Unit 25: In a situation where there is growing unemployment, what are the advantages and disadvantages of the following partial solutions?

1. job sharing,

2. decreasing working hours,

3. lowering the age of retirement,

4. increasing the number of public sector jobs.

	Advantages	Disadvantages
1. Job sharing:	Net productivity increases when two people share the same job. More people are employed in the economy, so unemployment rate falls.	Job sharing is expensive for employers, as having 2 members of staff instead of 1 involves extra costs. Co-workers must adapt to working with each other
2. Decreasing working hours	Employees can invest their time in training, development and education. They will work more efficiently. To avoid mass-redundancies.	The company will operate not at full capacity, so it will lose profits.
3. Lowering the age of retirement.	New young employees are better trained. They are more energetic and their productivity is much higher.	Companies will lose experienced and knowledgeable staff
4. Increasing the number of public sector jobs	More people are employed in the economy, so unemployment rate falls.	Create a budget deficit, which lead to great problems in a whole economy Low-paid jobs

Unit 26: Discuss fixed and floating currency exchange rate and how currency speculation distorts the real picture in the currency market.

An exchange rate is the price at which one currency can be exchanged for another. For 25 years after World War II, the levels of most major currencies were determined by governments. They were fixed or pegged against the US dollar and the dollar was pegged against gold. This system was known as gold convertibility. Pegging against the dollar ended in 1971, because of the inflation, as the Federal Reserve did not have enough gold to guarantee the American currency.

Since the early 1970s, there has been a system of floating exchange rates (Milton Friedman). This means that exchange rates are determined by people buying and selling currencies in the foreign exchange markets. A freely floating exchange rate means one which is determined by market forces: the level of supply and demand. If there are more buyers of a currency than sellers, its price will rise; if there are more sellers, it will fall.

Furthermore, exchange rates can change due to currency speculation – buying currencies in the hope of making a profit. This means exchange rates change due to speculation rather than PPP. Banks and currency traders make considerable profits from the spread between a currency's buying and selling prices.

Governments and central banks sometimes try to change the value of their currency. They intervene in exchange markets, using foreign currency reserves to buy their own currency -in order to raise its value – or selling to lower it. But speculators generally have more money, so central banks or governments only have limited power to influence exchange rates

Unit 27: Many of us think that free trade is beneficial to both trading parties. However, there’s an opinion that it may not be the case especially when we deal with less developed countries. Suggest some of the arguments used by critics of free international trade.

“Free trade” – no barriers over the world, goods and services can be sold without taxes, tariffs or quotas.

Although many economists are in favour of free trade, there is also a lot of opposition. There have been huge and violent protests at meetings of the World Trade Organization (WTO) which is the biggest free-trade organization.

• WTO policies prohibit developing countries from protecting infant industries until they’re internationally competitive.

• The WTO defends “Trade Related Intellectual Property” rights, granting pharmaceutical companies patents copyrights and trademarks which deny poor countries access to lifesaving medicines and generic drugs.

• The price of exported goods doesn’t reflect the environmental cost of transporting them.

• The WTO has ruled that governments cannot take into account ‘non-commercial values’ such as human rights and opposing child labour.

• The WTO classifies most environmental, labour, health and safety protection laws as illegal ‘barriers to trade.

Russia in WTO

+ Pros	Cons
consumer commodities’ price will fall diversification of the supply of goods the quality level will raise f.e. gas and oil companies will benefit since we’re the main exporters	in open market conditions industries are not protected so there is a risk of acquisition advanced countries can outsource production where labour costs are cheaper without considering environmental situation f.e. open market doesn’t take into consideration peculiarities of countries f.e. automobile industry in Russia: WTO is great for customers but very bad for industry