Fiscal Policy

1. Fiscal policy is an instrument of demand management which is used to influence the level of economic activity in an economy through the control of taxation and government expenditure.

2. The government can use a number of taxation measures to control aggregate demand or spending: direct taxes on individuals (income tax) and companies (corporation tax) can be increased if spending has to be reduced, for example, to control inflation. Spending can also be reduced by increasing indirect taxes: an increase in the VAT on all products or excise duties on particular products such as petrol and cigarettes will result in lower purchasing power.

3. The government can change its own expenditure to affect spending levels as well: a cut in purchases of products or capital investment by the government can reduce total spending in the economy.

4. If the government is to increase spending, it creates a budget deficit, reducing taxation and increasing its expenditure.

5. A decrease in government spending and an increase in taxes (a withdrawal from the circular flow of national income) reduces aggregate demand to avoid inflation. By contrast, an increase in government spending and / or decrease in taxes - an injection into the circular flow of national income stimulates aggregate demand and creates additional jobs to avoid unemployment.

6. In practice, however, the effectiveness of fiscal policy can be reduced by a number of problems. Taxation rate changes, particularly changes in income tax, take time to make; considerable proportion of government expenditure on, for example, schools, roads, hospitals and defence cannot easily be changed without lengthy political lobbying.

Вправа УД. Прочитайте б абзац тексту і дайте письмову відповідь на запитання:

What can decrease the effectiveness of fiscal policy?

V ВАРІАНТ

Вправа І. Перепишіть наступні речення, підкресліть Participle I та Participle II, визначте їх функції. Перекладіть речення на українську мову:

1. Selling and buying things, all people use money.

2. The Bank of Canada is a magnificent building occupying more than 3 acres of ground.

3. The answer received from our distributors greatly surprised me.

4. I have been working on my income tax all day long.

Вправа II. Вставте в речення необхідне модальне дієслово, перекладіть на українську мову:

1. The director is alone, you ... see him for a moment.

2. ... I speak to you now?

3. My grandson ... read, though he is only five.

4. If you want to be a good manager you ... work hard.

5. The Petrovs ... have moved to Kyiv, I am not sure.

Вправа IIІ. Перекладіть наступні речення, пам'ятаючи про різні значення дієслів to be, to have, to do, та визначте їх функції в реченнях:

1. She is good at cooking.

2. Business interests have a great influence on government in many countries.

3. They didn't send us their new price-list.

4. The goods were in the store.

Вправа IV. Перепишіть речення з герундієм, визначте його функцію та перекладіть речення на українську мову:

1. It was a very long inventory lasting for 2 months.

2. Management is the process used to accomplish goals through controlling people.

3. Packaging has always been an important aspect of goods' supply.

4. They don't mind signing the contract.

Вправа V. Прочитайте текст. Перепишіть і письмово перекладіть на українську мову 1, 2 абзаци тексту.