What causes business cycles?

Vocabulary

distinguish- проводить различие

external and internal events – внешние и внутренние события

occurring – происходящие

causes – причины, мотивы

significant – значительные, важные

triggeroff– инициировать; давать начало

are likely to have – вероятно будут иметь

inventions and innovations – изобретения и новшества

burst of business activity – взрыв/ вспышка деловой активности

to provide – обеспечивать

capital goods – средства производства

tools and equipment – станки и оборудование

total production – совокупный продукт

generated – вызванный

to give a nudge – дать толчок; подтолкнуть

power to tax and spend– право налогообложения и расходов

the supply of money and credit in circulation – денежно-кредитная масса, находящаяся

в обращении

fiscal policy – фискальная (налогово-бюджетная) политика

monetary policy – денежно-кредитная политика

For many years economists struggle to find a theory that would explain all business cycles. In explaining business cycle fluctuations, today’s economists often distinguish between external and internal events

External events are those outside the economic system that explain fluctuations in the business cycle. Internal events are those occurring within the economy itself.

External Causes. External factors which affect the economy are: population changes, inventions and innovations, and other significant political and social events.

Population changes. Changes in population affect the demand for goods and services. Population increases can lead to increased production and employment levels that trigger off expansion and boom. Population decreases are likely to have the opposite effect.

Inventions and innovations. Major changes in technology, such as the development of the automobile, the airplane and the computer, have led to bursts of business activity and investments. This, in turn, was followed by increased employment opportunities and a period of expansion and boom.

Internal causes. Internal causes of fluctuations are factors within the economy which are likely to start an expansion or contraction of the business cycle. Three of these internal factors have to do with consumption, business investments, and government activity.

Consumption. Business firms try to provide consumers with the goods and services they want. When consumer spending is on the increase, business firms hire additional help and increase their level of production. As production, employment and sales increase, the business cycle enters a period of expansion and boom. When consumer spending decreases, the opposite occurs. Production is reduced, workers are laid off, and the economy enters a period of contraction and recession.

Business investment. Investment in capital goods like plants, tools and equipment, creates additional jobs, thereby increasing consumer purchasing power. The increase in spending generated by the initial increase in investment leads to still further investment, consumption and total production. When investment decreases, the opposite occurs and the economy enters a period of contraction.

Government activity. Governmental policies can give the business cycle an upward or downward nudge. Government does this in two ways. One is through the use of its power to tax and spend. The other is by reducing the supply of money and credit in circulation. Economists describe government’s ability to tax and spend as its fiscal policy, and its ability to regulate the supply of money and credit as its monetary policy.

WORD STUDY

Ex. 10. Match the words with their definitions.

______ business cycle ______ innovation ______ technology ______ population ______ credit ______ fluctuation ______ spending ______ capital goods

a. goods that are themselves utilized in the production of other goods rather than being sold to consumers. b. the sum of money that a bank makes available to a client in excess of any deposit. c. the recurrent fluctuation between boom and depression in the economic activity of a capitalist country. d. an amount of money spent, especially regularly, or allocated to be spent. e. something newly introduced, such as a new method or device f. the total knowledge and skills available to any human society for industry, art, science, etc. g. the total amount of money in a country's economy at a given time.

______ money supply h. constant change; instability

______ capital goods i. all the persons inhabiting a country, city, or other specified

place

Ex. 11. Match the synonyms.

to give a nudge additional to hire fluctuation to distinguish external to occur significant internal to trigger off to generate a period spending

instability outer to push extra to give rise to employ to create a phase to differentiate expenditure to happen important inner

Ex. 12. Match the words with an appropriate preposition and word-combination to make

a phrase.

to distinguish fluctuations to occur changes demand development to lead a period a level investments money

within in for between of to

goods and services technology automobile and airplane external and internal events the economy itself the business cycles production capital goods bursts circulation expansion and boom

Ex. 13. Give the English equivalents to the following words and phrases. Recollect the

sentences of the text where they were used.

1. внутри самой экономики ______________________________________________

2. оказывать влияние на экономику ______________________________________

3. иметь обратный эффект _______________________________________________

4. экономический цикл вступает в период подъема __________________________

5. значительные политические события ____________________________________

6. расходы потребителей _________________________________________________

7. первоначальный рост инвестиций _______________________________________

8. создавать дополнительные рабочие места _________________________________

9. покупательная способность потребителей _________________________________

10. увеличивать уровень производства

Ex. 14. Define what parts of speech these words are.

1. to govern, government, governmental

2. creation, creative, to create

3. powerful, to power, power

Fill in the blanks with the words given above.

1. Man’s ________________ the Great Chinese Wall is the only man-made object visible from

outer space.

2. Planned economy is an economy with a large amount of _____________________ planning

and direction.

3. I’ll do everything in my ______________ to help you.

4. People who devise advertising campaigns must have a __________________ mind.

5. They go to the polls on Sunday to choose the people they want _______________ their

country.

6. The Labour Party is the most ________________ political force in the United Kingdom.

7. People have to face the indisputable fact that the media is controlled by the ______________.

8. To start working on a computer ___________________ it up.

COMPREHENSION

Ex. 15. Say if the sentences are true or false. Correct the false ones.

1. Internal events are those outside the economic system.

2. When investment decreases the economy enters a period of expansion and boom.

3. Changes in population affect the demand for goods and services.

4. Investment in capital goods like plants, tools and equipment, creates additional jobs, but it

doesn’t increase consumer purchasing power.

5. No economists tried to explain the nature of business cycles.

6. Governmental policies can give the business cycle an upward or downward nudge.

7. Economists describe government’s ability to tax and spend as its monetary policy, and its

ability to regulate the supply of money and credit as its fiscal policy.

8. When consumer spending is on the increase, business firms hire additional help and increase

their level of production.

Ex. 16. Finish the sentences.

1. External factors which affect the economy are: . . .

2. Internal causes of fluctuations are factors which have to do with . . .

3. For many years economists struggle to find a theory . . .

4. Internal events are those . . .

5. Business firms try to provide consumers with . . .

6. Governmental policies can give the business cycle . . .

7. In explaining business cycle fluctuations, today’s economists often distinguish between . . .

8. When consumer spending decreases, production is reduced, . . .

Ex. 17. Put questions to the words and word-combinations in italics.

1. For many years economists struggle to find a theory that would explain all business cycles.

2. Internal events are those occurring within the economy itself.

3. Changes in population affect the demand for goods and services.

4. Increased production and employment levels trigger off expansion and boom.

5. Investment in capital goods creates additional jobs.

6. When consumer spending decreases, production is reduced, workers are laid off, and the

economy enters a period of contraction and recession.

7. To give the business cycle an upward or downward nudge, government uses its power to tax

and spend.

8. Economists describe government’s ability to tax and spend as its fiscal policy

9. When investment decreases, the economy enters a period of contraction.

10. Three of the internal factors have to do with consumption, business investments, and

government activity.

UNIT 9 THE BELARUSIAN ECONOMY

DISCUSSION

Answer these questions before you read the text below.

1. Where is Belarus situated?

2. What are the country’s main regions?

3. In what part of Belarus does the vast majority of population live?

4. Which nationality groups make up the largest percentage of the total population?

5. What are the two official languages of Belarus?

6. When did Belarus proclaimed its independence?

7. Who is the country’s president at the moment?

8. Who is the head of the government in Belarus nowadays?

9. What is the most highly developed sector of the Belarusian economy?

10. What are some of the leading agricultural products in Belarus?

11. What nations are main trading partners of Belarus?

12. What are the major problems facing Belarus today?