Comprehension

1. What is the main topic of the text?

2. What kinds of economies are described in the text?

3. How can you define the concept of “economic system”?

4. What are the main features of a market economy?

5. What are the two sides of a market economy?

6. Demand is the sellers’ side of the market economy, isn’t it?

7. Supply is the sellers’ side of the market economy, isn’t it?

8. What is the difference between the producer and the consumer?

9. What are the advantages of a market economy?

10. What are the disadvantages of a market economy?

11. Why is government intervention required in a market economy?

12. What is the main difference between the market economy and the planned economy?

13. Market forces are as important in the market economy as they are in the planned economy, aren’t they?

14. Why does the planned economy react slower to changes in consumer needs and fluctuating patterns of supply and demand than the market economy?

15. What two major sectors can be identified in the mixed economy?

16. What are the main features of the miхеd economy?

The traditional economy

It's hard to imagine our lives without coins, banknotes and credit cards.

Yet for most of human history people lived without money. For

thousands of years human societies had very simple economies. There

were no shops, markets or traders. There were no employers, paid

workers or salaries. Today, we call this kind of economy the traditional

economy, and in some parts of Asia, South America and Africa this

system still exists.

People who live in a traditional economy don't have money because they

don't need it. They live lives of subsistence. That means they hunt,

gather or grow only enough food to live. There is almost no surplus in

the traditional economy, and there is almost no property. Families may

own simple accommodation, but land is shared by all the tribe.

Economic decisions are taken according to the customs of the tribe. For

example, every family may need to give some of the crops they grow to

the tribal leader, but keep the rest for themselves. They don't do this

because it makes economic sense. They do it because the tribe has

always done it. It's simply a custom.

Custom, also, decides what jobs people do in the traditional economy.

People generally do the jobs that their parents and grandparents did

before them. Anyway, there aren't many jobs to choose from in the

traditional economy. Men are hunters, farmers or both. The woman's

place is at home looking after children, cooking and home-making. This

division of labour between men and women is another characteristic of

the traditional economy. Whatever the work is, and whoever does it, you

can be sure it's hard work. This is because traditional economies have3

almost no technology. Physical strength and knowledge of the

environment are the tools for survival.

Like any other economic system, the traditional economy has its benefits

and drawbacks. Probably the biggest benefit is that these are peaceful

societies. People consume almost everything they produce and own

practically nothing. They are equally poor. For all these reasons, war is

almost unknown in these societies.

However, people who live in traditional societies are among the poorest

people in the world. Because custom decides what people do, nothing in

these societies ever changes. Because there is no technology, people

depend on nature to survive. They have no protection from

environmental disasters like droughts and floods. They are always in

danger of hunger and disease.

But the traditional economy is in danger itself. There are only a few

examples left on the planet. In 100 years from now, it may have

disappeared forever.