President Reagan cautioned yesterday that "we must not raise false hopes" in advance of November's summit with Soviet leader Mikhail Gorbachev, and urged Gorbachev to shift resources "from armaments to people" to improve the Soviet standard of living.

In his weekly radio address, delivered from Camp David, Reagan said he will discuss the Geneva summit at his meeting here Friday with the new Soviet foreign minister, Eduard Shevardnadze.

"As you know, the Soviet Union has frequently been bent upon expansionism. Indeed, since the 1970s the Soviet Union has been engaged in a military buildup which far exceeds any rational definition of its defense needs," Reagan said.

"These policies have inflicted bitter costs on the Soviet peoples every week. Russian soldiers are dying in Afghanistan while their standard of living has suffered accordingly," he added.

"Mr. Gorbachev can change this," Reagan said. "He can set in train a policy of arms reductions and lasting peace. By shifting resources from armaments to people he can enable his nation to enjoy far more economic growth.

"Given the nature of the Soviet system and its ideology, we must not raise false hopes," the president said. During the Shevardnadze meeting, Reagan said, he will "search for signs of a Soviet willingness to engage in a genuine give-and-take."

Reagan's comments on allocation of Soviet resources come as Moscow is preparing a new five-year plan, the first under Gorbachev. A senior White House official said last week that Reagan thinks the Soviets have been going through a period of "introspection" and that the new plan would give Gorbachev "a real opportunity" to "put his mark" on basic choices about the Soviet economy and military policies.

Soviet sources have said Shevardnadze is bringing a new proposal on limiting nuclear weapons in his visit this week. The Reagan administration has been calling for Moscow to make a "concrete" arms proposal, following suggestions from Gorbachev that the Soviets are prepared to negotiate reductions in superpower arsenals.

Last week, Reagan ruled out a possible trade-off of additional limits on his missile defense research program, the Strategic Defense Initiative, in exchange for deep reductions in Soviet offensive weapons. A third round of U.S.-Soviet arms negotiations began last week in Geneva.

Yesterday, speaking of the forthcoming summit, Reagan twice voiced the admonition that "we must not raise false hopes."

The president also noted meetings at the White House this week with Jordan's King Hussein and Egyptian President Hosni Mubarak. Reagan said the search for peace between Israel and her neighbors will "dominate the agenda," and the United States is "doing all we can" to support Hussein's effort to begin negotiations between Israel and a Jordanian-Palestinian delegation.

Reagan said there would be discussions on the Irani-Iraqi war and ways to "keep it from spreading" and threatening the flow of oil through the Persian Gulf.