5 Banks lend money, but they never
borrow money. TD/FD
6 At the end of each day banks usually have less money than
they need. TD/FD
Before you listen
Discuss the following with your partner.
-* Read the summary which explains what open market operations are. Try to complete the gaps with words from the box.
■ borrow ■ decreases ■ lend
■ reserve ■ selling ■ shortages (x2) \_____ у
The government can create
(1)........................ of money for commercial
banks by (2).......................... securities.
Securities are a way to (3).............................
money to the government at an agreed rate of interest. This is what is known as open market operations. When people buy securities the money
supply (4)........................... This causes
(5)........................ in the commercial banks'
(6)........................ accounts, so they have to
(Z)........................ money from the central
T |
bank.
С Listening
Now you're going to hear someone talking about open market operations. Listen and check your answers.
-> Economists sometimes talk about economic shocks.
-*■ What do you think this might mean?
-* What might cause a shock to the economy?
В D Vocabulary
Complete each sentence with a word or phrase from the box.
■ disrupt ■ go on strike
■ gross national product л knock-on effect
■ miner к sharply stagflation
■ unrest
1 The total value of a country's goods and services
consumed in one year is called the....................
II something done affects something else, which then again affects something else, we call this a
If people are not happy with their government,
there may be political......................
Being a................... and digging underground
to bring out minerals, must be very dangerous.
Some people.................... as a way of showing
their unhappmess with work conditions or pay.
If we have.................... there is a sharp drop
m production of some goods causing their price to rise.
A fallen tree can.................... the electricity
supply to thousands of homes.
Prices have risen.................... but unfortunately
wages haven't.
В Reading 2
Economic shocks
Governments try their Ixst to control economic growth, hut there arc some tilings that nobody can control |-or example war. political unrest in another country oi simply a change in the weather can all affect an economy in unexpected ways. Sometimes the effect of these events will cause a sudden shift in aggregate demand (>r aggregate supply. This is an economic s/iocfe.
fhe causes of ikitiand-suk вкоскв may he events in the local economy [domestic demand) or events abroad (external ifemunth. An example of domestic demand was when house prices in the IK dropped suddenly in the late L9808. because a home is one of the largest assets most people have, homeowners suddenly felt that they were not as wealthy as they had been. As a result, people started to spend less. This had a knock-on effect on the rest of the economy. Aggregate demand fell sharply and the gross national product tell with it.
ИасааШап Gaiaa to Economics Uait ti 79
External demand-side shocks happen when a country relies heavily on exports or on foreign investment. The Great Depression in the W.Vis is a classic example of this. At the time of the Great Depression, many countries exported their goixls to the 1'SA. and many other countries relied on American money for investments to help their industries grow. When the American economy collapsed, it had disastrous effects for other economics, too.
Supply~side shocks occur when the supply of goods is disrupted. If the commodity is an important raw material for many industries, then the supply from these industries will drop dramatically. When raw materials are in short supply, they become more expensive. This will cause an increase in manufacturers' variable costs Manufacturers will then have to increase their prices.
Imagine, for example, that miners in the iron industry went on strike. The supply of iron and steel to manufacturers would Ik- disrupted. This Would mean a drop in supply of all sorts ol" goods, from teaspoons to aeroplanes. As you can see from figure 2 below, the sudden drop in supply will cause a shift in the supply curve. As a result, prices rise even though aggregate demand stays the same. This unfortunate situation is called stagflation.
Figure 2: Aggregate Supply Shock Mt«tt>» shock
Fall in output
Real National Output
The gocxl news, however, is that sometimes positive supply-siik- shocks happen. These occur when there is a sudden increase in supply while demand stays the same This can happen when new technology makes the production of materials or products much easier or more efficient. The result - prices fall and output grows.
I? E Comprehension
Now read the text again and choose the best way to finish each sentence.
An economic shock causes... prices to rise, a demand or supply shift, demand to fall.
Demand- side shocks of a domestic nature...
are caused by events in another country.
are only caused because of a fall in
property prices.
are caused by events at home. The Great Depression is an example of... A an external demand-side shock.
an external supply-side shock.
a domestic demand-side shock.
Supply-side shocks can cause... A a fall in variable costs.
an increase in variable costs. С a fall in faxed costs.
Stagflation is when...
prices fall but output rises, prices rise and output rises, prices rise and output falls.
A positive supply-side shock is when... prices fall but output rises, prices rise and output rises, prices rise and output falls.
Before you listen _
Discuss the following with your partner.
-» An embargo happens whew a country stops trading with another. In 1973, there was an embargo on oil. What effects do you think this had on the worlds economies?
В F Listening 4)))
Now listen and complete the notes.
1 After..................... industrial nations enjoyed
economic growth.
2 They used huge amounts of...................
3 A lot of oil came from countries m the...............
4 The embargo began on the....................., 1973.
5 Prices of oil rose to................... times higher
than before.
6 The New York Stock Exchange lost...................
dollars in a few weeks.
2 The embargo ended in.....................
80 4*iniili«Guide to EconcTitk Unit IJ
G Speaking
Discuss the following with your partner.
Look at figure 1 on page 78 and figure 2 on page 80 again.Take turns explaining to your partner what the diagrams show.
Task
Work in groups of three or four. Discuss the effects that these events might have on the economy in your country. Use phrases to describe economic shocks as seen in text 2. Use the space below to make your notes.
-* coal miners go on strike
large amounts of oil and gas are discovered in Australia
the government provides a free Internet service to anyone who wants it
Pronunciation guide Equilibrium efcw i rbi tarn Asset asset Homeowner is i я «вЛ г) Disastrous d ■ '> Stagflation ч.е iliei|n Embargo mi К |
the interest rate doubles in just a few weeks в* H Writing
Write an essay describing how interest rates are set in the money market. First read through text 1 again and make notes.Then use the plan to help you organise your essay.
Essay
INTRODUCTION
What are interest rates and why are they important for the economy?
PARAGRAPH 1
What does the money supply consist of? What is demand and supply m the money market?
PARAGRAPH 2
How is the interest rate set by the money market?
PARAGRAPH 3
How does the government try to influence the interest rate?
CONCLUSION
Sum up in a couple of sentences what you have said in paragraphs one to three.
Before you read____
Discuss these questions with your partner.
Inflation is the rising cost in prices over time. ■§ Does your country surfer from inflation? ■# Why do you think this is?
P A Vocabulary
Choose the correct word.
1 When something is in the headlines / articles, it is an important story in the news.
When parents are unemployed it is difficult for a family to make ends touch / meet.
3 The cost / price of living m cities like London and Tokyo is very high.
i People prefer to shop in supermarkets because they find a wide range / amount of goods there.
■i The retail / shopping industry includes shops, supermarkets and department stores.
In statistics, when a number is valued / weighted it is multiplied by another number to show its importance.
7 The victim / culprit is the person or thing that is responsible for doing sometliing bad.
8 It is difficult for old people to manage / cope with Irving on a small pension.
9 In maths, a/an equation / formula is a sum which is equal on both sides.
10 The speed that something travels at is called
velocity / capacity.
IBReading 1
Inflation
Injhitimx is an overall Increase in prices over a certain period ol" time. It's also a worry for anybody who's trying to make ends meet, and a headache lor many governments. The rate of inflation is often in the headlines, llowe\ei. Inflation isn't really news. In most of Europe, l"i example, prices have risen year after year for at least the last 5(> years. Deflatitm (overall deer* Si in price--' docs happui ■ iceasionally. but the trend is mostly for the cost of Ii\ing (>> increase.
There are lots ol ways to measure inflation. (>ne of the most popular ways is the i\t<til price index This is calculated by recording increases in price for a range of goiuls ami services This is sometimes called a huski.4 o/jgQOX&r. Some of the goods are weighted more heavily than others because they are more important, for example, food will be Weighted more than the cost of a cinema ticket, because a 5% increase in food 's more important than a 10% increase in the cost oi seeing a film. Inflation is worked out from an average of all the price increases in the basket.
82 И a r ra ■ 11 a a G u ■ d a 10 Economic* Uao ii
Inflation can happen for a number of reasons, bul economists say there are two main eulpriis. i lu si are demand-pull inflation and i-nst-push inflation. Demand pull nidation ean happen when the economy is growing last. Aggregate demand begins to grow faster than suppliers ean eope with. This causes.1 shortage, ami prices rise. At first, customers may be able to pay the higher prices.. 11 ill demand jjTCWB again. This forces prices up even more, and the cycle continues.
< hie of the characteristics of demand-pull intuition is that there is often too much money going round the economy Ibis is explained by the quantity theory ol rnonej This theory uses the following equation-money supply x velocity = average price I 11.111s.1cli. ins
W/oenv is the Speed that money is passed on from one person to another. Some economists чау that velocity and the numlvr of transactions don't really change. The only things that change in this equation are the money supply and average prices. This means thai when the money supply increases, prices will increase too. For this reason, printing money is rarely;i solution for economic crises.
1 lost push Inflation, on the other hand, oceurs when prices rise without an increase in demand This happens when suppliers' variable costs increase sharply. For example, workers may demand higher wages or raw materials ni;i\ become more expensive. Producers then pass these increases on to consumers by raising prices. So. as usual, we are the ones who pay!
В Comprehension
Now read the text again and match each paragraph with the correct heading.
PARAGRAPH 1...........................
PARAGRAPH 2...........................
PARAGRAPH 3....................
PARAGRAPH 4...........................
PARAGRAPH 5...........................
A Measuring inflation 1 Too much cash
The effects of aggregate demand on inflation D Production cost changes
Inflation is a fact of life
Before you listen
Discuss the following with your partner.
-» High inflation affects the whole
economy in different ways. How do you trunk inflation affects the people and organisations listed below? Try to match the people and organisations 1 -4 with the effects A-D.
A lose money on loans
В can't get investment
С are not so competitive
D can't buy as much with their money
Look at the photo and answer these questions:
-» What are these people doing?
-* How do yon think they leal? Why?
-* Why do you suppose thoy are in this situation?
D Vocabulary
Complete each sentence with a word or phrase from the box.
■ can't be bothered * contracts
■ freelance * mobility I obsolete
■ region ■ relocates ■ retrain
■ shipyard ■ tastes
1 People's................... ш clothes change with
fashion and with their age.
If you.................. to do something, you just
don't feel like doing it.
i When something..................... it gets smaller.
-I A.................. is an area of a country.
When a company.................... to another part
of the country or abroad, many workers lose their jobs.
6 workers are not employees for a
company, but are self-employed.
If something is..................., it no longer exists
because it isn't needed anymore.
II you lose your |ob due to mechanisation, you
may have to go to college and.................... for
something else.
j A.................... is where ships are built.
В Reading 2
Unemployment
There will always lx- a certain aim null of unemployment in the economy. When economists talk alxnityh// employment they mean that everyone who can work ami wants to work has got a job Able workers who are not working are simply not happy with the salaries that are offered - or just can't Ik- bothered!
However, economies rarely reach lull
employment. There are a number of reaeoHa
lor this, and a number of different types ol unemployment, t)ne of these is cwlivul unemployment. This type of unemployment varies with tin growth and re-cession cycle of the economy As the economy grows, demand for labour grows and unemployment falls t\i the economj contracts, unemployment grows
A second kind of unemployment is sinirtuml unemployment. This occur? when changing public tastes or advances in technology cause a fall in demand for some types of work. For example, computer technology has revolutionised the priming industry, and many traditional printers' jobs have become obsolete..Sometimes whole regions of a country suffer from high structural unemployment. The north-east of KngJsjtd, for example, was famous for many years for its shipbuilding industry. Competition from abroad
 |
How long structural unemployment lasts will depend on two things. Firstly, how easily the workforce can retrain for new jobs. This may be difficult for older workers who lind it hard to learn new skills. There is also the question of who pays for the training. The second issue is mobility. Workers who are able to relocate easily to another part of the country will find new jobs more quickly.
There are two other kinds of unemployment which we should mention here. These are less serious, perhaps, but they are still difficult for governments to get rid of. The first is frietional unemployment. This is a natural kind of unemployment that occurs when someone leaves a job and is looking for another one that suits them. Frietional unemployment often happens because people want to leave their job in order to change careers. Few tK'ople walk straight into another job. However, when the economy is in recession, frietional unemployment will be more common because jobs are harder to lind.
The second kind is seasonal unemployment Some industries have busy periods and periods where there is no work at all. Some freelance farm workers, for example, get most of their work in the spring and summer. Like structural unemployment, seasonal unemployment can affect whole regions of a country. Areas that rely on summer tourism, for example, suffer serious unemployment during the autumn and winter months.
■ E Comprehension
Now read the text again and choose the best answer or answers for each question.
Which kind of unemployment happens regularly every year? A cyclical unemployment
structural unemployment
frietional unemployment
seasonal unemployment
Which kind of unemployment happens because of advances in technology? A cyclical unemployment
structural unemployment С fricUonal unemployment seasonal unemployment
Which kind of unemployment may happen because someone wants it?
cyclical unemployment
structural unemployment
frietional unemployment
seasonal unemployment
Which kind of unemployment happens because of changes in economic growth?
cyclical unemployment
structural unemployment С frietional unemployment
seasonal unemployment
Which kind of unemployment happens in particular parts of the country? (2 answers)
cyclical unemployment
structural unemployment
frietional unemployment
seasonal unemployment
Before you listen___
Discuss these questions with your partner.
The chart below shows the trends in unemployment in two countries. Look at the chart, and answer these questions.
-» What does the vertical axis show?
•# What does the horizontal axis show?
•f What two countries are shown?
-» How many years are shown?
-* Are there any similarities between the curves for the two countries?
If Listening
Now listen and write the correct percentages on the chart.The first answer has been done for you.
—■—Germany USA
1995 1N7 1999 2001 2003 2905
Macmilljn Guid* ta Etooeraitt U» ' l 16 85
US G Speaking
Discuss these questions with your partner.
-» Is inflation а problem m yovu country? Why Why not?
How does unemployment affect people psychologically?
What kind(S) of unemployment do you think affect the aiea whore you live?
Can you talk about the history of unemployment in your country since the 70s like the diagram in exercise Г Listening on page 85?
Task
Work in groups of three or four. Imagine you and your friends are running the country.Things are not going well! Here are some of your problems.
imemploymont is high (12%)
- the rate of inflation is also high
workers are going on strike for higher wages
your large steel industry is losing money because of foreign competition
Talk to each other and decide which of these problems is the most important. Then decide what you can do to make things better. In your discussion think about:
• retraining / relocation of workers
I cost-push inflation
' the money supply
Use the space below to make your notes.
Notes:
в? H Writing
Imagine you are a shipyard worker who has just become unemployed because the government has decided to close down the shipyards.Write a letter to a friend explaining what's happened and how you feel about it.
Informal letter
Use this plan to help you.
Greeting
PARAGRAPH 1
Thank your friend for his/her last letter. Respond to a piece of news he/she had in his/ her letter.Tell your friend your bad news.
PARAGRAPH 2
Explain how yon lost your job. Explain what the government's reasons were for closing the yard (inflation made exports uncompetitive).
PARAGRAPH 3
Explain how you feel about losing your job. How is it affecting you and your family?
PARAGRAPH 4
Explain what you're planning to do (retrain / relocate?).
Sign off
Write 100-140 words
Pronunciation guide
Culprit kslpni. Velocity \.fli r Deflation >: nViJiv Equation fkwei г Freelance nl Revolutionise к лл|-,г.|.->п;н/ Shipyard |ip, sd Inflation u. I. I:
lo EioaomKt Uall la
Revision Vocabulary Units 13 to 16
Circle the word in each group which does
not fit.
kinds of money
hat, commodity, fake, intrinsic
things yon can do in a bank
deposit, barter, borrow, make a withdrawal
kinds of inflation
demand-pull, exchange rate, cost-push, high
kinds of unemployment
target, structural, cyclical, seasonal
economic problem
shortage, stagflation, mobility, depression
other words for money
cash, exchange, currency, coins
д r*\
Now write six example sentences using as many words as possible from this exercise.
В Complete the crossword with words we use in economics.
V
ACROSS
3 People buy these from the government as a way to invest their money.
2 The money that a bank keeps in its account at the central bank.
8 A bank loan given to house buyers.
9 Governments try to get the economy working so it uses ail its resources.
10 This is another word for fake money.
DOWN
1 This is the cost of borrowing money.
2 A kind of income tax system.
4 The whole income of a country is called the gross national
5 When money is paid back.
6 The oil crisis of the 1970s caused an economic
G Read this letter and fill in the gaps with the words and phrases from the box.
■ allowance ■ cash till Ш knock-on effect
■ lend ■ make ends meet ■ obliged
■ plus ■ purse ■ relocated ■ transport
Dear Gill.
How are you getting on at university? As you know, rather than studying, 1 decided to get a job but you will bo surprised to hear my news.
I didn't take the job I was offered in the
(1).................... department because 1 was also
offered another job in a bank: You may well bo wondering why and the answer is simple - money!
It would have been hard to (21.................. on
the salary the first job paid. As a single person my
personal (3).................... isn't very much so I
have to pay a lot of tax. Being paid well is always a
(4).................... in any job! Added to that. I'm not
(5)................... to work in the city centre which
is something I'd prefer to avoid and neither do I
run the risk of being (6)..................... I'd hate to
have to move.
Anyway, the position I have is working at a
(7).................... As you can imagine. I see a lot of
things m a day - it's never boring. Take yesterday. Well, an old lady came to my counter, opened her
bag and took out her (8)................ Then she
began to count a huge pile of coins and notes in front of me. This went on for a while, then the man behind her started to complain. Of course that
had a(n) (9).................... and soon the whole
bank was going crazy, all the customers arguing.
Throughout all of this the old woman continued her
counting! Well, she deposited her life savings and
the customers calmed down. 1 must say. perhaps
there's a bit too much excitement sometimes. I may
move to the loans department in the future. It might
be easier to 110).................. people money!
Anyway, let me know how you're getting on.
Love.
Helen xxx
Murnillin q n i a» to Economics RtvitieaVccabuiarr Units ■ ■ If 87
Before you read
Discuss this question with your partner.
-* What do you think makes an economy grow?
д Vocabulary
Choose the correct answer А, В or С from the list opposite.
In many ways hie for previous................... was
much more difficult.
Home................... has increased m many parts
of Europe.
When the economy grows dangerously fast, we say
it...............
; A................... is when the economy is growing
quickly.
.................. are fairground rides like trains that
go up and down very fast.
I................... in technology in the last 30 years
has been incredible.
1.................. is when you get better after
something bad like an illness - or economic depression.
When you................... you fight or work hard
for something.
Don*t buy anymore milk. We've got...................
m the fridge.
A fortunate person is very.....................
Mountain climbers are people who enjoy a
The................... is the government minister
responsible for the economy.
3.................. growth is growth that can continue
for a long time.
1 *!
ownership boils over
4 A bang
roller-coasters
growth discovery overheat plenty
10 A hard-working
11 A challenge
12 A economist
sustainable
В Reading 1
Economic growth
Many millions о i' people enjoy a quality of life today that previous generations oould not have dreamed of. Home ownership, private ears and holidays are now standard for most families in industrialised countries. And yet at the same time, billions of people in other countries live without even clean drinking water. How can this be? The answer is that the fortunate lew live in countries with sustained economic growth.
An economy is grow iug when the gross national product is increasing year after year. When economists calculate economic growth, though, they must take into account the effects of Inflation. For example, imagine that the gross national product of a country increased from #500 billion to #510 billion from one year to another. That's an increase of two per cent in output. Very impre\ssive! However, if the rate ol inflation was two |xt cent, then there has been no real growth at all.
Дата добавления: 2015-11-04; просмотров: 25 | Нарушение авторских прав
| <== предыдущая лекция | | | следующая лекция ==> |