3. Complete the sentences, choosing the proper word. Translate them into Russian.
Economic growth is usually defined as the rate at (that, which, what) the national income of a country grows in real terms.
Apart from three or four top management executives (who, that, which) are employed full time, the board of Directors comprises a number of outstanding businessmen - often board chairmen or presidents from other diverse fields.
The rouble exchange rate (what, that, which) is periodically established reflects the currency offer and demand balance.
Governments can help promote economic growth trying to create an environment (that, where, what) exports can flourish and
businesses make considerable investments.
Nations have been long classified into groups (when, that, which) indicate their economic strengths and weaknesses as well as their stage of development.
Economic growth is the government's major objective the aim of (that, what, which) is to rise the standard of living of the country’s people.
In a time of the increased standard of living some groups in
society may not share in the increased prosperity (which, whose,
that) incomes rise less quickly than those of other groups.
Pensioners, students, unemployed, disable may comprise such
groups.
Much attention in international economic and political affairs
focuses on the welfare gap between the developed and developing
nations. Comparisons made among countries (when, what,
which) use such measures as population, per capita income
and wealth, labour costs, prices etc.
The scope of economics is indicated by the fact with (which,
what, that) it deals. The latter consists mainly of data on output,
income, employment, expenditure, interest rates, prices related
with the activities of production, consumption, transportation and
trade.
10. It is important (what, that, which) the growth of population has not exceeded the growth of the national income.
4. Translate into Russian. The sentences are based on the rule of sequence of Tenses.
1. The deputy said that economic growth was a major objective of the government. 2. The participants of the seminar wondered what factors could encourage the development of businesses. 3. The minister said that for many years he had believed in justice and peace for the people of South Africa. 4. The workers of the factory wanted to know when the problem of pay rise would be solved. 5. The British government reported that it was necessary to prepare the people for the changes in employment. 6. General Motors confirmed that they would have to dismiss many workers. 7. The IBM predicted many years ago that the personal computer industry would become a commodity business. 8. The chairman asked the participants of the conference if they all had sent their reporters. 9. This country said that they would continue its underground nuclear tests until a test ban came into a force.
5. Translate the sentences into English. Remember the rules of sequence of Tenses.
1. Государство объявило, что оно будет приобретать контрольные пакеты акций (controlling stocks) во всех промышленных предприятиях. 2. Инженеры сказали, что данные исследования еще не завершились. 3. Фирма сообщила, что собирается уволить около 100 работников. 4. Все надеялись, что меры, предпринятые правительством, помогут улучшить ситуацию в стране. 5. Директор нашего завода сказал, что мы должны работать вместе, чтобы преодолеть кризис. 6. Лектор спросил студентов, кто интересуется английской поэзией. 7. Мы думали, что наши друзья вернулись из Канады, но оказалось, что они еще находятся в Торонто. 8. Инженеры не были уверены, будет ли работа закончена через 6 дней. 9. Участники собрания не знали, смогут ли они обсудить все вопросы за один день.
6. Translate the text into English.
Главной целью любого правительства является экономический рост. В этом случае растет и благосостояние населения. Но если рост населения будет превышать рост национального дохода, дополнительная продукция будет поглощаться очень быстро. Важно повысить реальный доход на душу населения. Но доход некоторых групп людей не растет так быстро. Например, доход тех, кто занят полный рабочий день, превышает пенсии по старости. Важной частью роста экономики является внедрение инновационных идей. Если какая-то фирма выпускает товар, не пользующийся спросом, она быстро разоряется. Многое зависит от талантливых управленцев. Они создают основу для успеха компании. Производство товаров, которые пользуются спросом, помогает экономическому росту государства.
7. Translate into Russian.
Modeling Economic Growth
One very influential, and more specific, model of economic growth was developed by economist Robert Solow in 1957. Technological innovation allows capital and labour to be used in more effective and valuable ways. The use of the Solow growth model served to highlight some important factors in economic growth. For many years, economists tended to treat growth as primarily a matter of encouraging savings, investment, and the creation and dissemination of technology. In more recent years, other economists have suggested that perhaps this model has directed too much attention to savings and technology. Some have argued that other factors such as good institutions that support markets, innovations in the organization of work, or access to global markets should be thought of as equally important in promoting economic growth.
Read the text and give the most suitable heading for each paragraph.
Text 4B
There are a variety of ways in which the benefits of economic growth may be enjoyed. By maintaining the same labour force working the same number of hours, the community may enjoy the gains from its increasing ability to produce in the form of higher levels of consumption. Alternatively, since any given output can now be produced with a small labour input, workers may decide to take part of their improved living standards in terms of increased leisure. It would also be possible to maintain consumption levels and reduce the proportion of the population at work by extending the provisions for full-time further education and/or reducing the age of retirement. Economic growth, as pointed out earlier, also makes it possible to devote more resources to the social services without having to cut private consumption.
Nevertheless, in whatever form society chooses to take the further benefits, economic growth imposes a sacrifice in terms of current living standards. In a fully employed economy a higher rate of investment can only be carried out by allocating more resources to the production of capital goods, therefore, will be less than it might otherwise be. It is true that a much greater annual output of consumer goods will be forthcoming in the future, but it may be many years before there is any net gain. Is it worth it?
Economic growth also gives rise to a variety of social costs. Rising incomes make it possible for more people to own cars, but this could lead to problems of pollution and traffic congestion. Huge modern steel plants, chemical works, oil refineries, and generating stations may be very efficient on the basis of purely commercial assessments, but they could impose costs on society by destroying natural beauty and other amenities. Modern methods of agriculture may greatly increase yields per acre, but they could have damaging effect on wild life. On the other hand, we must remember that it is economic growth which makes it possible to devote more resources to the search for safer and cleaner methods of production.
Perhaps the most disturbing social costs are those associated with a rapid pace of economic change. The technical progress which makes machines and production methods obsolete also makes people redundant. Labour will have to learn new skills, adopt new methods of working and accept more frequent changes of occupation. While programs of retraining with adequate financial grants can deal with the problem to extent, there still remains the social cost in terms of the disruption of a career and the unpleasant breaks in the partners of a person's working life. The benefits of economic growth may not be evenly spread; instead of everyone reducing his working week by a small fraction, it is more likely that some individuals may find themselves completely redundant.
Read the text and answer the questions.
What were the reasons of the biggest one-day decline in the
economy?
What has Congress been eager to force this year?
Text 4C
A Troubling Fall on Wall Street
The credit crunch, long blamed for the sluggish economy, is sharing blame for a bad day on the stock market. Combined with a decline in biotech stocks, fears about proposals to limit bank credit-card interest rates helped drive the Dow down 120 points last Friday, the biggest one day decline since October 13, 1989. Even worse damage occurred in the highflying over ─ the-counter market, which has been setting new records. With credit-card rates hovering near record highs this year, Congress has been eager to force lower rates. Wall Street read the news differently. "It dawned on the market that a cap on interest rates could cause less credit to be available to consumers, not more", observes bank-stock analyst James McDermott. "Congress is playing with fire". It could spread. Says investment analyst Paul Kronlokken: "Until now, the high level of the market was the only thing that was making people feel good about the economy."
Read the text and answer the questions.
Why is a jobless benefits package very important?
What is "hidden unemployment"?
Text 4D
The Plight of the Hidden Unemployed
When, as expected, the President signs into law the new, long-awaited jobless benefits package, he will extend unemployment payments to the millions of people who have already exhausted their benefits or will soon do so. But the law will not help the millions of Americans who want to work but have given up looking for jobs because they believe there are none to be had. Although the number of these "hidden unemployed" has not yet hit the recession high of 1.8 million, it has jumped nearly 30 percent since last year, according to government statistics. Add that to the "officially unemployed" ─ those Americans who are still hunting for jobs ─ and the number of people not working edges toward 10 million. That's a particularly frightening number to politics.
Mini-presentation
You are asked to give mini-presentations on the topics given below.
How to overcome an economic crisis.
When we say a high standard of living what do you mean?
Favorable economic environment.
Essential Vocabulary to Text 4A
the value of national output
|
ценность национальной продукции (выпуска)
|
the national income
|
национальный доход
|
to allow for
|
учитывать
|
allowance
|
пособие, скидки
|
in real terms
|
в реальных начислениях
|
an injection
|
введение, вливание
|
to sustain
|
переносить, выдерживать, испытывать
|
to promote
|
продвигать, содействовать, учреждать
|
to attempt
|
делать попытку, пробовать, предпринимать
|
the standard of living
|
уровень жизни
|
quantity
|
количество
|
to exceed
|
превышать
|
to swallow up
|
поглощать
|
income per head
|
доход на душу населения
|
to share in something
|
разделять, участвовать, иметь долю
|
the prosperity
|
процветание, успех
|
a developing economy
|
развивающаяся экономика
|
to become obsolete
|
стать устаревшим, выйти из употребления
|
to go out of fashion
|
выйти из моды
|
to thrive
|
процветать, преуспевать
|
a spending power
|
покупательная способность
|
a perceptive manager
|
проницательный менеджер
|
a framework
|
структура
|
to benefit from
|
извлекать выгоду из чего-либо, приносить прибыль
|
buoyant sales
|
повышенные, оживленные продажи
|
to cut rates
|
сокращать нормы, снижать курс, снижать ставки
|
to improve
|
улучшать, совершенствовать, повышаться в цене
|
to lead to something/lead up to
|
завершаться чем-либо, явится причиной чего-либо
|
to follow on/out
|
следовать, придерживаться
|
to throw up/out of/away on
|
пренебрегать, терять (работу), тратить, выбрасывать (деньги)
|
to place in/with/on
|
разместить, помещать, обложить (налогом)
|
to coincide with
|
совпадать
|
Module 5
Business and Economic Policy
Conditional Clauses and Clauses of Time.
Emphatic Structures.
Phrasal Verbs: provide for/with; demand from/of; refer back to
1. Translate into Russian. The sentences contain different types of Conditional clauses.
1. If the market becomes saturated demand will fall.
2. Unless the country invests more money in education, productivity won`t increase.
3. Russia will start producing this weapon provided any other country starts doing this.
4. If we do our job well, we contribute to the national and world economies.
5. It won`t be easy to find a job abroad if you can`t speak the language of this country well.
6. You won`t be given a bonus unless you exceed your sales.
7. Unless there was good will on both sides, we wouldn`t have to talk about negotiations.
8. If the manager didn`t understand the staff well he wouldn`t be able to gain their trust.
9. The results of this research won`t be recognized unless they aren`t supported with statistical data.
10. I wonder what might happen to car manufacturers if we all rode bicycles.
11. Provided you deliver the goods by the end of the week, we will pay all the advertising costs.
12. If California were a country, its gross domestic product would be the world`s seventh.
13. If I should know English well I would have helped you with the translation yesterday.
14. Should he finish his research he would have time to send it to the conference.
15. I wouldn`t have spent my time on the report if I didn`t think it would be of some use.
16. Five years ago the results of the project wouldn`t have had the same effect.
17. Without active government involvement this industry wouldn`t exist.
18. If people don`t realize how important it is to conserve energy, there will be nothing left for future generations.
19. If employees had followed safety instructions, they wouldn`t have been injured during the fire.
2. Complete the following sentences with the correct form of the verbs in brackets.
1. If we … (break) into the Asian market, our turnover would increase greatly.
2. If young employees … (to be keen) to build a career and work hard, the company delivers training to help people reach their goals.
3. We are sure that as soon as customers … (to decide) are to buy the new product, they will place an order.
4. The merged companies will make a profit provided they … (to be able) to create benefit.
5. You will learn a lot about the market situation as long as you … (to read) will the annual report.
6. The company will promote the new food product as long as it … (to package) it with interesting recipes.
7. You could succeed as a businessman providing that you … (to get) interested in finance and management.
8. Provided that you had the money on your account you … (can) withdraw up to 100$ a day.
9. The bank would not lend you the money unless you … (to have) a good banking history.
10. After the company … (to access) the market potential, it will take part in the Trade Fair where firms can exhibit samples of their products.
11. In case costs … (to be) higher than profit, the business would be unprofitable and the firm might go bankrupt.
12. If a company … (to rely) on one supplier of raw materials, it will face huge losses.
3. Complete the following sentences with your own ideas.
1. The quality of goods produced by this plant will improve as soon as … .
2. If the company doesn`t meet the consumer`s demand its goods … .
3. If no money had been spent on ecology … .
4. The company could expand if … .
5. If I were asked to work overtime … .
6. Our advertising campaign would be more successful if … .
7. If the consumer demand changes next year, the production of some goods … .
8. If the company paid my transport costs, I … .
9. There will be great progress in science if … .
10. Unless the workers were taught how to work with new equipment, … .
4. Fit these conjunctions into the gaps in the sentences.
if in case unless until when
1. We are unable to supply the goods ….. we receive payment in advance.
2. A spare axle is provided ….. one is damaged during routine use.
3. The machine should not be modified ….. a service engineer is present.
4. The filter should be changed …… the unit has been in operation for two months.
5. The red light will come on ….. the machine overheats.
6. The machine should not be touched ….. it has cooled down.
7. There`s a first aid box ….. someone hurts themselves.
8. The red light will not go out ….. the green switch has been pressed.
5. Fill the gaps using the verbs below.
1. If I have enough time, I`ll finish the report tonight.
2. If the machine ….., we ….. our service engineer at once.
3. If your guarantee ….. still valid, any repairs ….. free of charge.
4. If they ….. a lower bid last month, we …. it immediately.
5. What ….. you ……if you ….. a colleague stealing substantial quantities of stationery from your office?
6. If you …..how angry my boss gets, you …..how nervous I feel.
7. If they ..... to pay up, we ..... them a threatening letter.
8. If I ..... the extent of the damage, I .....all our insurance policies!
accept be break down call carry out check contact do finish˅
foresee have˅ know make realize refuse see send
6. Translate into English. The sentences contain Conditionals of different types.
1. Если вы будете хорошо относиться к заказчикам (to treat right), то они будут продолжать пользоваться вашими услугами (to stay with you).
2.Если бы выборы проводили сейчас (to hold the elections), он бы легко победил (to be the easy winner).
3. Если бы вы соблюдали инструкции вчера (to follow), то этот эксперимент прошел бы успешно.
4.Вам бы лучше вложить больше денег в производство на случай, если ситуация ухудшится.
5. Ваша фирма сможет получить кредит, если предоставит (to provide) банку определённые гарантии.
6. Если бы страны-участницы МВФ сумели договориться (to settle) по вопросу курсов валют, то многие другие вопросы политики решили бы очень быстро.
7. Если мы будем выполнять нашу работу хорошо, мы будем способствовать (to contribute to) росту национальной экономики.
8. Если вы умеете делать что-то такое, чего не могут делать ваши конкуренты, вы победите в борьбе за контракты.
9. Мы оставляем за собой право (to reserve the right) отменить эту программу, если мы не сумеем получить необходимых денежных субсидий.
10. Если вы будете быстро удовлетворять потребности заказчика, не снижая (to lower) качества, то это сделают ваши конкуренты.
7. Translate into Russian the sentences with emphatic structures.
1. It was the industrial revolution that changed a rural society into an urban one.
2. It is this problem that the countries have not taken into consideration.
3. It is in marketing where the quantitative approach is most difficult.
4. It isn`t foreign money that is going to solve Russia`s problems.
5. It is for these reasons that corporations have specialized departments.
6. It was not until 1998 that relations between these countries were normalized.
7. It is due to well-planned programs that extensive data can be collected.
8. It was after this exhibition that I was invited to New York.
9. It is the communication between people, not between computers, which improves the team work.
10. It is the Supreme Court that makes the final decision in constitutional cases.
8. Translate the words and define the parts of speech they belong to.
1) globe, globalization, global, globally
2) establish, establishment, established, establishing
3) advertising, advertise, advertisement, advertiser
4) reduce, reduced, reduction, reducing
5) introduced, introducing, introduce, introduction
6) competitive, competitiveness, compete, competition, competitor
7) participator, participation, participate, participating
8) promotion, promote, promoter, promoting
9) Europe, European, euro
10) circulate, circulating, circulation
9. Complete the following sentences with the words in an appropriate form from Exercise 8.
1. The ____ in taxes usually stimulates production.
2. Both small and large companies spend money on ____ in newspapers or on TV in order to promote their goods and services.
3. ____ may help people move from one country to another easily in order to seek for better jobs.
4. In order to get more profits companies try to ____ goods.
5. The ____ of single currency has made transactions between different foreign countries much easier and faster.
6. Most countries of Central and Eastern Europe try to join the European Union as _____ in such a union can provide certain benefits in trade.
7. Famous American companies such as Coca Cola and McDonalds have already _____ subsidiaries in Russia and they can successfully ______ with domestic producers and consumers.
10. Before reading the text answer the following questions:
a) Why is it necessary for individuals and organizations to pay taxes?
b) What does the government spend its money on?
c) What is the role of banks in a society?
d) What are advantages and disadvantages of free market economy?
e) In what way does the government interfere in the economy?
Read and translate the text using Essential Vocabulary and any necessary dictionary.
Text 5A
Business and Economic Policy
The Government has the duty to manage the economy so as to give the highest possible standard of living to the country’s people and this includes providing a prosperous environment for its businesses.
There are two categories of the government activities which may affect businesses in the short and long run. They are: Fiscal policy and Monetary policy.
Fiscal policy refers to a policy based upon taxation. The current taxes can be split into two broad categories: direct taxes on income and capital, such as income, corporation and inheritance taxes; and indirect taxes on expenditures, such as VAT and excise duties.
Expenditure by the government can be classified. The main items are expenditures by central government on items such as social services, defense and the National Health Service. There is also substantial expenditure to provide education, libraries and many other services.
In general, a government’s fiscal policy is the relationship between the level of government expenditure and the amount raised in taxation in any given fiscal year. If the government spends more than it raises in taxation (known as a budget deficit) then, injections into the circular flow will exceed withdrawals from it and the level of activity should increase. This might lead to rising employment rates but also to the danger of inflation and increases in imports. On the other hand, a surplus of taxation will reduce the level of economic activity. This is termed a budget surplus and might result in an increase in unemployment. The balance between taxation and government expenditure is determined annually as the annual budget is announced.
All governments have fiscal policy even if they do not regard it as a key policy in their management of the economy. This is true because all governments spend money and raise taxes and, therefore, some balance – or imbalance – must exist between the two.
We cannot predict the precise impact of fiscal policy on the business environment by simply considering the relationship between government spending and taxation revenue. The exact economic consequences will depend upon the types of tax which are altered and the state of the economy prior to the changes being implemented.
Monetary policy centres on adjusting the amount of money in circulation in the economy and the level of spending and economic activity. This may involve the manipulation of the money supply, interest rates or exchange rate.
The first difficulty here is to decide exactly what comprises money. We should agree that it is notes and coins, and perhaps the money in our current accounts at the bank, but should we include our savings and deposit accounts? Part of the difficulty in assessing the effectiveness of monetary policy is the doubt concerning what exactly is covered by the term ‘money’.
It is the central bank that plays a major role in the implementation of a nation’s monetary policy. In some countries (for example, Germany) the central bank operates monetary policy independent of government policy, the Bank of England implements monetary policy on behalf of the government.
Monetary policy has three main aspects:
Controlling the supply of money
Controlling the rate of interest
Managing the exchange rate
The aim of the authorities when controlling the money supply is to limit the amount borrowed, and hence spent, by businesses and individuals. It is hoped in this way to limit the level of overall demand in the economy and thus to remove or reduce inflationary pressure.
Controlling the money supply also affects the sales revenue of businesses.
If Governments relax monetary policy by making money more freely available to businesses and citizens, expenditure and output will increase, depending upon the level of demand and the level of economic activity will raise.
The overall impact of changing interest rates will depend upon the size of the change as well as the initial level.
A one per cent rise in interest rates to 15 per cent may not have a great impact if the rate of inflation is 20 per cent because the real value of the debtor’s repayments is falling by one fifth annually, which more than compensates for the high interest charges.
A variety of other policies exist to control all or some aspects of the economy. Their popularity has fluctuated over the years as economic understanding has progressed and new ideas have become fashionable.
Exercises
1. Answer the questions to the text.
Why does the government have the duty to manage the economy?
Into what broad categories can the current taxes be split?
Give the definition to the term “fiscal policy” and explain it.
Why do all governments have a fiscal policy?
What role does Central bank play in different countries?
What are the aspects of monetary policy?
For what do governments spend money gathered by taxation?
What determines the balance between taxation and government expenditure?
Do you know the categories of government activities that affect businesses? What are they?
What is the aim of the authorities when controlling the money supply?
2. Match each word or word combination with its definition:
1. a duty (a) a tax which has to be paid by the taxpayer direct to the government
2. a fiscal year (b) the act or process of taxing smb. or smth.
3. a fiscal policy (c) a tax that is not paid direct to the government but is collected by suppliers, stores etc.
4. a direct tax (d) a tax charged on the value of property transferred at death to an heir.
5. taxation (e) a government tax on certain goods and commodities.
6. an inheritance tax (f) the government’s financial year.
7. an indirect tax (g) the plans made and followed by a government in raising and spending money.
8. a deposit account (h) sums of money not spent but put aside for future use.
9. savings (i) the amount of an economic good that will be offered for sale in the market.
10. a supply (j) one tin which money paid in or deposited by a customer and earns interest at the bank’s base rate.
3. Choose the correct phrasal verb in an appropriate form to complete each sentence. Some phrasal verbs should be used twice.
provide against/ for/under/with; demand from/of; refer to/back to
What can we do ______ a failure of the wheat crop?
Who is going _____ money ______ the additional workers?
It was unwise in your speech ______ rising unemployment.
The new law doesn’t ______ land used for farming.
A public health center in every city is ______ the health laws.
In requesting an answer, it is wise ______ the earlier letter on the subject.
The film ______ its workers ______ their uniforms but they are expected to keep them regularly cleaned.
The GEO ______ obedience ______ his employees.
Hard work ______ students in this course.
Insurance helps ______ a sudden loss of income.
Many successful businessmen ______ their success ______ hard work.
4. Translate into Russian:
Using Profits
Some corporations pay out most of their profits in the form of dividends to their stockholders. Investors buy into these companies if they want a high income on a regular basis. But some other corporations, usually called “growing companies”, prefer to take most of their profits and reinvest them in research and expansion. Persons who own such stocks are content – to accept a smaller dividends or none at all, if by rapid growth the shares increase in price. These persons prefer to take the risk of obtaining a “capital gain” or rise in value of the stock, rather than be assured a steady dividend.
The typical corporation likes to keep a balance among these methods of raising money for expansion, frequently plowing back (вкладывать) about half of the earnings into the business and paying out the other half as dividends. Unless some dividends are paid, investors may lose interest in the company.
5. Translate into English.
Для нормальной работы экономики необходимо, чтобы денежная масса соответствовала количеству товаров и услуг, которые существуют в стране. Государство способно контролировать размеры денежной массы и как она расходуется. Для этого применяются различные меры, которые составляют кредитно-денежную (монетарную) и бюджетную (фискальную) политику. Как правило, государство не пытается управлять всей массой наличных и безналичных денег. Но оно может регулировать часть этих денег при помощи банковской системы. Государственный банк выпускает деньги в обращение на определенную сумму. Коммерческие банки выдают кредиты фирмам и частным лицам.
Цель бюджетной политики государства помочь экономике развиваться стабильно. Главный источник доходов государственного бюджета – это налоги. Это прежде всего подоходный налог, который платит каждый работающий человек в стране. Это налоги на собственные дома, дачи, землю. Налог на доходы фирм тоже являются важнейшим источником доходов государства. В странах, где применяется налог с продаж (например, в США) каждая покупка в магазине сопровождается уплатой налога с продаж.
Text 5B
Read the text and answer the questions.
What was Keynes’ Educational Background?
What contribution did he make to Economics and Economy?
What public service was he involved in?
What scientific work made John Keynes famous worldwide?
John Keynes was an English economist and political statesman. Keynes was bornin Cambridge in 1883 where his father lectured at the University in economics and logics. He attended a local preparatory school and gained a scholarship to Eton where he gained a number of prizes for his schoolwork.
Keynes impressed his teachers and peers with his ability and cleverness and won a place at King’s College, Cambridge to read mathematics. As a University student at Cambridge he led a full life. He was President of the Union and President of the University Liberal Club as well as a member of the Apostles, a select debating society. He achieved a first class degree in mathematics.
In the two years after receiving his degree, Keynes entered the civil service and began to study economics intently. He spent his time as a civil servant working in the India Office but found the work routine and tedious. In 1908 he returned to Cambridge as a lecturer in economics, in due course he became a fellow at his old College of King’s and he remained in this post for the remainder of his life.
Keynes became editor of the Economic Journal and in this he wrote extensively on economics. During the First World War Keynes entered government service as an economist for the first time. During the war he rose rapidly through the Treasury and ended up overseeing the management of the UK’s reserves of foreign exchange. He knew many of the premier figures of the time and worked hard on behalf of his country.
Keynes opposed the policy by which the Allies forced the Germans to pay huge reparations for war damages. He wrote pamphlets on these preparations and on the economic consequences of the peace. In 1930 he published a lengthy work on money and was appointed as chairman of a panel of economists set up to advise the government.
It was during this post-war period and through these writings that Keynes began to shape his views which were eventually expressed in his “General Theory of Employment, Interest and Money” in 1936. This revolutionary text advocated a central role for the government in the management of the economy. He argued for the government’s management of the economy through controlling the level of spending of individuals and the government itself. After the Second World War, his ideas on economic management were adopted in most democratic nations.
Keynes’s public service continued throughout the Second World, through his health began to fail him after he suffered a severe heart attack in 1937. Throughout the war Keynes acted as an advisor to the Treasury and wrote on “How to pay for the war”. In 1942 he was given a peerage and became Lord Keynes. His prime role during this conflict was to negotiate with the Americans on financial matters. He arranged for the Americans to make loans and was involved in establishing the International Monetary Fund in 1944.
He died in 1946. He left a legacy of a great understanding of the economic system and how it could be used to the well-being of nations.
Text 5C
Read the text and answer the questions.
What are Milton Friedman’s academic achievements?
Why was M. Friedman very popular in the 1960s and 1970s?
Milton Friedman was born in Brooklyn, New York, in July 1912 the son of Jewish immigrants. He immediately attracted attention as a brilliant student and received a number of state scholarships. He studied at a number of American universities, eventually being awarded a doctorate by Columbia University. Since then Friedman and his academic achievements have been honoured by a considerable number of honoury degrees from universities worldwide.
In 1948 at an early age Friedman was appointed Professor of Economics at the University of Chicago, a post he held until his retirement in 1977 aged 65. Friedman soon began to attract attention for his criticism of all forms of government intervention in the economy. This brought him into direct conflict with the ideas of Keynes and his supporters, such as Friedman’s great rival John Kenneth Galbraith. His free market views extended to criticizing many aspects of the welfare state and even public education – from which he had so clearly benefited.
Friedman was at the height of his powers and popularity in the 1950s and 1970s when undisputed leader of the Chicago School of Economics. This group of liberal economists advocated the extending of free market economics and the reduction of the role of the state in managing the economy. Friedman’s ideas had their origins in the work of earlier economists, but he expressed his ideas with originality. Many of his views have attracted considerable controversy. For example, he contends that government economic intervention in the form of imposing minimum wages has an undesirable side effect, in that it creates unemployment as firms hire less of the now more expensive resource. This, Friedman argues, lessens the welfare of those whom the government sought to protect.
Monetarism may not be Friedman’s most important contribution to economic thought, but it is the idea with which, he is most closely identified. Monetarist economists believe that the sole cause of inflation is increases in the money supply.
Friedman is credited with saying that “inflation is always and everywhere a monetary phenomenon”. Friedman’s leadership of the Chicago School coincided with the rise of inflationary pressures throughout the Western world alongside the apparent failure of Keynesian economics.
Friedman explains the failure of monetarist policies in the UK and US by arguing that the government concerned did not wholeheartedly adopt monetarist philosophies. They did not adopt the growth of the money supply as their prime economic target. Unlike Keynes, Friedman has survived to see the overthrow of his ideas and their replacement by new schools of economic thought. Nevertheless, his impact on economic thought has been immense and his work was recognized by the award of the Nobel Prize for Economics in 1976.
Read the text and answer the questions.
1. Describe the impact of Burton’s decision on the local economy in the west End of London.
2. What actions could the government take to minimize the impact of the job losses on the local economy?
Text 5D
Burton Group
Burton Group, the fashion retailer, sacked more than 1900 people yesterday in an attempt to streamline its bureaucratic head office, remove under-employed shop assistants, and bear down on its large wages bill.
Burton is dismissing 933 buyers, merchandisers, personnel and financial staff and others employed in central functions in five different locations in the West End of London. They represent 25 per cent of the head office workforce. it is also removing about 1000 full-time shop-floor jobs across all its fashion chains, which include Burton, Top Shop, Top Man, Principles, Dorothy Perkins, Evans and Champion Sport.
Burton will inform shop assistants over the next six weeks. It expects to create up to 3000 part-time jobs instead. Most of the casualties will be offered part-time work.
The cost of the redundancies will be $10-$15 million, Burton said. That cost will be paid back in the current year in savings on wages.
Paul Morris, the store analyst with Goldman Sachs, applauded the streamlining, raising, his profits forecast for 2006 from $62.5m to $72.5m. ‘And it will wash its face in the current year.’
Mini presentation
You are asked to give a short talk on a business topic. You have to choose one of the topics from the four below and then talk for about three minutes.
1. Fiscal Policy in Russia.
2. Monetary Policy in Russia.
3.What needs to be changed in Russian fiscal policy
4.Monetary Policy Rules
Essential Vocabulary to Text 5A
Annual budget – ежегодный бюджет
annually – ежегодно
Authorities – органы власти
Budget surplus – профицит бюджета
Circular flow – круговой поток
Deposit account – депозитный счет
Direct tax – прямой налог
Exchange rate – курс обмена валют
Excise duty – акцизный налог
Fiscal policy – налогово-бюджетная политика
Fiscal year – финансовый (бюджетный, отчетный) год
Government spending – правительственные расходы
Income tax – подоходный налог
Indirect tax – косвенный налог
Inheritance tax – налог на наследство
Interest rate – процентная ставка
Key policy – ключевая политика
Monetary policy – кредитно-денежная политика
Money supply – денежная масса (сума денег в обращении)
On behalf of – от имени (к-л)
Standard of living – уровень жизни
Taxation - налогообложение
To affect smth – влиять на ч-л
VAT (value added tax) – налог на добавочную стоимость
Withdrawal – вывод средств
Module 6
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