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5.1. Agree or disagree with the following statements using the previous texts:

Part I

1. Inflation is a general rise in the prices of goods and ser-vices.

2. Today inflation continues to be blamed on private greed.

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3. We have 2 measures of inflation.

4. CPI is the most widely watched measure of inflation. 5. It’s not easy to measure commodities.

6. Commodities are the most volatile indicators of all.

7. Monetarism is an economic theory which argues that man-agement of the money supply should be the primary means of regu-lating economic activity.

Part II

1. Non monetary theories of inflation traditionally don’t separate ‘demand-pull’ factors from ‘cost-push’ factors.

2. As a rule, demand originates from purchasing power.

3. Some logical objections to the idea of demand-pull infla-tion center on the importance of money.

4. The monetarists argue that increases in the quantity of money don’t cause inflation.

5. The monetarists think that the quantity of money is diffi-cult to define.

6. It’s very easy to identify the causes of inflation

7. Professional economists have not reached agreement to the origins of the inflation process.

5.2. Make the following words negative by using one of the following prefixes: de-, dis-, im-, in-, un-

1. … accelerating 7. … effective 2. … intended 8. … perfect 3. … prove 9. … stable

4. … desirable 10. … efficiency 5. … natural 11. … predictable 6. … stabilize 12. … voluntary

Complete what this reporter says about Paradiso’s economy with the following words:

jobless, inflation, balance of trade, imports, trade gap, trade deficit, exports, trade surplus, inflation rate, out of work

Paradiso’s economic indicators are perfect. In the past, Para-diso imported more than it exported, and there was a (1) … this (2) … was very worrying. Now the country exports a lot of com-puter equipment, but still imports most of its food: the value of (3) … is more than the value of (4) …, so there is a (5) … and the (6) … is positive. Prices are rising very slowly: with an (7) … of

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two per cent per year, (8) … is under control. Of the working popu-lation, very few are (9) …: only three per cent are (10) …

Read the information translating words in bold into Eng-lish:

Monetary policy is the process by which a (1) правительство, central bank, or monetary authority manages the money supply to achieve specific (2) цели. Usually the (3) цель of monetary policy is to accommodate economic (4) рост in an environment of stable prices. For example, it is clearly stated in the Federal Reserve Act that the Board of Governors and the Federal Open Market Committee should seek ‘to (5) поддер-живать effectively the goals of maximum employment, (6) стабильные prices and moderate long-term interest rates?’

A failed monetary policy can have significant detrimental ef-fects on an economy and the (7) общество that depends on it. These include (8) гиперинфляция, stagflation, recession, high unemployment, shortages of imported goods, (9) неспособность to export goods and even total monetary collapse and the adoption of a much less efficient (10) бартерная economy. This happened in Russia, for instance, after the (11) падение of the Soviet Union.

Monetarists believe that persistent inflations (or deflations) are purely monetary phenomena brought about by persistent expan-sionary (or contractionary) policies. Their view is that monetary policy should serve to accommodate increases in real GDP (gross domestic product) without causing either inflation or deflation.

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