Economics study

(6)......................rates are higher.

Education and training

Children drop out of (Z)......................

earlier.

No (8)......................at work.

 

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Speaking

 

Discuss this question with your partner.

Do you think it is possible to share wealth equally?

 

Task

 

Give a two-minute talk on the subject of poverty. First read text 2 again and make notes below on the following.

 

ways of measuring poverty

striking facts about poverty in the world today

 where poverty exists

 causes of poverty

 how poverty affects people's lives

 he poverty trap

 

 H Writing

 

Pronunciation guide

Inequality

Modernised

Precious

Jewel

Lorenz curve Poverty

Associate

Corruption

Drought

Flood

Schooling

Write a report describing the charts on pages 56 and 57.

 

First, read text 1 again. Then look carefully at figure 1 and figure 2. Use the outline plan to help you. Remember to include the following language:

The chart shows ...

It is clear from the figures that...

The majority of the population ...

Л very small percentage of the population ...

about / approximately / almost

a quarter / half / a third

In comparison ...

In contrast...

is owned by ...

earn...

 

Report

PARAGRAPH 1

Introduction. Say generally what the charts are about - use the titles to help you.

Begin like this: These charts show how wealth and income are distributed in the UK. Figure 1 shows ...

PARAGRAPH 2

Describe figure 1 in more detail. Say how

much of the wealth the top one per cent own. Compare this with the bottom 50 per cent.

Begin like this: Figure 1 shows how unfairly wealth in the UK is shared out. You can clearly see from the chart that...

PARAGRAPH 3

Describe figure 2 in more detail. Describe the perfect distribution shown by the blue line. Give examples from the chart. Describe the real distribution shown by the red line. Give examples from the chart. Say how much of the total income the lowest 40 per cent earn. Say how much of the total income the top 30 per cent of the population earn.

Begin like this: Figure 2 compares perfect distribution of income with real distribution in the UK. The blue line shows what happens if income is evenly distributed ...

PARAGRAPH 4

Conclusion. Explain briefly what the figures show about the UK economy.

Write 200-250 words

 

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Before you read_

 

Discuss these questions with your partner.

Micro means small and macro means large.

 What do you think macroeconomics is?

How is it different from microeconomics?

5 A Vocabulary

 

Match the words and phrases with the definitions.

1 devastating collapse	A something that happens
2 fiscal policy	B a method or tool for
	doing something
3 domestic	C control of spending
	through taxation
4 steady growth	D money you have to
	spend after paying tax
5 monetary policy	E a serious slowing down
	of the economy
6 recession	F at a slow, unchanging
	rate
7 mechanism	G move around
8 disposable income	H control of the cost
	of borrowing and
	movement of money in
	economy
9 interest	I the members of the
	population able to work
10 circulate	J something you know will
	happen
11 depression	K complete destruction
12 predictable	L the cost of borrowing
	money
13 event	M not foreign
14 workforce	N a very bad period for the
	economy

Macroeconomics

 

In the 1930 s one of the worlds strongest economies suffered a devastating collapse. It was the American economy, and the disaster was the Great Depression. The effects of the Great Depression were tell all around the world, and it brought about a change in economic thinking Economists began to realise that looking at the behaviour or individual consumers and suppliers in the economy was not enough. Economists and governments bad to understand how the whole economy worked. In other words, they had to have an understanding of macroeconomics.

Microeconomics looks at how the details of the economy work. Macroeconomics lakes a few steps back and looks at the whole picture While microeconomics looks at Supply and demand for a single product or industry, macroeconomics follows supply and demand patterns for the whole economy. Whereas macroeconomics about

economic events at home, macroeconomics looks

at how the domestic economy interacts with the economies of other countries.

However, macroeconomics isn't only about knowing what's happening in the economy. Alter the shock of the Great Depression, governments realised that an economy needs to be managed. Most governments aim to have steady economic

growth, to control inflation and to avoid recessions .Just managing an individual business is a hard enough task. How do you manage a whole economy? Governments have certain mechanisms which help them to do this.

 

 

 

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The first of these mechanisms is fiscal policy. Fiscal policy refers to the tax system and to government spending. Bу increasing or decreasing the amount of tax people must pay, the government can affect how much money people havе available to spend (disposable income). This, in turn, has an effect on demand in the market. Bу increasing or decreasing their own spending, governments can have a huge effect on the growth of the economy

The second mechanism is monetary policy. With its monetary policy, a government sets Interest rates and also controls the amount of money that circulates in the economy. The interest rate the government sets influences the rate that commercial banks set when they lend money to customers. Interest rates have a big impact on the economy. For example, they can affect people's divisions about saving or spending money

The third mechanism is administrative approach. This is a range of things that governments do to increase the supply erf goods and services to the economy but without increasing prices. There

are a number of ways governments try to do this.

For example, improvements in education and (raining can make the workforce more productive Investment in technology can make industry more efficient. Governments can also change employment and business laws to make the market more competitive.

With a combination of these methods, governments try to steer or guide, the economy on a steady and predictable path. They aim for gradual economic growth and to avoid disasters like the Great Depression.

 

 В Comprehension

 

Now read the text again and answer the questions.

1 Which countries wore affected by the Great Depression?

A only America

В just America and Europe

C the whole world

 

2 Which of the following is interested in foreign economies?

A microeconomics

B macroeconomics

С both micro and macro economics

 

3 The three different mechanisms which governments use are ...

A all concerned with how much money people have to spend.

В aimed at improving education and training.

С all different ways of managing an economy.

 

4 Which mechanisms involve changing interest rates?

A fiscal policy

B  monetary policy

С administrative approach

 

5 Which mechanisms might involve creating job training schemes for school leavers?

A fiscal policy

B monetary policy

С administrative approach

 

6 What do governments want to achieve with their macroeconomic policies?

A to predict what will happen in the economy

В to create steady economic growth

C to combine different paths for economic growth

 

Before you listen _

 

Discuss the following with your partner.

You're going to hear about the Great Depression -the worst economic recession in recorded history. Before you listen, see if you can put these events in the order that they happened.

the economy began to recover

companies produced more goods for

future demand  World War 2 began

people started selling their stocks and shares  the stock market crashed  people lost jobs and farmers left their farms  people borrowed money to invest in stocks

and shares  demand began to fall

 

С Listening )))

 

Now listen and check your answers.

 

 

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Before you read

 

Discuss the following with your partner.

In soma ways, running a large economy is like running a small business. What do you think are the similarities and what are the differences?

 

 Reading 2

Aggregate demand and aggregate supply

 

When a company makes plans for how much to produce and what prices to set. it needs information. The company needs to predict the level of supply that will he required to meet demand. It needs to set prices that will keep the business running. In the same way. governments need this information for the whole economy. The total level of demand for all products and services is called the aggregate demand. The total supply is called the aggregate supply.

The demand for products and services is how much is wanted. For a company, the demand conies from customers. For a whole economy, things are a little more complicated. Demand in the whole economy comes from the following:

  from consumers, because they buy products and services (consumption)

  from companies, because they invest money to build factories and buy machines (investment)

  from the government, because they spend money on services and projects (government spending)

from exports, because these are sales to customers in other countries (export)

 

 

D Vocabulary

 

Complete each sentence with a word or phrase from the box.

 

aggregate      availability      behave exports      long run      predict

■ required      short run      trend

 

The price of a flight often depends on the

......................of seats.

Technology is making it easier and easier to ......................changes in the weather.

When talking about the.......................we mean

the total.

Some people......................very differently

when they go abroad.

The......................means in the next few weeks

or months.

The......................means in the coming years

or decades.

Chinas......................include all kinds of

manufactured goods.

Л lot of raw materials......................for

manufacturing are imported.

Prices are still following a......................

to increase.

Figure 1: Aggregate Demand

 

 

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Although aggregate demand is made up of many

things, it behaves in the same way as demand for a single product. For example, demand rises when incomes rise. The same applies to aggregate demand. Similarly, demand falls as prices rise. The same is true for aggregate demand. You can see this relationship shown in figure 1 on page 63. The vertical axis shows prices. The horizontal axis shows real national income .Real national income is the value of all the services and products produced by the whole economy. It's calculated in the same way as aggregate demand (consumption, investment, government spending and exports). You can see from the curve that national income (and therefore aggregate demand) increases as prices fall.

Changes in any of the four things which make up aggregate demand will cause a shift in demand. For example, if the government decides to spend a huge amount of money on building new hospitals and schools, this will have an effect on the whole economy. Aggregate demand will increase at all price levels. This is shown in aggregate demand curve 2 (AD2) in figure 1.

The supply curve for an individual product or service is very simple. As the company increases its supply to the market, it increases the price. But what about aggregate supply for the whole economy- This is more complex. In the short run, aggregate supply follows the same trend as the supply for a single product. Supply rises as prices rise. However, the long run is different. In the long run. supply is not affected by price. In the long run, production is limited by the factors of production. In other words, what a country can supply depends on the number of factories it has. the number of people working and the availability of raw materials. This is why the long run supply curve in figure 2 on page 63 is a straight line.

 

E Comprehension

 

Now read the text again and match each paragraph with the correct heading.

PARAGRAPH 1......................

PARAGRAPH 2......................

PARAGRAPH 3......................

PARAGRAPH 4......................

PARAGRAPH 5......................

A What aggregate demand includes

B Two types of aggregate supply curve

С The relationship between aggregate demand and price

D Why are aggregate supply and demand important to governments?

E What causes aggregate demand to shift?

 

Before you listen_

 

Discuss the following with your partner.

The gross domestic product (GDP) is a way of measuring the income of a whole nation.

How do you think GDP is calculated?

Why do you think some countries have a larger GDP than others?

Which countries in the world do you think have a large GDP?

Which ones have a small GDP?

F Listening

 

Now listen and complete the summary.

The gross domestic product is the total value

of all the (1)......................supplied by a

country during a whole (2)......................

. It is often called the (3).......................

It is a way for the government to measure

the economic (4)......................of the

country. The GDP per capita is the GDP

divided by the number of (5).......................

It is a useful measure of a nation's

(6).......................In 2005. Luxembourg had

a per capita GDP of $ (2).......................In

the same year, the figure for Burundi was only $ (8).......................

 

 

 

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G Speaking

 H Writing

 

Discuss these questions with your partner.

Why is it important for a country to have steady economic growth?

The GDP of a country is sometimes used to measure standard of living. Do you think this is a good measure for standard of living? Why / Why not?

 

Task

 

Work in groups of three or four. The diagram below shows the aggregate demand and aggregate supply curves for a country. Talk to each other about how the curves could change for each of these situations.

the government decides to spend billions of pounds on road building

there is a large increase in the price of petrol

the government increases income tax rates by five per cent

wages increase a lot

Use the space below to write your notes.

 

H Writing

 

Imagine you're a farm worker in America in the 1930s. You've just lost your job because of the Great Depression. Write a letter to your cousin in Russia.

Look back at the unit and make notes before you start.

 

Letter from history

Dear [your cousin's name).

PARAGRAPH 1

Tell your cousin the bad news about losing your job and what difficulties you're facing.

Useful words and phrases: made redundant, struggle to get by. landlord demanding rent, bills to pay, go into debt

PARAGRAPH 2

Explain the situation in America: how the stock market crash happened, the Depression. Read the notes from С Listening on page 62.

Useful words and phrases: stock market, crash, fall in demand for produce, businesses closing down

PARAGRAPH 3

Explain what life is like in America now, especially for farmers and farm workers.

Useful words and phrases: high unemployment, families struggling to get by. people depressed, people leaving their homes for the city

PARAGRAPH 4

Say what you plan to do to find work.

Here are some ideas: move to the city to find work, join the army, try to sell something valuable you own and buy a ticket to Europe.

Sign off

Write 100-150 words

 

Pronunciation guide

Devastating

Fiscal

Mechanism

Monetary

Recession

Availability

Axis

 

 

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Revision Vocabulary   Units 9 to 12

 

 

Match words from box A to words in box В to make expressions we use in economics. You can use words in box В more than once.

 

■ absolute	■ aggregate	■ disposable	■ fiscal
■ income	■ mixed	■ monetary	■ pension
■ poverty	■ public	■ relative

 

■demand	■ policy	■gap	■poverty
■goods	■income	■scheme	■trap

 

                     

Now match the expressions to their meanings.

services that the government provides because no one else will......................

services and goods that the government provides because they are good for us......................

not having enough money to survive......................

to be much poorer than other people in the same country......................

the government's decisions about taxation and spending......................

the governments decisions about interest rates and money in the economy......................

the money you can spend after you have paid

tax......................

a situation in which it is impossible to escape from being poor......................

all the services and goods that are bought in the economy......................

a way to save money for old age......................

the difference between the highest earners and the lowest earners......................

 

Units 9 to 12

 

Economic hard times set to continue

 

The government released more gloomy economic figures today. Unemployment has risen again this month, and now ten per cent of the (1) krowforec are without a job. At the same time, the Bank of England has said that (2) vinnetmest by companies has decreased dramatically. Businesses simply don't want to be involved in (3) srki-agtkni when the economy is like this. commented John Cash, a senior director with the bank.

But the people worst affected are the unemployed and their families. Many are now spending their life (4) gisvans in order to survive. Government Minister. Alison Wellby said yesterday that. "The (5) frelwae of ordinary people is our most important concern". To prove this, the government has promised to increase spending on (6) frantres payments such as unemployment (2) fitsbeen. However, this could be a sign that the (8) cresseion will probably continue into next year. It seems that even in the (9) glon nur things are not looking good.

 

 С Find ten words in the square connected with buying and selling.

6 The words in bold in this newspaper story have been wrongly printed. Put the letters in the correct order to make the right word.

 

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