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The economy: fundamentals

1.8.2018, , Zdroj: Verlag Dashöfer

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The economy: fundamentals

Edward Thomas

1. THE BASICS

Look at the following vocabulary. Can you match the terms with the definitions given?


1) Economics A) Things that are made, presented or constructed to have valued added.
2) The economy B) Transportation, medical services, education, sales, marketing- the economic stage where skills and relationships are more important than things.
3) Primary sector C) Actions that give benefits to customers which pay for them.
4) Secondary sector D) An economy where competition is free among market participants.
5) Tertiary sector E) An economy with some free areas but also some areas controlled and managed by Government.
6) Goods F) The system of economic relationships which exists in a defined space.
7) Services G) Working on the image of a service or product to make it more attractive and to develop relationships between companies and customers.
8) Free market economy H) Taking basic materials and making more complex physical products with a payment for the value added.
9) Mixed economy I) The connecting process between cutomer and company where the good or product is paid for by the customer.
10) Planned economy J) Computer-led systems which manage and organise information.
11) Sales K) The social science which studies how the market works.
12) Marketing L) Agriculture and mining- the industry of the basic materials which drive everything else.
13) Manufacturing M) An economy where government has control of most of the activities.
14) Information technology N) The economic stage where basic materials are turned into more developed or complex ones.

Correct answers are here1

2. WALLS BETWEEN US

„Underlying most arguments against the free market is a lack of belief in freedom itself.”- Milton Friedman

Most countries today use some kind of mixed economy, where the Government limits some of the activities of the free market and provides some services outside the free market. But there are also some international limits l - like trade barriers.

Look at the questions 1-5 below. Match them with the answers A-E (answers on page below)

1) What are trade barriers?

2) Why do trade barriers exist?

3) What are the negative effects of trade barriers?

4) What does the term ”developing countries“ mean?

5) What are the economic and social problems of developing countries which prevent development?

A) Trade barriers are one of the big ones! Another is debt- when a country's Government borrows a lot of money from other countries and uses money from taxation to pay the interest on the debt instead of using it for services the people need. Other problems include low levels of education and lack of infrastructure like roads and railways.

B) The negative effects are clear: according to the UN Millenium goals, „Lower trade barriers would bring hundreds of billions of dollars in extra income- spread across all nations, but benefitting especially the developing countries”. It is not just the money, either, there is also the fact that infrastructure is not developed locally in the developing nations. This often leads to migration, which is a problem for developed countries to deal with too.

C) It is a term to describe countries whose economies have not fully developed according to the standards which allow for the education, leisure and health of their people. Many are in South America and Africa. Most of their economic activities are part of the primary sector- for example mining and especially agriculture, rather than in ”valued-added“ production or services.

D) All kinds of things, including taxes on foreign goods, regulations that make it harder for imports to enter an economic market, and artificial support for industry or agriculture, which are called subsidies. There are also natural barriers, like seas, mountains and deserts.

E) Generally they protect the manufacturers or service providers of a country or a group of countries from the cheaper or more effective competitors of in other countries. Such a way of helping companies is known as protectionism, but some people say they don´t really ”protect“ anyone.

Correct answers are here2

3. ECONOMIC TERMS IN A LITTLE MORE DETAIL

Match the words with the definitions:


1) Manufacturing plant A) Money paid to governments by all citizens from their wages/salaries or from the things they buy.
2) Mining B) The idea of building economic walls or barriers to stop foreign competitors from taking local business
3) Tax / taxation C) Money (from taxation) that a government has extra to the amount that it spends on public services.
4) Farming D) All kinds of mechanisms which prevent free trade- for example laws, regulations, subsidies and taxes.
5) Regulation E) Getting basic materials from the ground, for example coal, oil, iron ore, bauxite, diamonds.
6) Protectionism F) The amount of money that a Government doesn‘t have when its taxation money falls below its spending on public services.
7) Debt G) Sending goods from one country and receiving them in another.
8) Trade barriers H) Money someone or some group has to return to a bank, person or organisation that gave them it- usually in the form of loans
9) Goods I) The transport of goods from producers and manufacturers to sales hubs and outlets
10) Development J) Part of the primary sector, growing plants for food or other uses.
11) Export/Import K) A complex of buildings used to turn raw materials into products for distribution.
12) Budget Deficit L) Rules that tell you what you can and can‘t do, and how this must/must not be done.
13) Distribution M) The willingness of workers to travel or migrate to find work.
14) Budget Surplus N) The state of the economic system, how many and how good its facilities are.
15) Mobility O) Payments made from Governments to producers or other companies to help them financially.
16) Subsidies P) Things, usually made in the secondary sector but also coming from the primary sector, which are sold to people.

Correct answers are here3

4. MARKET CONTEXTS

The sentences below describe situations that affect many economies. Can you fill the numbered gaps 1-10 in the sentences with the words in the box below?


A) Unemployment B) debt C) protectionism D) information technology E) consumption F) subsidies G) manufacturing plants H) capital I) interest rates J) inward investment

1) ”In the 1990´s and 2000´s Ireland benefited from a lot of …………………………… ……………………………, helping to start new industries and develop service companies.“

2) „The …………………………… of alcohol has been falling for years because of very high taxation or duties paid on alcoholic drinks, public health campaigns, and the smoking ban reducing the attractiveness of pubs and clubs.“.

3) „…………………………… …………………………… have been closing for many years because of competition from China”.

4) „A rise in …………………………… is one of the great dangers facing the economy today, as Governments try to protect their economies from competition.

5) „High levels of …………………………… resulted from the closure of heavy industry in former Communist countries.”

6) „People working in agriculture often don't have the …………………………… to buy new equipment”.

7) „High …………………………… set by central banks mean that people are less likely to take out loans”.

8) „Government …………………………… has risen dramatically because of spending on unemployment benefit and support for industry”.

9) „Many companies are using …………………………… …………………………… to make their operations more efficient in difficult economic times”.

10) „The only way some uncompetitive companies can survive is through …………………………… from the Government.”

Correct answers are here4

5. THE SAME BUT DIFFERENT

Economic Synonyms

Read any newspaper, watch to any news report, and you will find that many words are used which mean the same or almost the same. You need several words for every economic idea!

Look at the words in the table below. Can you say which ones are synonyms? There is only one match for each word given. Secondly, can you identify the correct words to fill the gaps in the sentences which follow it?


Terms Synonyms
1) Debt a) Levy
2) Trade b) Finance
3) Inflation c) Area
4) Sector d) Spending
5) Capital e) Commerce
6) Tax f) Liabilities
7) Expenditure g) Earnings
8) An investment h) Use
9) Income i) Price rises
10) Consumption j) A stake


Correct answers are here5

a) Banks with financial problems are trying to get …………………………… from Governments and investors.

b) The …………………………… of oil has fallen by 10% due to difficult economic conditions.

c) The rate of …………………………… has risen to 3.7% this month.

d) People working in the automotive …………………………… are experiencing increased demand for environmentally friendly cars.

Correct answers are here6

6. THE PRESIDENT SPEAKS...

A) consumers B) information technology C) trade D) protectionism E) development F) economies
G) products H) to market (verb) I) growth J) markets K) incomes L) financial

In January 2000, then President of the USA, Bill Clinton, spoke to the World Economic Forum on the subject of free trade. In the text below there are parts of his speech. There are also 12 words missing, which you can see in the boxes above. Can you put them back into the correct places in the text?

“I think we have got to say again... that open 1. …………………………… in countries and rules-based 2. …………………………… going backwards and forwards between countries are the best way to lift living standards, reduce environmental destruction and build shared prosperity. This is true whether you're in Detroit, Davos, Dacca or Dakar. Worldwide, open markets create jobs. They raise 3. …………………………… for everyone. Today they do this partly through 4. …………………………… …………………………… and the explosion of international communications through the Internet, which is the fastest-growing network in history.“

“Trade is especially important, of course, for nations at lower levels of economic 5. …………………………….

 
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