ТЕКСТИ ДЛЯ САМОСТІЙНОЇ РОБОТИ СТУДЕНТІВ

TEXT 1

Read the article and answer the questions.

1. How can the notion of inflation be defined?

2. What is generally understood by the purchasing power of currency?

3. What type of inflation can be described as follows: “Inflation resulted from increases in the cost of petroleum imposed by the member states of OPEC. Since petroleum is so important to industrialized economies, a large increase in its price can lead to the increase in the price of most products”?

4. What is aggregate demand made up of?

5. What kind of inflation can be best described as "too much money chasing too few goods"?

6. When does built-in inflation happen?

7. What other causes of inflation are known to you?

WHAT CAUSES INFLATION?

Inflation is a steady increase in the prices of goods and services in a country, usually measured in terms of a specific annual percentage. This decreases the purchasing power of currency by reducing the amount of goods or services a person can get for the same amount of money. Here we will mostly concentrate our attention on demand-pull, cost-push, and built-in inflation.

In the case of demand-pull, inflation is caused by aggregate demand being more than the available supply. Aggregate demand is made up of consumer spending, investments, government spending, and whatever is left after subtracting imports from exports. Factors that commonly lead to demand-pull inflation include a sudden increase in the amount of money in an economy and decreases in taxes on goods, which leaves consumers with more disposable income. Since people have more money to spend, manufacturers raise the general prices of goods and services.

Another common cause of demand-pull situations is an increase in consumer spending because of increased optimism caused by a boom in the economy. When people are more confident about their financial future, they tend to spend more, contributing to a rise in prices.

Cost-push inflation occurs when manufacturers and businesses raise prices as a result of shortages, or as a measure to balance other increases in production costs. An example of this is rising labor costs. An increase in the taxes imposed on goods may lead to a cost-push situation as well, since suppliers transfer the costs to consumers. This also often happens when one or several companies have a monopoly in the market, and decides to raise their prices above demand to increase their profit.

Built-in inflation happens as a result of previous increases in prices caused by demand-push or cost-pull. In this type of situation, people expect prices to continue to rise, so they push for higher wages. This raises costs for manufacturers, which then raise the cost of goods to compensate, causing a cycle of inflation.

Other causes of inflation include wars, natural disasters, and decreases in natural commodities. Wars often result in this situation as governments must recoup the money spent on them. Natural disasters may have a similar effect by disrupting the usual cycle of the production process. This creates a temporary scarcity as people scramble to purchase the limited supply of goods, causing the prices to skyrocket. Decreases in natural commodities, like helium or oil, can act in the same way.

Match the words in italics from the text to their synonyms below:    

1. To derange

2. Producer

3. To reduce

4. Calculated

5. Commodities

6. Cost

7. Duties

8. Deficit

9. To compensate

10. Profit

11. To buy

12. Buyer

13. Growth

14. Pay

15. Expenses

TEXT 2

Read the article and answer the questions.

1. What does macroeconomic stability represent?

2. What is consumer price inflation? How can it be tracked?

3. What indices of inflation are characteristic of macroeconomic stability?

4. What does gross domestic product represent in terms of economic stability?

5. Is there any connection between gross domestic product and the level of employment?

WHAT IS MACROECONOMIC STABILITY?

Macroeconomics is the study of broad economic factors that affect an entire nation or the nation’s economy. Macroeconomic stability represents specific factors that lead to a strong and stable environment in which individuals and companies can engage in transactions. A few of the most important factors include consumer price inflation, gross domestic product growth over multiple business cycles, and positive changes in unemployment. Other factors can also play an important role in macroeconomic stability and often relate to a government’s interaction with the national economy, such as monetary and fiscal policy.

Consumer price inflation is a total annual change in the prices of goods most consumers purchase as part of their normal standard of living. Many economies track inflation using a basket of various consumer goods. Each item in this fictional basket of goods represents a portion of the economy’s production industries. Each year, economists review the market prices for these items to determine how much increase there was for each item. Macroeconomic stability leads to a little or almost no increase in inflation, resulting in the currency’s purchasing power remaining fairly stable.

Gross domestic product represents the market value for all final products a single nation produces within its borders. In terms of macroeconomic stability, gross domestic product needs to increase at a respectable pace each year. In many cases, five to six percent annually is good, stable growth for an annual period. Increases in a nation’s gross domestic product allow its citizens to enjoy a stable or better standard of living. A country can also strengthen its economy as constant growth in the national economy can lead to better exports and the ability to increase money naturally in the domestic economy. Most countries measure their gross domestic products over each quarter in an annual period.

Strong economies often have positive effects on a country’s employment levels. As the gross domestic product increases in a nation, more jobs often come available. This occurs because companies in the economy need to make investments in their operations. More jobs typically lead to expanded growth and the opportunity for all individuals to improve their livelihoods. Macroeconomic stability can also shift labor resources from one industry to another as companies alter production to meet consumer demands.

2. Find the English equivalents for the following words and word combinations  in the text:

1. Макроекономічна стабільність

2. Інфляція споживчих цін

3. Приріст внутрішнього валового продукту

4. Економічний цикл

5. Безробіття

6. Народне господарство

7. Грошово-кредитна та податкова політика

8. Споживчий кошик

9. Ринкові ціни

10. Інфляція

11. Купівельна сила валюти

12. Ринкова вартість

13. Кінцевий продукт

14. Внутрішня економіка

15. Трудові ресурси

16. Споживчий попит

TEXT 3

1. Read the article and decide whether the statements are ‘true’ or ‘false’.

1. Socialism and communism are legal doctrines.

2. Socialism and communism are identical in their treatment of economy and society.

3. The means of production are privately owned in both systems.

4. Many people consider socialism to be a "higher" or more extreme form of communism.

5. Under communism, all people are considered equal.

6. Capitalists assert that wealthy people who own the means of production are able to exploit workers.

7. In socialists` terms, socialism can develop out of a capitalistic society.

8. In socialists` terms, capitalism should be combined with a centralized planning system.