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ECONOMIC ENGLISH FOR UPPER INTERMEDIATE

UNIT 10

ECONOMIC POLICY

OBJECTIVES: students become familiar with the specific macroeconomic vocabulary and concepts. if clause II.

I. Study the following items in groups and give the answers: 1. What are the origins of the word "policy" and what is its meaning? 2. Did it change its meaning nowdays? 3. What it is to be understood by economic policy? 4. Is it necessary for a government to be clear over the policy objectives that are to be pursued? The stance the any government takes towards any aspect of economic activity will be included within the term "economic policy". The unit will concentrate on what is termed macroeconomic economic policy - those policies that impinge upon the operation of the economy as a whole. Particular attention will be paid to monetary policy as long as nowdays governments attach a considerable importance to it, as it is a main element of macroeconomic policy. It is nevertheless a point worth making, that the purpose of economic policy is to attain objectives. Only if those objectives are clearly identified, can the design, implementation and evaluation of economic policy be conducted. The conventional four objectives are usually held to be: a high and stable level of employment. A certain level of unemployment is appropriate for the efficient operation of a changing economy, since, it will take people a period of time to switch between jobs, or retrain for a new job. a low and stable rate of inflation, which is considered a necessary objective of economic policy, in order to try to avoid the costs associated with inflation

ECONOMIC ENGLISH FOR UPPER INTERMEDIATE

a high rate of economic growth, since economic growth provides for the increase over time in the living standards of the population a satisfactory balance of payments which implies that a country is able to pay its international terms and to purchase imports, while a surplus would imply that the stock of overseas assets is, in addition, increasing. a satisfactory distribution of income and wealth is put forward as a fith objective. The distribution of income refers to either individuals (there should be neither very rich nor very poor) or regions. II. Summarise the main objectives of the economic policy in a written form.

III. Forms of economic policy Find a title for each paragraph: ...................................... The purpose of monetary policy is to control some measures of the money supply an/ or the level and structure of interest rates. The importance attached to it within the government's policy package will depend upon its view of the operation of the economy and upon the decision it has reached regarding the priority given to different objectives. ..................................... Fiscal policy is concerned with decisions regarding the level and structure of government expenditure and taxation. It has traditionally been regarded as having its impact through its influence on the level of aggregate demand within the economy; an expansionary fiscal policy would involve increasing government expenditure relative to taxation in order to boost the level of spending within the economy and there by bringing more people into employment and enhancing economic growth. Alternatively, a contractionary fiscal policy would involve raising taxation relative to government expenditure, with the purpose of reducing aggregate demand and lowering inflation and the demand for imports - though with the side-effects of lowering employment and growth. .................................... Exchange rate policy involves the targeting of a particular value of the exchange rate. One of its major purpose is to influence the flows within the balance of payments, and may perhaps be used in conjunction with other policies such as exchange control, import tarrifs and quotas. ..................................... Prices and incomes policy is intended to influence the rate of inflation by means of either statutory or voluntary restrictions upon increases in wages and/or

ECONOMIC ENGLISH FOR UPPER INTERMEDIATE

prices. The range of prices and incomes over which such a policy may prevail, and the degree of statutory control involved, is subject to considerable variation. .................................... National debt management policy is concerned with the manipulation of the outstanding stock of government debt instruments held by the domestic private sector with the objective of influencing the level and structure of interest rates and/or the availability of reserve assets to the banking system. It involves decissions regarding the issue of new government securities and monetary policy has as one of its concerns the level of interest rates. IV. Match the words with the definitions bellow: a) regulation; b) deregulation; c) monetarism; d) infrastructure; e) recession; f) intervention; g) inference; h) supply-side theory; i) laissez-faire; j) crowding-out. 1) the concept in economics suggesting that a reduction in private expenditure results from an increase in government expenditure 2) the removal of conrtrols imposed by governments on the operation of markets 3). (social overhead capital) - the goods and services ussually requiring substantial investment, considered essential to the proper functioning of an economy, for exemple roads, railways, sewerage and electricity supply constitute essential elements of a community's infrastructure. 4). a school of thought in economics that places money at the centre of "macroeconomic policy. Based on the quantity theory of money, and first expressed by the Scottish philosopher David Hume (17ll-76), it relates the price level to the quantity of money in the economy. 5). a slowdown or fall in the rate of growth of GNP. A severe recession is called a depression. 6). an economy in which government intervention is kept to a minimum and market forces are allowed to rule. The term is attributed to J.Gourlay (1712-59) is best translated as "let the people do as they think is best.". 7). an approach to macroeconomics that emphases the importance of the conditions under which goods and services (including labour) are supplied to the market in determining the level of employment and output in an economy 8). a logical process by which it can be reached a conclusion from facts or reasoning 9). interferring or becoming envolved 10). control by rules and restrictions made by an authority V. Make compound nouns with "unemployment" and the following words; find their meaning in the dictionary and write your own sentences using them. - classical, cyclical, frictional, seasonal, structural, voluntary

ECONOMIC ENGLISH FOR UPPER INTERMEDIATE

VI. Find a representative economic statement belonging to each of the following names: 1. Adam Smith 2. John Maynard Keynes 3. Milton Friedman 4. Robert Lucas VII. Change the conditional sentences; notice that the form changes, but the meaning remains the same: Anyone can obtain money from his bank account if he issues a personal cheque. Anyone can obtain money from his bank account by issuing a personal cheque. 1. You can improve the bank activity if you install new computer technology. 2. You can understand banking if you study basic textbooks. 3. They could improve the performance of the institutions if they changed the regulations. 4. The bank can make more profit if it provides services which the public really needs. 5. One can obtain some additional money if he deposits his savings with a bank for a stated period of time. 6. Business can be done without banknotes if it uses payment instruments VIII. Translate into English using the following vocabulary: knowledge; wage, wages; salary; skills; dangerous, dirty, inconvenient, tedious jobs; cost of living; clothing; support a person's life; subsistance wages are; compensating differentials; purchasing power; progressive or redistributive tax. 1. Suma de bani pe care un muncitor o primete pentru o sptmn de munc, n numerar se numete salariu. 2. Angajaii permanent ai societii noastre i primesc venitul lunar prin transfer bancar sau cec. 3. Puterea de cumpreare a sczut anul trecut cu un procent de 5%. 4. Calificarea, cunotinele i expertiza acumulat prin educaie sau specializare profesional reprezint capitalul uman i este remunerat corespunztor. 5. Societatea pltete persoanelor cu un nivel sczut de scolarizare salarii difereniat compensatorii pentru a accepta munci periculoase, murdare, dificile, enervante. 6. Salariul mediu pe economie trebuie s poat asigura existenta zilnic a unei persoane. 7. Impozitul progresiv sau global este menit s reduc inegalitile veniturilor.

ECONOMIC ENGLISH FOR UPPER INTERMEDIATE

8. Costul existentei este acea sum necesar pentru hran, cas, mbrcminte, i altele. IX. Translate into English using appropriate phrasal verbs: 1. Dup o perioad de 5 ani de rapid cretere a nivelului somajului, acesta a nceput n sfrit s scad. (level off) 2. Din cauza recesiunii economice pronunate, preurile la produsele de larg consum au crescut semnificativ. 3. A fost necesar s se nchid fabrica i s fie concediai toti muncitorii.(close down; lay off) 4. El frunzrete ziarele n fiecare zi, dar nu gsete prea multe locuri de munc. 5. omerii gsesc uneori locuri de munc ocazionale. (casual work) 6. Personalul bncii a fost redus.(to cut back on the staff). 7. Din cauza recesiunii economice o parte din investitori s-au retras de pe pieele nou aprute sau i-au redus activitatea.(emerging markets, pulled out of, scale down) 8. Conducerea a decis restrngerea activitii societii (put off) i restructurarea serviciilor administrative.(carry out restructuring) 9. Preul, serviciilor bancare a crescut pentru ca ele s devin profitabile n condiiile inflaiei ridicate. 10. Guvernul duce o politic de austeritate (austerity) menit s reduc inflaia, importurile, chaltuielile bugetare (government spending). X. Translate into English: Frmiarea statal, ndelungata stpnire strin nsoit de stoarcerea necruttoare a resurselor, nesfritele rzboaie purtate pe locurile acestea, au determinat o stare de napoiere economica, fiind frnat dezvoltarea unor structuri productive asemenea celor formate deja n rile avansate din Europa Apuseana. n prima jumtate a secoului trecut, n ara Romneasc i Moldova industria era slab, n agricultur persistau rmie feudale, piaa intern continua s fie ngust. Doar Transilvania se afla ntr-un stadiu relativ mai avansat. Dificulti deosebite creea dezordinea din circulaia bneasc, ntruct se foloseau bani provenii de pretutindeni, n jur de 8o de monede strine diferite: era urmarea faptului c lipsea un sistem monetar naional i chiar dup nftpuirea Unirii, o lacun creia i se va pune capt abia n 1867; atunci s-a instituit sistemul bnesc al leului i au nceput s circule instrumente monetare emise n ar. Dincolo de Carpai

ECONOMIC ENGLISH FOR UPPER INTERMEDIATE

situaia era numai n aparen mai bun, populaia romneasc resimind din plin repetatele crize monetare izbucnite n Imperiul habsburgic. n condiiile date, acumularea intern a capitalului rmnea insuficiena pe ntreg teritoriul, iar sistemul de credit avea s pstreze, pn destul de trziu, trsturi desuete, rmase de la cmtria medieval. Implicit a fost favorizat penetrarea capitalului strin, care i va consolida cu timpul poziiile n economia romneasc.

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