1. Fiscal policy is applied by changing the level of tax receipts relative to ... .
2. When taxes are ..., individuals and business firms will have more money available to spend for the things they want.
3. When properly applied, ... can provide effective tools with which to fight recession and ... .
4. Fiscal policy solutions have several serious ... .
5. When government reduces taxes to fight a recession, it often creates a ... .
6. The federal government can also finance its debts by printing ....
7. Fiscal policies must be ... so that they are applied at the right moment.
8. There is a direct relationship between the amount of money in ... and the level of business activity.
IV. Read and translate the text
Ever since the days of the Great Depression, the federal government has sought to stabilize the economy.
To achieve these goals the government relies upon two sets of «tools» or strategies: fiscal policy and monetary policy.
Fiscal Policy. Fiscal policy is applied by changing the level of tax receipts relative to federal spending. It is the responsibility of the President and Congress because they control taxing and spending.
When taxes are reduced, individuals and business firms will have more money available to spend for the things they want. As business and consumer spending begins to increase, the economy will enter the expansion phase. If taxes are increased consumers and business would have less to spend. This would create a contraction in the total demand for goods that should reduce inflation.
Fiscal Policy Has Its Critics: Many economists feel that when properly applied, fiscal policies can provide effective tools with which to fight recession and inflation. Others, however, believe fiscal policy solutions have several serious drawbacks.
— When government reduces taxes to fight a recession, it often creates a budget deficit. That is its revenues will be less than its expenditures, and the government's debt will increase. When taxes are reduced, the government can still spend because it can borrow or print money.
If the government chooses to borrow from the public to offset a tax reduction, the money it borrows cannot be spent by the lenders.
— The federal government can also finance its debts by printing money.
Unfortunately, such increases in the money supply tend to fuel inflation by pushing up prices. For that reason a number of economists are opposed to this strategy.
Fiscal policies must be timed so that they are applied at the right moment.
Monetary Policy. Monetary policy refers to regulating the supply of money as a way of stabilizing the economy. Monetary policy is the responsibility of the Federal Reserve System.
There is a direct relationship between the amount of money in circulation and the level of business activity. When the money supply is increased, consumer spending and business spending tend to increase with it. It follows that in time of contraction and recession, an increase in the money supply will help to bring about economic recovery. When the opposite situation prevails and the booming economy is pushing up prices in an inflationary spiral, a reduction in the money supply will serve to reduce demand and lower prices.
V. Answer the following questions:
1. What strategies does government rely upon to promote maximum employment, production and purchasing.
2. What is fiscal policy?
3. How is fiscal policy applied?
4. In what ways could the recession be reversed?
5. What will happen when business and consumer spending begins to increase?
6. Can fiscal tools be used to slow the economy?
7. What serious drawbacks have fiscal policy solutions?
8. What is monetary policy?
VI. Define the terms:
regulating the supply of money –
fiscal policy –
monetary policy –
budget deficit –
VII. Translate into English:
1. Економісти шукають шляхів, щоб стабілізувати економіку. 2. Для того щоб досягти мети стабілізації економіки, уряд звертається до двох стратегій: фіскальної та грошової політики. 3. Коли податки зменшуватимуться, фірми та приватні особи матимуть у розпорядженні більше грошей, щоб витрачати їх на речі, які вони хочуть придбати. 4. Деякі економісти стверджують, що фінансова політика має кілька серйозних недоліків. 5. Коли уряд зменшує податки, він може створити дефіцит бюджету. 6. Дефіцит бюджету означає, що прибутки будуть меншими за витрати, і заборгованість уряду зросте. 7. Уряд може покривати дефіцит бюджету, роблячи позички або випускаючи нові гроші. 8. Прикро, що збільшення грошової маси є поштовхом до інфляції. 9. Існує прямий зв'язок між наявною в обігу кількістю грошей та рівнем виробництва.
VIII. Read and dramatize the following dialogue:
A: Can you tell what times we are living through. As I know when people speak of prosperity and depression, they think of things like business cycles.
B: Yes! The business cycle is the pattern of periodic ups and downs of business activity.
A:And how does the government try to stabilize the ups and downs of the economy?
B: In its efforts to stabilize the economy and achieve its goals the government relies on the fiscal and monetary policy.
A: Do you know anything about fiscal policies?
B: Certainly, I do. Fiscal policies seek to adjust total demand through the appropriate use of the government's powers to tax and to spend. Fiscal policy is in the hands of the President and Congress.
A: Then monetary policies must be quite different.
B: Not exactly. Monetary policies seek to achieve similar goals by regulating the money supply. Monetary policies are determined by the Board of Governors of the Federal Reserve System.
A: And how do fiscal policies influence the events in times of recession?
B: In times of recession fiscal policies would call for some combination of tax reductions and increases in government spending.
A: And what about monetary policies?
B: Monetary policies in those times would seek to increase the money supply through strategies such as the increased purchasing of government securities by the Open Market Committee, a lowering of discount rate, and a reduction in the reserve ratio.
A:And what happens in the times of inflation?
B: In times of inflation both fiscal and monetary policies would follow an opposite course.
A: Oh! I came to know very much about some things I've never heard before. Thanks a lot.
B: You're welcome.
IX. Make up your own dialogue using the following expressions:
to stabilize the economy
to enter the expansion phase
to fight recession and inflation
to control taxing and spending
to provide effective tools
to reduce inflation
to fuel inflation
to increase taxes
to reduce taxes
U N I T 7 ECONOMIC_SYSTEM
TOPIC: ECONOMIC SYSTEMS
1. Practise the pronunciation of the following words:
The survival of any society depends on its ability to provide food, clothing and shelter for its people. Since these societies are also faced with scarcity decisions concerning What, How and for Whom to produce must be made.
All societies have something else in common. They have an economic system or an organized way of providing for the wants and needs of their people. The way in which these decisions are made will determine the type of economic system they have. There are three major kinds of economic systems: traditional, command and market.
In a society with a traditional economy nearly all economic activity is the result of ritual and custom. Habit and custom also prescribe most social behaviour1. Individuals are not free to make decisions based on what they want or would like to have. Instead, their roles are defined. They know what goods and services will be produced, how to produce them, and how such goods and services will be distributed.
An example of traditional economy is the society of polar eskimo2of the last century. For generations, parents taught their children how to survive in a harsh climate, make tools, fish and hunt. Their children, in turn, taught these skills to the next generation. The main advantage of the traditional economy is that everyone has a role in it. This helps keep economic life stable and community life continuous. The main disadvantage of the traditional economy is that it tends to discourage3new ideas and even punishes people for breaking rules or doing things differently. So it tends to be stagnant4or fails to grow over time5.
1. social behaviour — тут: поведiнка суспiльства
2. polar eskimo — ескiмоси пiвночi
3. to discourage — розхолоджувати
4. ... tends to be stagnant — має схильнiсть до застою
5. ... fails to grow over time — не може розвиватися далi
I. Give the corresponding nouns to the following verbs:
to survive, to depend on, to provide, to prescribe, to decide, to distribute, to determine, to organize, to generate, to behave, to define, to know, to punish, to tend, to grow, to direct.
1. to make decisions
2. to have smth in common
3. economic system
4. traditional economy
5. command economy
6. market economy
7. social behaviour
8. major kinds
9. for generations
10. main advantage
11. main disadvantage
12. to make tools
а. із поколiння в поколiння
б. традицiйна економiка
в. поведiнка суспiльства
г. головнi типи
д. головний недолiк
е. приймати рiшення
є. командна економiка
ж. головна перевага
з. ринкова економiка
и. економiчна система
i. мати щось спiльне
ї. виробляти знаряддя
III. Match the synonyms:
decision, approximately, produce, shelter, to make, type, habitation, as, the community, major, concerning, to produce, the society, main, nearly, about, kind, since, product, solution.
IV. Match the antonyms:
scarcity, last, advanced, to produce, to discourage, next, stagnant, stable, to encourage, to distribute, disadvantage, to accumulate, uncommon, advantage, to consume, unstable, common, abundance.
V.Fill in the blanks with prepositions or adverbs if necessary:
1. The survival ... any society depends ... its ability to provide ... food, clothing and shelter ... its people. 2. All ... societies have an economic system or an organized way ... providing ... the wants and needs ... their people. 3. There are three major kinds ... economic systems: traditional, command and market. 4. In a society ... a traditional economy ... all ... economic activity is the result ... ritual and custom. 5. An example ... traditional economy is the society ... polar eskimo ... the last century.
VI. Complete the following sentences:
1. The survival of any society depends on ... . 2. Since these societies are also faced with scarcity ... . 3. All societies have an organized way of providing for ... . 4. The way in which these decisions are made ... . 5. There are three major kinds of economic systems: ... . 6. In a society with traditional economy nearly all economic activity is ... . 7. Individuals are not free to make decisions based on ... . 8. An example of traditional economy is ... . 9. For generations, parents taught their children ... . 10. The main advantage of the traditional economy is ... . 11. The main disadvantage of the traditional economy is ... .
VII. Answer the following questions:
1. What does the survival of any society depend on? 2. What are all societies faced with? 3. What have all societies in common? 4. What determines the type of economic system? 5. What are the major kinds of economic systems? 6. What prescribes most social behaviour? 7. What is the role of individuals in a traditional economy? 8. What did polar eskimo teach their children? 9. What is the main advantage/disadvantage of the traditional economy?
VIII. Translate into English:
1. Кожному суспiльству доводиться приймати рiшення стосовно того, що, як та для кого виробляти. 2. Виживання суспiльства залежить вiд того, чи воно спроможне забезпечувати своїх людей їжею, одягом та житлом. 3. Кожному суспiльству притаманна своя економiчна система. 4. Тип економiчної системи визначається методом, за яким приймаються рiшення про задоволення бажань та потреб людей. 5. У суспiльствi з традицiйною економiкою вся економiчна дiяльнiсть є результатом традицiй та звичаїв. 6. Люди не вiльнi приймати рiшення, якi ґрунтуються на тім, що вони хочуть або хотiли б мати. 7. Люди знають, якi товари або послуги будуть вироблятися, як вони вироблятимуться та як вони розподiлятимуться. 8. Ескiмоси пiвночi навчали своїх дiтей, як виготовляти знаряддя, ловити рибу та полювати. 9. Головний недолiк традицiйної економiки полягає в тім, що вона схильна розхолоджувати ідеї. 10. Головна перевага традицiйної економiки в тім, що кожний у нiй має свою роль. 11. Традицiйна економiка схильна до застою i не може розвиватися далi.
1. Practise the pronunciation of the following words:
Other societies have a command economy — one where a central authority makes most of the What, How and for Whom decisions.
Economic decisions are made at the top and people are expected to go along with1choices made by their leaders. It means that major economic choices are made by the government. It decides goals for the economy and determines needs and production quotas for major industries. If the planning body wants to stress growth of heavy manufacturing, it can shift resources2from consumer goods to that sector. Or, if it wants to strengthen national defence, it can direct resources from consumer goods or heavy manufacturing to the production of military equipment and supplies.
The major advantage of a command system is that it can change direction drastically in a relatively short time. The major disadvantage of the command system is that it does not always meet the wants and needs of individuals.
The second disadvantage of the command economy is the lack of incentives3that encourage people to work hard. In most command economies today workers with different degrees of responsibility receive similar wages. In addition4, people seldom lose their jobs regardless of5the quality of their work. As a result, there is a tendency for some to work just hard enough to fill production quotas set by planners.
The command economy requires a large decision-making bureaucracy. Many clerks, planners, and others are needed to operate the system. As a result, most decisions cannot be made until a number of people are consulted, or a large amount of paperwork is processed. This causes production costs6to increase and decision-making to slow down. Thus, a command system does not have the flexibility to deal with day-to-day problems.
1. ... people are expected to go along with — сподiваються, що люди приєднаються
2. to shift resources — перемiстити ресурси
3. the lack of incentives — брак стимулiв
4. in addition — до того ж; крім того
5. regardless of — незважаючи на
6. production costs — витрати виробництва
I. Define the parts of speech of the following words:
кoмандна економiка; економiчний вибiр; плановi органи; змiцнювати нацiональну оборону; центральнi керiвнi органи; визначати потреби; основнi галузi промисловостi; перемiщати ресурси; важка промисловiсть; споживчi товари; вiйськове устаткування; у вiдносно короткий промiжок часу; рiшуче змiнювати напрям; задовольняти бажання та потреби людей; заохочувати людей наполегливо працювати; брак стимулів; ви- трати виробництва; незважаючи на; якiсть роботи; великий бюрократичний апарат, що приймає рiшення; займатися щоденними проблемам; керувати системою; рiзний рiвень вiдповiдальностi.
IV.Fill in the blanks with prepositions or adverbs if necessary:
1. Economic decisions are made ... the top and people are expected to go ... choices made ... their leaders. 2. The government decides goals ... the economy and determines needs and production quotas ... major industries. 3. In most ... command economies people ... lose jobs regardless ... the quality ... their work. 4. As a result, there is a tendency ... some to work ... hard enough to fill ... production quotas set ... planners. 5. A command system does not have the flexibility to deal ... day-to-day problems.
V.Complete the following sentences:
1. In a command economy decisions are made ... . 2. It means that ... . 3. Government decides ... . 4. If the planning body wants to strengthen national defence, it can ... . 5. The major advantage of a command system is ... . 6. The major disadvantage of a command system is ... . 7. The second disadvantage of the command economy is ... . 8. The command economy requires ... .
VI.Answer the following questions:
1. Who makes most of What, How and for Whom decisions in a command economy? 2. Who determines needs and production quotas for major industries? 3. What is the major advantage of a command system? 4. What disadvantages does the command economy have? 5. What does the command economy require? 6. The command system doesn’t have the flexibility to deal with day-to-day problems, does it?
VII. Retell the text B using the following words and
command economy; central authority; to go along with smth; production quotas; major economic choices; major industries; to direct resources; to stress growth of heavy manufacturing; to strengthen national defence; in a relatively short time; to change direction drastically; consumer goods; to determine needs; to meet the wants and needs of individuals; the lack of incentives; regardless of; to shift resources; to operate the system; a large decision-making bureaucracy; production costs; to deal with day-to-day problems.
1. Practise the pronunciation of the following words:
In a market economy, the questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests. In economic term a market is an arrangement that allows buyers and sellers to come together to conduct transactions1.
Since consumers like products with low prices and high quality, producers in a market economy will try to supply such products. Those who make the best products for the lowest prices will make profits2and stay in business3. Other producers will either go out of business or switch to4different products consumer can buy.
A market economy has several major advantages that traditional and command economies do not have. First, a market economy is flexible and can adjust to change over time.
When gas prices in the United States began to level off in 1985 and then decline in 1986, the trend slowly began to reverse.
The second major advantage of the market economy is the freedom that exists for everyone involved. Producers are free to make whatever they think will sell. They are also free to produce their products in the most efficient manner. Consumers on the other hand are free to spend their money or buy whatever goods and services they wish to have.
The third advantage of the market economy is the lack of significant government intervention. Except for national defence, the government tries to stay out of the way5. As long as there is competition among producers, the market economy generally takes care of itself.
The final advantage of the market economy is the incredible variety6of goods and services available to consumers. In fact, almost any product can and will be produced so long as there is a buyer for it.
1. to conduct transactions — проводити дiловi операцiї