

capacity n - способность (что-л. делать)

expanding ~ потенциал роста

depreciation n – 1. обесценивание; 2. изнашивание, амортизация

domestic adj – отечественный, внутренний

ensure v – гарантировать, обеспечивать

estimate v – оценивать

 

expenditure n – издержки, расход(ы)

 to undertake ~ –  нести расходы

gross domestic product (GDP) – валовый внутренний продукт

GDP deflator ~ - дефлятор валового внутреннего продукта

gross national product (GNP) – валовой национальный продукт

impact n- сильное воздействие; влияние