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Revenue прибуток

Circumstance обставина

Unit 2. Economic Stability

Active Vocabulary

to have serious drawbacks мати серйозні недоліки

fiscal policy фінансова політика

monetary policy грошова політика

tax receipts грошові надходження від

budget deficit дефіцит бюджету

money supply грошові надходження

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 consumers spending begins to increase, the economy will enter the expansion phase. If taxes are increased consumers and business would have less spend. This would create a contracting in the total demand for goods that should reduce infatuation.

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 government’s debts 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 regulation the supply of money as a way of stabilizing the economy.

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 economy 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.

Exercise 1. Give the English equivalents:

підвищувати податки, зменшувати податки, стабілізувати економіку, контролювати податки та витрати, застосовуватися в потрібний момент, змінювати рівень грошових надходжень за рахунок податків, випускати гроші, попит на товари, дефіцит бюджету, спад виробництва.

Exercise 2. Write an appropriate word-combination:

reduced, fiscal policies, inflation, federal spending, timed, budget deficit,

money, drawbacks, circulation.

1. Fiscal policy is applied by changing the level of tax receipts ….

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.

Exercise 3. Translate into English:

1. Економісти шукають шляхи стабілізації економіки. 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 позики або випускати нові гроші. 8. Прикро, що збільшення грошової маси є поштовхом для інфляції. 9. Існує прямий зв'язок між наявною в обігу кількістю грошей та рівнем виробництва.

Exercise 4. Answer the following sentences:

1. What strategies does government rely on 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 reserved?

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?

Exercise 5. Read and translate the following dialog:

A.:	Can you tell me 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 down of business activity.
A.:	And how does the government try to stabilize the ups and down 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 regulation 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 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 happen in its 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. Thanks a lot.
B.:	You’re welcome.

Exercise 6. Create communicative situations:

1. Although economists know a great deal about how to stabilize the economy, our system still goes through periods of expansion and contraction. Describe some of the problems facing decision makers who are trying to use fiscal and monetary policies to keep the economy growing steadily.

2. As the economy moves from “recession” to “expansion”, what is likely to happen to wages, investment, employment, profits?

3. During which phase of the cycle (“recession or “expansion”) is production

increasing? Why?

Дата добавления: 2015-05-26