Vocabulary

budget n – бюджет

contractionary fiscal policy – сдерживающая фискальная политика

discretionary fiscal policy – дискреционная фискальная политика

downturn n (syn. decline) – 1) падение, спад; упадок; 2) экономический спад; спад деловой активности; 3) спад, уменьшение

downward-sloping line – нисходящяя наклонная линия

effective demand – платежеспособный спрос

eliminate v – устранять, исключать, уничтожать, ликвидировать

expansionary fiscal policy–стимулирующая фискальная политика

laissez faire – невмешательство

long-term investment – долгосрочные инвестиции

maintain v (syn back up, uphold) – поддерживать, защищать, отстаивать (закон, теорию, мнение и т. п.)

moderate v – умерять, сдерживать, обуздывать; ослаблять, смягчать

offset a recession – нейтрализовать; сбалансировать спад

propensity n – склонность

~ to consume – склонность к потреблению

~ to save – склонность к сбережению

shortage n – нехватка, недостаток, недостача, дефицит

soar v – стремительно повышаться

GLOSSARY

• Actual budget records the actual dollar expenditures, revenues, and deficits in a given period.

• Automatic stabilizers are federal expenditures and tax revenues that automatically change levels in order to stabilize an economic expansion or contraction; sometimes referred to as nondiscretionary fiscal policy.

• Balance budget is a budget when revenues and expenditures are equal during a given period.

• Budget deficit is a budget in which government expenditures exceed government revenues in a given time period.

• Budget surplus is a budget in which government revenues exceed government expenditures in a given time period.

• Discretionary fiscal policy is the deliberate use of changes in government spending or taxes to alter aggregate demand and stabilize the economy.

• Fiscal policy is the use of government spending and taxes to influence the nation's output, employment, and price level.

• Government debt (sometimes called public debt) consists of the total or accumulated borrowings by the government; it is the total dollar value of government bonds owned by the public (households, banks, businesses, foreigners, and other non-federal entities).

• Spending multiplier is the change in aggregate demand (total spending) resulting from an initial change in any component of aggregate demand, including consumption, investment, government spending, and net export.

• Tax multiplier is the change in aggregate demand (total spending) resulting from an initial change in taxes.

4. The microeconomy

4.1. Supply and demand

DISCOVERING CONNECTIONS

Have you ever heard the quip “Teach a parrot to say "Demand and supply" and you have an economist!"? Do you know that there is a strong element of truth in it. Can you guess why? Why does the price of hotel rooms in the Caribbean plummet when the weather turns warm in New England every summer? Why does the price of gasoline in the United States rise when a war breaks out in the Middle East? What do these events have in common? Do you know that, in fact, they all show the workings of supply and demand.

So if you want to know how any event or policy will affect the economy, you must think first about how it will affect supply and demand.

READING

Text 1

As you read the text, pay special attention to the definitions of terms in italics.