Inflation is a steady rise in the average price and wage level. The rise in wages being high enough to raise costs of production, prices grow further resulting in a higher rate of inflation and, finally, in an inflationary spiral. Periods when inflation rates are very large are referred to as hyperinflation.
The causes of inflation are rather complicated, and there is a number of theories explaining them. Monetarists, such as Milton Friedman, say that inflation is caused by too rapid increase in money supply and the corresponding excess demand for goods.
Therefore, monetarists consider due government control of money supply to be able to restrict inflation rates. They also believe the high rate of unemployment to be likely to restrain claims for higher wages. People having jobs accept the wages they are being paid, the inflationary spiral being kept under control. This situation also accounts for rather slow increase in aggregate demand.
On the other hand, Keynesians, that is, economists following the theory of John M. Keynes, suppose inflation to be due to processes occurring in money circulation. They say that low inflation and unemployment rates can be ensured by adopting a tight incomes policy.
Incomes policies, though, monetarists argue, may temporarily speed up the transition to a lower inflation rate but they are unlikely to succeed in the long run.
The costs of inflation depend on whether it was anticipated and on the extent to which the economy's institutions allow complete inflation adjustment.
The longer inflation continues, the more the economy learns to live with it. Indexation is a means to reduce the costs of some inflation effects. Indexed wages or loans mean that the amount to be paid or repaid will rise with the price level. Indexation has already been introduced in countries that had to live with inflation rates of 30 or 40 percent for years. And the more countries adjust their economies to cope with inflation, the closer they come to hyperinflation. Indexation means that high rates of inflation are much more likely to continue and even to increase.
Vocabulary:
are referred to as – называются
in the long run – в долгосрочный период, т.е. достаточно длительный для того, чтобы фирма могла изменить все факторы производства
whether – ли (союз, который вводит придаточное предложение)
means – средство, средства (существительное, которое употребляется с глаголом в единственном и множественном числе)
by means of – при помощи, посредством
to mean (meant) – значить, иметь значение, означать
any – 1. какой-нибудь; сколько-нибудь (местоимение употребляется в вопросительных предложениях и после союза if); 2. никакой, нисколько (в отрицательных предложениях); 3. всякий, любой (в утвердительных предложениях)
steady a – устойчивый, постоянный, равномерный
inflationary spiral – инфляционная спираль (ситуация, когда темп инфляции постоянно и быстро повышается)
inflation rate – темп инфляции
hyperinflation n – гиперинфляция (обычно связывается с месячными показателями роста цен примерно на 50% за несколько месяцев подряд и с социальными потрясениями)
cause n – причина, основание
cause v (smth) – быть причиной, вызывать, причинять (что-л)
rather adv – довольно, несколько
explain v (smth to smb) – объяснять, давать объяснения; толковать, разъяснять (кому-л что-л)
account v (for smth) – 1. объяснять (что-л); 2. нести ответственность (за что-л); служить причиной (чего-л); 3. составлять, доходить (до какой-л величины)
accept v – принимать
occur v – случаться, происходить
ensure v – обеспечивать, гарантировать
incomes policy – политика доходов (ставит своей целью контроль над инфляцией путем сдерживания прироста зарплаты и цен)
argue v – приводить доводы, утверждать, доказывать, спорить
argument n – довод, доказательство, аргумент
speed v (smth) (sped, speeded) (up) – ускорять, увеличивать
anticipate v – ожидать, предвидеть
extent n – степень, мера
to some extent – до некоторой степени
adjustment n – регулирование, согласование
adjust v (smth to smth) – приспосабливать (что-л к чему-л); регулировать, устанавливать
indexation n – индексация
cope v (with smth) – справиться (с чем-л)
Exercise 1: Translate the following sentences into Russian using Vocabulary to Text 1:
1 With slow price and wage adjustment, an increase in money supply results in a temporary output rise, but eventually it only causes higher prices.
2 Although inflation may not have been anticipated at first, people learn to adjust to it.
3 It is frequently argued that reducing the average level of inflation means reducing risks of making decisions and plans.
4. Governments and political parties usually have to decide whether they like the redistribution of income caused by inflation.
5 Governments think that tight monetary policies aimed at coping with inflation are desirable. Though these policies may mean higher unemployment and lower output.
6 Industrial economies have to make severe adjustments to cope with the rising energy scarcity.
7 Indexation means that the wages agreement will remain correct for any anticipated inflation that occurred over the life of the contract.
8 The extent of demand, budget constraints and other factors have been found to account for the particular level of government protection for a certain commodity over time.
Exercise 2: a) In Text 1 you've read several words and word combinations with the Russian equivalent «сдерживать». These are: to restrict, to hold back, to restrain, to keep under control. Translate the following sentences using ALL these word combinations and verbs:
1. При плановой экономике рост цен сдерживается прямым правительственным регулированием.
2. Инфляцию можно сдерживать при помощи жесткой политики доходов.
3. Некоторые экономисты считают, что жесткая политика доходов не может сдерживать инфляцию продолжительное время.
4. Задача правительства – сдержать рост темпов инфляции.
b) In English the Russian verb «принимать» has several equivalents, each of them having its peculiarities in usage and meaning. The most general is to receive. The verb to accept means принять с готовностью, с желанием. The verb to adopt is used when something usual is to be changed. Use these verbs in the following sentences:
1 The business community (деловые круги) expect the recently formed government to... a new fiscal policy.
2 An individual firm has to... prices existing in the market.
3 It is argued that the Russian Parliament has not... a clear programme of land reform so far.
4 The manufacturers... the new tax rates with satisfaction.
5 Although the economic study had been done at the request (просьба) of the government, the latter did not... the recommendations the economists arrived at.
6 The Vice President was expected to... additional responsibilities.
7 Households are known to... incomes in the forms of wages, interest, rent, and social benefits.
8 Immigrants are... mainly in the countries that need either unskilled (неквалифицированный) workers or workers with human capital unavailable domestically.
Exercise 3: Change the given Russian words and word combinations into their English equivalents:
1 The economists discussed several reasons why past (политика доходов) had been unsuccessful.
2 State planning and central control of the economy often (означает) that the state has monopoly of important goods and services.
3 Until prices and wages (приспосабливаются) to the new (жесткой монетаристской политике), real aggregate demand will fall. Economists (утверждают) that this situation can last for a period of years rather than months.
4. There are different policies aimed at (ускорение) the process of (регулирования) of prices and wages.
5 (Инфляционная спираль) is a situation when inflation gets worse and worse, because higher prices result in demands for higher wages, and higher wages increase costs and so (вызывают) higher prices.
6 Money is any generally accepted (средство) of payment.
7 Political figures and economists (высказываются) for restraining (рост денежной массы) and widely discuss the mechanisms through which this (происходит).
8 Prices of goods and resources are determined to (обеспечить) the production of the goods and services that society demands most.
9 Large industrialized countries (составляют) a large proportion of international trade.
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