A Again, economics is about solving problems.
B Economics is a social science
C In other words, we have unlimited possibilities in life to do whatever we want, but we are limited by the resources we have to do these things.
D Namely, jobs, and decent-paying ones at that.
E The role of the economist may differ from that of the manager.
F Traffic jams can be prevented.
G You need to spend time studying or working which prevents you from movie watching and dancing.
H Economics, first and foremost, is a social science.
Ex.22. Read the text and decide whether the following statements are true or false. Correct the false statements.
1. Economics helps you understand how stock markets and other markets work.
2. Economics is a business degree.
3. Economics teaches important business skills.
4. Economics helps to explain the mysteries of how people and society operate.
5. Economics is defined as the study of how people choose to use their unlimited resources in an attempt to satisfy their scarce wants.
6. Economics builds scientific models to explain why people behave the way they do.
7. In economics, driving is a resource and freeways, time, and money are wants.
8. Economists work in all facets of the business world, including manufacturing, mining, banking, insurance, and retailing.
9. Economists are trained to think analytically and critically to solve complex problems.
10. Only large firms hire economists.
11. Large firms tend to have whole divisions dedicated to economic research, with a number of economists addressing specialised areas.
Ex.23. Read text B again and answer the following questions.
1. What is not economics?
2. How is economics defined?
3. Why does economics build scientific models?
4. How do economists use these models?
5. What is economics about?
6. Why do businesses need economists?
7. When did businesses begin to hire economists?
8. How do large and small firms hire economists?
9. What is the role of the economist?
10. What does the manager use to make decisions?
Text C: Micro, Macro and Fantasy Economics
Ex.24. Before reading
Can you anticipate what fantasy economics is about?
Ex.25. Reading
(1) There are two branches of genuine economics, the micro and the macro, and a third and phoney one, the fantasy economics that feeds on wishful thinking demagogy and the rantings of pretentious charlatans. As micro and macro are tangled up in one of their periodic conflicts of mutual misunderstanding, the hour is to the fantasy economics "new order," "need, not greed," "equitable distribution," "stability," and so forth. None of this rhetoric is harmless, and the seductive apple-pie-and-motherhood language it uses makes it difficult to combat. Micro-economics finds support in common sense, the lessons of everyday life and perhaps also in inherited instincts that favoured genetic survival in evolutionary selection. Micro-economics teaches that no sane man will try to increase his income by borrowing more heavily on his credit card so that his increased consumption should stimulate consumption, fill factory order books, and permit him to earn more by doing overtime. Yet macro-economics suggests that something of the sort is a quite plausible sequence of events. Plausible, however, is sometimes mistaken for necessarily true. "It all depends"; macro-economic plausibility may or may not point to correct conclusions.
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(2) When in 2000 France's socialist government reduced the "legal" work week to 35 hours the main plea was that this will spread the available work among more people, i.e. reduce unemployment, which of course it did not. It increased costs and caused much disruption. On the other hand, when in 2008-2009 a large proportion of German employers reduced both the work week and wages, the result was that German unemployment rose significantly less than that in neighbouring countries. Could this be a negation of the French experience? It was nothing of the sort; it was simple that other things were not equal, in one experience labour costs increased, in the other they did not. Micro and macro are fairly unanimous that you do not increase the demand for labour by making it more expensive. Higher unemployment pay has no direct incidence on wage cost, because it is paid out of general tax revenue and leaves unemployment insurance rates (a kind of payroll tax) unchanged. However, wherever the incidence of a higher cost first hits the economy, the indirect incidence will inevitably work through to labour cost, too.
(3) The contemporary quarrel between micro and macro rages around the sustainability of growing government debt, the potential of the fiscal stimulus to induce growth and create jobs, and the risks of unorthodox central banking. In all these areas, the instinctive, micro-oriented "know-nothings" confront the educated Keynesians. The latter keep desperately trying to hammer into the thick skulls of the former the basic blueprint of John Maynard Keynes's system. More government spending (i.e. dissaving) generates income that is greater than the spending itself, with part of the income being consumed and part saved to generate the saving that matches the government dissaving. In Keynesian parlance there is the multiplier effect and it is greater than 1. As long as there is spare capacity (unemployment) in the economy, the government ought to go on spending more, working through the multiplier, because the extra private saving takes care of the government dissaving and the extra consumption is, so to speak, a welcome windfall gain. Timidly refusing to generate it is criminal waste.
(4) Fantasy economics as a study of warfare or at best a bitterly fought football game helps to understand the self-inflicted pain most of Europe is currently suffering in the "crisis" of the euro - a "crisis" that is increasingly looking like a quasi-permanent state of affairs. The euro replaced national currencies in 1999 partly because it was promised to raise economic growth rates "in the region by 5 per cent or more, and partly because it would enable Europe "to look the dollar in the face" or, better still, to become its equal as a global reserve currency. Milton Friedman was convinced that, failing fiscal unification, the euro experiment will collapse in a matter of months. Instead, it is still subsisting, though it has signally failed to fulfil the promises of growth and especially of prestige that had been made for it. It is being maintained by the Herculean efforts of the more solvent of the member states that seem determined to throw good money after bad to save their nearly insolvent fellow members without admitting that at least some of this money can be regarded as already gone down the drain. The mystery is that doing this is unanimously acclaimed as wise, constructive and necessary because it preserves the integrity of the Eurozone. There is ominous talk of "fragilisation" and "contamination" from Greece to Ireland, Ireland to Portugal, Portugal to Spain and so on, ending in some unspecified but catastrophic collapse. Nobody feels the need to ask why such language is the right one to use, and why the "integrity" of the zone and its common currency is so precious as to warrant the most painful economic and political contortions. Heavily loaded metaphors suffice to convince us that Greece, Portugal, Spain or Italy reverting to their own separate currencies would be a bad thing for anyone, let alone (as is being asserted) for everyone.
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(5) What is saddening is that it is not solid understanding of micro and macro theory, the depressing history of exchange controls, fixed rates and commodity price stabilisation schemes, not the vacuity of fantasy economics that will preserve us from these hoary panaceas, but rather the sheer unlikelihood of reaching unanimous agreement among sovereign states on anything substantive, however foolish it may be.
Task 1. Discuss how micro and macro are tangled up in conflicts of mutual misunderstanding. (para.1)
Task 2. Explain why higher unemployment pay has no direct incidence on wage cost. (para.2)
Task 3. If something is constructive (para.4), is it
a) involving the use of imagination to produce new ideas or things;
b) useful and helpful, or likely to produce good results;
c) designed for building?
Task 4. What way out of the crisis does the author see? (para.5)
Task 5. What does the author mean by hoary panaceas? (para.5) Which of them does he focus on in the above text?
BUSINESS COMMUNICATION
Introductions
How to Say Hello
Dolly: Hello! Hello there, how are you? Oh Hello!
Horace: You know too many people.
Dolly: Total strangers!
Horace: Then why do you greet them?
Dolly: It makes me feel good to have so many friends.
Horace: Oh, say hello for me too then.
Dolly: I already did.
Conversation Practice
Notes:
1. It is not common to use titles (Mr., Mrs., Dr., etc.) when referring to yourself. However, it is polite to use titles with others in formal situations, unless they give you permission to do otherwise.
Examples:
I'm Mr. Robert Smith. (Title is not necessary here.)
I'm Robert Smith. (Better.)
I'm Dr. Sampson. (Okay if you want to keep the relationship formal.)
After an introduction:
Nice to meet you, Mr. Smith.
Oh, please call me "Bob."
2. Do not use titles with first names, and do not use last names alone without titles.
Hello, Mr. Bob (Wrong!)
Hi, Bob (Okay.)
Good morning, Smith (Wrong!)
Good morning, Mrs. Smith (Correct.)
Ex.1. Do you know the other people in the class? Introduce yourself to everyone.
Good morning. My name is __________. I am from __________.
Listen to others introducing themselves. Say "Nice to meet you" and repeat their names. Smile (and shake hands if appropriate).
Ex.2. When do we say Good morning? Good afternoon? Good evening?
