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Render the text according to the plan: 1. The headline (the title) of the article (text) is ... (The article is headlined ..., The headline of the article I've read is...) (1 sent.) 2. The author of the article (text) is...unknown person (1sent.) 3. The article is taken from (the newspaper) the book “.....”(1 sent) 4. The central idea of the article is about... (The main idea of the article is... the article is devoted to... the article deals with... the article touches upon... the purpose of the article is to give the reader some information on... the aim (1-3 sent) of the article is to provide a reader with some material on...) 5. Give a summary of the article (5-10 sentences) (The article begins with…., On the one hand, on the another hand, the author stresses, points out, dwells on…) next in the article… 6. Speak on the conclusion the author comes to.(In conclusion…) (1-2 sent) 7. Express your own point of view on the problem discussed. (In my opinion/ to my mind) Microeconomics and macroeconomics 1 Many economists specialize in a particular branch of the subject. Labour economics deals with the problem of the labour market A viewed by firms, workers, and society as a whole. Urban economics deals with city problems: land use, transport, congestion, and housing. However, we need not classify branches of economics according to the area of economic life in which we ask the standard questions what, how, and for whom. We can also classify branches of economics according to the approach or methodology that is used. The very broad division of approaches into microeconomic and macroeconomic cuts across the large number of subject groupings cited above. 2. Microeconomic analysis offers a detailed treatment of individual decisions about particular commodities. For example, we might study why individual households prefer cars to bicycles and how producers decide whether to produce cars or bicycles. We can then aggregate the behaviour of all households and all firms to discuss total car purchases and total car production. Within a market economy we can discuss the market for cars. Comparing this with the market for bicycles, we may be able to explain the relative price of cars and bicycles and the relative output of these two goods. The sophisticated branch of microeconomics known as general equilibrium theory extends this approach to its logical conclusion. It studies simultaneously approach to its logical conclusion. It studies simultaneously every market for every commodity. From this it is hoped that we can understand the complete pattern of consumption, production, and exchange in the whole economy at a point in time. 3 If you think this sounds very complicated you are correct. It is. For many purposes, the analysis becomes so complicated that we tend to lose track of the phenomena in which we were interested. The interesting task for economics, a task that retains an element of art in economic science, is to devise judicious simplifications which keep the analysis manageable without distorting reality too much. It is here that microeconomists and macroeconomists proceed down different avenues. Microeconomists tend to offer a detailed treatment of one aspect of economic behaviour but ignore interactions with the rest of the economy in order to preserve the simplicity of the analysis. A microeconomic analysis of miners’ wages would emphasise the characteristics of miners and the ability of mine owners to pay. It would largely neglect the chain of indirect effects to which a rise in miners’ wages might give rise. For example, car workers might use the precedent of the miners’ pay increase to secure higher wages in the car industry, thus being able to afford larger houses which burned more coal in heating systems. When microeconomic analysis ignores such indirectly induced effects it is said to be partial analysis. 4. In some instances, indirect effects may not be too important, and it will make sense for economists to devote their efforts to very detailed analyses of particular industries or activities. In other circumstances, the indirect effects are too important to be swept under the carpet and an alternative simplification must be found. 5. Macroeconomics emphasises the interactions in the economy as a whole. It deliberately simplifies the individual building blocks of the analysis in order to retain a manageable analysis of the complete interaction of the economy. For example, macroeconomists typically do not worry about the breakdown of consumer goods into cars, bicycles, televisions, and calculators. 6 They prefer to treat them all as a single bundle called “consumer goods” because they are more interested in studying the interaction between households’ purchases of consumer goods and firms’ decisions about purchases of machinery and buildings. 7 Because these macroeconomic concepts are intended to refer to the economy as a whole, they tend to receive more coverage on television and in the newspapers than microeconomic concepts, which are chiefly of interest to those who belong to the specific group in question. To give an idea of the building blocks of macroeconomics, we introduce three concepts which you have probably read about in the newspapers or seen discussed on television. Gross domestic product (GDP) is the value of all goods and services produced in the economy in a given period such as a year. GDP is the basic measure of the total output of goods and services in the economy. 8 The aggregate price level is a measure of the average level of prices of goods and services in the economy, relative to their prices at some fixed date in the past. 9 There is no reason why the prices of different goods should always move in line with one another. The aggregate price level tells us what is happening to prices on average. When the price level is rising, we say that the economy is experiencing inflation. 10 The unemployment rate is the percentage of the labour force without a job. By the labour force we mean those people of working age who in principle would like to work if a suitable job were available. Some of the landed gentries are of working age but have no intention of looking for work. They are not in the labour force and should not be counted as unemployed. 11 Already we can see two themes of modern macroeconomic analysis. Society reveals, both through statements by individuals and by the policy pronouncements of politicians who must submit themselves for re-election by the people, that it does not like inflation and unemployment. Yet for most of the 1970s economic interactions within and between national economies led to substantial inflation rates. In the 1980s, most Western economies faced sharp rises in the aggregate unemployment rate. Macroeconomists wish to understand how interactions within the economy can lead to these outcomes and whether government policy can make any difference. David Begg. Economics. — 3rd ed. — McGraw-Hill Book Company, 1991. — P. 11. After the rendering do exercises in written form: Anester the questions: 1. What is the crucial difference between micro- and macroeconomic analysis? 2. Why do macroeconomists consider consumer goods as a single bundle? 3. What is GDP? How to calculate this macroeconomic index? 4. What does the aggregate price level show? 5. What is the difference between those individuals who are a part of the labour force and those who are not? 3. Decide whether the following statements are True or False according to text. 1. General equilibrium theory is a crucial branch of macroeconomic theory. ___ 2. The main advantage of microeconomic analysis is the simplicity of the equilibrium theory. ___ 3. In microeconomics, analysts examine one aspect of economic behaviour and ignore interactions with the rest of the economy.___ 4. GDP is the basic measure of the total output in microeconomics.___ 5. People who are of working age and strive for employment should be considered as the labour force. ___ 4.Fill in the gaps using the prepositions from the box below (where necessary). for • to • on • between • into • in • at • with 1. There is often a legitimate but hazy division _________ two “groups” of older people: the young, recently retired and the older group. 2. Employees said they would prefer more flexible working hours _____ a rigid timetable. 3. Its policy was to restrict public expenditure ______ fields such as housing and to extend home ownership for council house tenants ______ their Right-to-Buy legislation in the Housing Act 1980. 4. It is difficult to assess effectiveness _____ a point in time as environmental changes take place. 5. Lower oil prices also tend to influence _____ the rate of exploration and exploitation of new oil wells along ______ reduced investment in energy conservation. 6. Toyota in Kentucky and Nissan in Britain emphasise ____ their managers’ open-plan, egalitarian offices. 7. To give you the flexibility you need, one information and communication company has committed itself _____ providing answers that make sense ______ your particular needs. 8. As the total area allocated ______ these crops increased, so the amount of time and land which a family could devote _____ food crop production for its own consumption often diminished. 9. Against that competition it is not altogether surprising that British newspaper readers found better issue coverage ______ British television. 10. This process is known as elaboration and involves a fruitful interaction _____ theory and data.