A. Are these statements true or false?

1. Ricardo is well-known in national economics for revealing the drawbacks of free trade.

2. Tree trade is a policy in which economical barriers to trade are strictly observed.

3. The principle of comparative advantage shows the possibility of importing goods by one nation from another even if it can produce that item less expensive the the exporter.

4. In his explanation of comparative advantage Ricardo considered the benefits of exchanging nine and cloth between Portugal and England.

5. From Ricardo’s explanation we can see that it would be more effective for England to import Portugal cloth.

B. Choose the best heading.

1. The greatest classical economist.

2. Classical champion of free trade.

3. Free trade removes all the tariffs.

4. English economics is the most efficient in the world.

Text 6. David Ricardo (1772–1823)

Word and word combinations

comparative advantage сравнительные преимущества
free trade свободная торговля
House of Commons палата общин
influential a влиятельный
remove v устранять, удалять
spokesman n представитель
stock exchange фондовая биржа
worker-year n производственный год

David Ricardo is one of history’s most influential economists. Born in England, Ricardo made a fortune on the London Stock Exchange. This wealth gave him the time to write and to serve in Parliament’s House of Commons. His most famous work, Principles of Political Economy and Taxation (1817), marked him as the greatest spokesman for classical economics since Adam Smith.

Ricardo is especially famous in international economics for demonstrating the advantages of free trade. Free trade is a policy in which tariffs and other barriers to trade between nations are removed. To prove his point, Ricardo developed a concept we now call the principle of comparative advantage. Comparative advantage enabled him to demonstrate that one nation might profitably import goods from another even though the importing country could produce that item cheaper than the exporter.

Ricardo’s explanation of comparative advantage went as follows:

Portugal and England, both of whom produce wine and cloth, are considering the advantages of exchanging those products with one another.

Let’s assume that:

* x barrels of wine are equal to (and therefore trade evenly for) y yards of cloth.

* In Portugal 80 workers can produce x barrels of wine in a year. It takes 120 English workers to produce that many barrels.

* 90 Portuguese workers can produce y yards of cloth in a year. It takes 100 English workers to produce y yards of cloth.

We can see, Ricardo continued, that even though Portugal can produce both wine and cloth more efficiently than England, it pays them to specialize in the production of wine and import English cloth. This is so because by trading with England, Portugal can obtain as much cloth for 80 worker-years as it would take 90 worker-years to produce themselves.

Text 7. John Maynard Keynes (1883-1946)

1.48. Words and notes on the text.

amass v накоплять, собирать
assurance n уверение, гарантия
commodity n предмет (широкого) потребления, товар
demand n спрос
total demand совокупный, полный спрос
full employment полная занятость (рабочих)
supply n предложение
supply and demand спрос и предложение
interfere v вмешиваться
interference n вмешательство
persist v устоять
speculation n игра на бирже, спекуляция
stocks n ценные бумаги, фонды
treasury official чиновник министерства финансов
the General Theory of Employment, Interest and Money Oбщая теория занятости, процента и денег
at a point well under full employment в точке, находящейся значительно ниже полной занятости

Read the text and answer the questions.

1. To what family was John Keynes born? 2. What other outstanding economists does Keynes rank among? 3. What did Keynes do through most of his adult life? How did he make a fortune? 5. When did Adam mith write his book The Wealth of Nations? 6. What book transformed economic thinking in the 20th century? 7. What did Keynes think about unemployment? 8. How do Keynes’ ideas contrast with those of Adam Smith? 9. What role did Keynes think government should have in the economy?

John Maynard Keynes (1883-1946)