– бедность
proposition – утверждение, предположение
recession – спад в экономике
relative – относительный; здесь : относительно
slow – медленный; замедлять
stable – стабильный
sustain – поддерживать
value – ценность, стоимость
worthless – обесценившийся
money growth – рост денежной массы
speed up – ускорять
range over – здесь : превышать
percentage point – процентный показатель
on average – в среднем
compound annual rates – совокупный годичный показатель
in excess of – превышающий
interest rates – процентные ставки
foreign-exchange value – обменная стоимость
flight from money – бегство от денег
tax rates – налоговые ставки
foreign decisions – решения относительно международных проблем
trend rate – обычный для экономики показатель
well aware – хорошо понимающий, хорошо сознающий
Географические названия:
Chile – Чили
Israel – Израиль
Brazil – Бразилия
Argentina – Аргентина ( также the Argentine )
Italy – Италия
Japan – Япония
Turkey – Турция
Vietnam – Вьетнам
Yugoslavia – ЮгославияExercise 2
Answer the questions:
1. Under what general conditions is inflation produced?
2. What does a government have to do if it wants to put an end to inflation?
3. Why did the Fed increase money growth in the US in the late sixties?
4. What is the relation between inflation and the interest rates?
5. Why do people «fly from money» in the periods of high growth of money?
6. What factors play key roles in the currency depreciation process?
7. What is the relation between inflation and output?
8. In what way do deflation and output interrelate?
9. What is the trend output rate?
10. What effect does monetarism have on real economic policies?Monetarism in Action
A little old lady sold pretzels on a street corner for 25 cents each. Every day a young man would leave his office building at lunch time. As he passed her pretzel stand, he would leave her a quarter, but would never take a pretzel. This went on for more than five years. The two of them never spoke. One day as the young man passed the old lady\'s pretzel stand and left his quarter as usual, the pretzel woman spoke to him: «Sir, I appreciate your business. You are a good customer, but I have to let you know that due to inflation the price of pretzels has increased to 35 cents.»
– Why do Economists provide estimates of inflation to the nearest tenth of a percent?
– To prove they have a sense of humour.
Inflation allows you to live in a more expensive neigbourhood without moving.
Слова и выражения:
appreciate – высоко оценивать
estimate – оценивать ( обычно заранее ), прогнозировать
pretzel – маленький соленый хрустящий крендель
quarter – монета в 25 центов
pretzel stand – лоток с кренделями
the nearest tenth of a percent – ближайшая десятая доля процента
sense of humour – чувство юмора
Exercise 3
Answer the questions:
1. Why didn\'t the young man take a pretzel?
2. What was the inflation rate in the five years the story about pretzels is speaking of?
3. Why is it possible to live in a more expensive house in the times of inflation?Monetary Policy
Monetary policy is the most important instrument of government policies. It is carried out by the central bank whose actions are affecting economic activity.
Monetary policies are on the demand side of macroeconomics. They stimulate or discourage spending on goods and services. Monetary policy is used to damp, perhaps even eliminate, fluctuations in aggregate demand. It is not a supply-side instrument. Central banks have no tools to affect productivity and real economic growth.
If a central bank is carrying out expansionary monetary policy, the aggregate spending (purchase of goods and services by consumers, businesses, and governments) increases. In its turn, these new demands raise output and employment, as well as prices. They also speed up inflation.
A central bank is usually called a «bankers\' bank», whose customers are not ordinary citizens but commercial banks, savings banks, savings and loan associations, and credit unions. They hold deposits in and borrow from the central bank and are supposed to follow the central bank\'s reserve requirements and other regulations.
Banks are to hold reserves equal to prescribed percentages of their deposits. These reserves are regularly tested, reserve tests being the main tool of monetary policy. In order to pass the reserve tests commercial banks need the central bank\'s funds, and so, the latter controls the supply. To acquire reserve balances banks sell their securities to the central bank. In other cases the central bank can extinguish reserve balances by selling its securities to commercial banks. These open-market operations are the instrument of monetary policy. The central bank open-market operations are interventions in this market.
Another tool of central bank policy is the setting of the discount rate. Money rates are costs of funds that the banks can lend to their customers. When discount rates go up, commercial banks have to raise their lending rates. The commercial banks\' customers then borrow and spend less, which affects business throughout the economy. So, controlling money markets and banks, the central bank influences the whole financial system, this influence affecting the national economy in general.
Слова и выражения:
damp – угнетать
eliminate – уничтожать, искоренять
expansionary – экспансионистская
extinguish – уничтожать, гасить
latter – последний
( из упомянутых )
lend – ссужать, давать взаймы
ordinary – обычный, ординарный
test – тест; тестировать
demand side – относящийся к спросу ( букв .: стороне спроса)
supply-side – относящийся к предложению
speed up – ускорять(ся)
savings bank – сберегательный банк
savings and loan association – кредитно-сберегательная ассоциация
credit union – кредитный союз
hold deposits – держать депозиты
reserve requirements – резервные ограничения
equal to prescribed deposits – равный предписываемому объему депозитов
in other cases – в других случаях
open-market – относящийся к открытому рынку
interventions – интервенции
discount rate – ставка рефинансирования
Exercise 4
Answer the questions:
1. What financial institution is monetary policy carried out by?
2. What side of macroeconomics (the demand or the supply side) are the monetary policies on?
3. What is the main objective of the monetary policy?
4. What happens in case a central bank carries expansionary monetary policy?
5. What financial institutions are a central bank\'s customers?
6. What is a reserve test?
7. What do commercial banks have to do in order to acquire reserve balances?
8. How can a central bank extinguish reserve balances?
9. What is a discount rate?
10. How does the setting of the discount rate affect the national economy?What Is Keynesianism?
1
– Why is a physician held in much higher esteem than a Keynesian economist?
– A physician makes an analysis of a complex illness whereas a Keynesian economist makes you ill with a complex analysis!
2
If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.
Слова и выражения:
physician – врач, терапевт
whereas – в то время как
esteem – уважение
hold in much higher esteem – питать большее уважение
make ill – делать больным
in which case – в коем случае
Keynesian Economics
Keynesian economics is a theory of total spending in the economy (called aggregate demand) and of its effects on output and inflation. The main points of the theory are as follows.
First, the Keynesians think that aggregate demand is affected by a great variety of public and private economic decisions. Of the public decisions most important are monetary and fiscal measures taken by the government and the central bank (i.e., spending and tax). Quite recently Keynesians believed that monetary policy was powerless, and advocated fiscal measures as the means to fine-tune the economy. Today the majority of both Keynesians and monetarists believe that both fiscal and monetary policy affect aggregate demand.
Secondly, changes in aggregate demand have their greatest short-run impact not on prices, but on real output and employment. The famous Phillips curves show that inflation changes only slowly when unemployment changes. Monetary policy produces real effects on output and employment only if some prices are stable and do not adjust instantly.
Thirdly, Keynesians suppose that prices and, especially, wages respond slowly to changes in supply and demand, resulting in shortages and surpluses, especially of labour.
Contrary to monetarists\'s view Keynesians do not think that the typical level of unemployment is ideal. With the