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All growth is good. Fast growth is good. Steady growth is good.
The majority of economists believe three factors positively influence economic growth. Economists are sure about what causes economic growth.
Economists have no idea about what causes economic growth.
The economy needs more raw materials to grow.
The economy needs more machines and
factories in order to grow.
The economy needs more labour to grow
For economic growth there needs to be more
spending and less saving.
For economic growth there needs to be more
saving and less spending.
Tor economic growth there needs to be the
right amount of saving and spending.
Technology creates more raw materials with less labour.
Technology creates greater output from the same amount of capital, labour and materials. Technology creates more labour -with fewer raw materials.
9 В Comprehension
Now read the text again and choose the sentence which best summarises each paragraph.
Economic growth does not happen everywhere.
Miin
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89
Before you listen
Discuss these questions with your partner.
Look at the photo below and answer these questions:
What country is this?
What do you know about its economy?
-> What countries are sometimes called the East Asian Tigers. Do you know why?
Which of the? things listed in С Listening helped the East Asian Tigers to grow?
90
Ml .n ...,J«infrin r I , 1 I II I Г
Now listen and tick the things that helped the East Asian Tigers grow.
|
spending on education |
□ |
|
cuts ill welfare benefits (ot unemployed |
□ |
|
high rate of savings |
□ |
|
high rate of local consumption |
□ |
|
exports to richer countries |
□ |
|
non democratic governments |
□ |
|
democratic- governments |
□ |
|
good relations between management |
□ |
|
and workers |
|
|
strict management rule |
□ |
Before you read
Discuss these questions with your partner.
Look at the chart on page 91 which shows the business or trade cycle.
-> What do you understand from the chart?
What is happening to the economy at each stage?
ff D Vocabulary
Complete each sentence with a word or phrase from the box.
bankrupt current debt inevitable lay off pay off
put up reasonable secure
shrink stages turnover
Each month I put 100 euros into the bank to my loan.
If you feel about your job. you don't
think there is a danger of losing it.
In Britain if it's sunny in the morning, rain :з later!
A company's is how much money it
spends and earns each year.
The price of oil is unbelievable.
Painting the body is one of the final
of manufacturing a car.
prices are prices you think are fair.
If you wash some clothes ш very hot water, they
The opposite of taking on staff is to
staff.
If a company goes it cannot pay
back the money it owes and it must close down.
I have a large and I have to pay back
a lot of money «very month.
Farmers have their prices so the
cost of fruit and vegetables has increased.
в Reading 2
The business cycle
in (lie long term, over many years, an economy will grow .n a steady rate However, the climb up iln hillside of economic growth is actu.ilh quite rocks l ong-term growth is made up of тая> short-term steps. Kacli short term step may last for live or ten years. < h er this short-term period the economy goes through a cycle ol growth and recession. This is called the Шик or business
cyc/i. and it has tour stages boom. slump, nwssion and narcery
During a boom. everything is good. Demand for g(><hIs and services is high and business is going well. To meet demand, companies need to take on more stall, so unemployment is low. ('.onhdenee is in the air! Consumers feel confident about spending because their jobs seem secure What's more, interest rates are reasonable, so jx'ople take out loans and use their credit cards. Low interest rates also encourage companies to invest in new capital, and businesses grow Ciovemments are happy too. !>ecause tax revenues are increasing. However, the government has to be careful. Ikxini economies arc alw ays in danger of overheating. Demand-pull or cost-push inflation will eventually bring the good times to an end
When the slump conies, the economy continues to grow, but not so fast Once inflation starts to rise, confidence falls. The government have probably put up interest rates to slow down Ixirrowing. People w ith mortgages have to spend more money to pay off their debt, so they have less to spend oil other things Higher interest rates discourage business investment Things are moving slowly, and people just hojK that the economy will improve again. But will itV
lf the government have not acted quickly enough, its fiscal ami monetary jxiliey changes may lx> t<«> late. In this ease, recession is inevitable. Some economists say a recession exists when the current rate of growth falls below the long-term rate of grow th. Others say a recession is when there is no growth at all, and the economy actually shrinks Whatever it is, a recession is bad news. Companies have to reduce costs because turnover is so low . The first thing they do is to lay off staff. If the recession is very bad. some companies may even go bankrupt and close. When this happens, thousands of workers may lose their jobs. As unemployment rises, the gov ernment needs to spend more on providing unemployment benefit for those who are out of work. In the worst recessions, these conditions can last for a number of years.
Kvcntually. with good government policy and a demand for goods or services from healthier economies abroad recovery will come. Slowly, confidence returns, investment grows and the cycle begins again.
National
Output A
>
Time
fi? E Comprehension
Now read the text again and answer these questions in your own words in the space provided below.
What is economic growth like in the long run?
What is economic growth like m the short run?
Why are businesses and consumers confident during a boom?
Why are mortgage repayments often higher during a slump?
How do companies try to save money during a recession?
What can help an economy recover? Notes:
Before you listen
Discuss this question with your partner.
The
Business Cycle
F Listening И)))
Now listen to these people. What part of the business cycle are they in? Match the people with the stage.
SPEAKER 1 A boom
SPEAKER2 Вslump
SPEAKER 3 С recession
SPEAKER 4 D recovery
G Speaking
Discuss these questions with your partner.
Is economic growth always good?
What are the negative results ot economic growth (eg. pollution, destruction of environment)?
1 CIO-TV
Work in groups of three. Each of you should take one of the following roles.
the Chancellor
chief director of one of the country's largest industries
leader of a workers' union
Imagine that the economy has gone into a recession.
you're the Chancellor. Explain to the others why the country is in recession and what you plan to do about it.
and should toll the Chancellor what problems the recession is causing them. Tell the Chancellor what you want him/her to do.
Use the space below to make your notes.
Notes:
H Writing
Answer this essay question:'Economic growth isn't always a good thing.' How far do you agree with this opinion?
Essay on economic growth
Use this essay plan to help you.
PARAGRAPH 1
Introduction to the topic:What is economic growth and how does it occur? Kearilexl 1 again and make notes.
PARAGRAPH 2
What are the benefits of economic growth for a country?
standard of living, health care, education, employment
PARAGRAPH 3
What are the negative externalities of economic growth?
effects on the environment, traditional way of life, stress and family life, equity and inequality
PARAGRAPH 4
In summary- sum up both sides of the argument in a sentence and say what your view is.
Pronunciation guide
Sustain v мет Industrialised ir tlwn M.n/il Recession rwjn/ Bankrupt '«id; 'Ixrnkr.spt Inevitable iiunitobl Chancellor t[a:iis.->lo<r) Externality I'lstrrna'tati
Before you read
Discuss this question with your partner.
Nearly all countries trade with each other. Why do you think this is?
f A Vocabulary
balance of trade
Imports
wide range
trading partnerships
value for money
insurance
flow
the movement of something, like water in a river
big variety
financial protection
I when you receive less money than you pay out
when something is worth the amount you pay for it
the difference between the total amount of exports and imports for a country in one year
people, companies or countries that do business together
goods and services a country buys from abroad
JdC
The open economy
All through history, people from one society have been trading with people from another. Three thousand years ago, for example, the Phoenicians of the Mediterranean built an economy almost completely on foreign trade. In tile jargon of economies, the Phoenicians had an о economy, and almost every economy since theirs has been open too.
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93
< >pen economies arc goi*! tor consumers. too. If tlu economy allows imports from abroad, there will be a greater variety of goods available locally. When products are available locally, imports of the same products should help to keep prices down and quality high. This is Itecause local companies will have to compete with foreign companies, and more competition will mean better quality and greater value for money.
I eonomists deseriK' imports and exports of material products as -visible - because you can really see and touch them Kxamples of visible exports and imports are food stuffs, furniture and electronic equipment. However, there are also invisible lm|>orts and exports These are mainly services, but ean include all sorts of things, h xamples of invisible exports and ini|n >rls include banking serv ices, insurance products, educational courses and tourism.
? В Comprehension
Now read the text again and decide whether these statements are true or false. If the statement is false, correct it.
Moat economies in the world were closed until very recently.
Open economies exchange exports and imports with each other.
Importing products will always make the local oconomy shrink.
Only the producer benefits from an open economy.
If you go abroad for a holiday, you create an invisible export for your country.
When exports earn more money than imports, there is a trade surplus for the oconomy.
< tpening up economies, however, does bring problems. One of the main difficulties is keeping a good balance of trade. К very time a country manages to sell a product or service abroad, this means money will tlow into the economy. < >n the other hand, every time someone buys from abroad, money (lows out of the country. Over time, if the ll<>w of money out of the economy is greater than the flow of money into the economy, then there is a trade deficit. This is not a good situation to be in. The challenge for governments is to keep the flow of trade equal in both directions, or to achieve a trade surplus. This is when total exports are greater than total imports.
Before you listen
America ■ China ■ closed
empires ■ invade ■ North Korea
resources ■ self-sufficient
An autarchy is another word for a
completely (1) economy.
An autarchy does not have trading
partners. It is (2) D.
There are no autarchies in the world
today, although (3) is
almost an autarchy. Autarchies don't exist because no oconomy has all the
(4) it needs. In the 19th
century, (5) was an autarchy
for about one year. (6) was
almost an autarchy in the 20th century. The only real autarchies that have existed
are (7) They have tended
T
С Listening 4)))
Now listen and check your answers.
Before you read
Discuss this question with your partner.
Can you name the currencies that these countries use?
-» USA
Switzerland
France
-* UK
Australia
Japan
India
BP D Vocabulary
Complete each sentence with a word or phrase from the box.
|
currency |
equilibrium point euro |
|
■ investors |
overseas sterling |
|
swap |
zone |
A is ihe kind of money used in
лcountry.
The currency used in Italy, Trance ind Greece is the
is another name for the UK's
pounds and pence.
A is an area.
Being means you are not in your
own country.
■ If you're riol satisfied with what you've bought, you can it for something else.
are people or companies that lend
money to companies in order to make a profit.
The is the price that sellers are
happy to sell at and buyers are happy to buy at.
Reading 2
Exchange rates
The 1 "h has sterling, the l'SA has dollars and Russia has the rouble. Almost every country h.is its own currency. Some countries in an economic /one share a currency, for example the 1Л European countries that share the euro, but this is quite rare. If I live in a Eurozonc country and I want to buy something from the ГК. I must buy it using I К sterling To do this I need to exchange mv euros for sterling The amount of sterling I can swap lor each euro depends on the i xc/iun^i rule.
For example, if tile exchange rate is i 1 €1.50 and the camera I want to buy is worth * 1<ю. then to buy the camera 1 must spend 1<>0х 1 5 €150. Similarly, it someone in the ГК wants to buy something from a Eurozone country, they must exchange their sterling for euros. If the computer they want to buy costs €500, then they must spend 500 x 0.75 = *Л75.
Most exchange rates, however, do not stay the same. They an changing all the time Imagine that a few days later the exchange rate changes to VI €1 15 This would make the camera cheaper for me. but the computer more expensive lor the buyer in the ГК. In other words, sterling has got weaker against the euro ami tin- euro has got stronger against sterling.
HatmiHiR
Gw>4« to Crenemift Lint! IS
95
Where does demand for a currency come from? Let's take the euro, for example. Exports from the Kurozone need to lx- paid for in euros. This means the buyers of those exports need to buy euros to make their purchases. So the demand for euros increases. Also, investors from outside the Kurozone may want to invest their money there because they think they will make a profit. To do this, they must buy euros, and again the demand for euros increases. The supply of euros on the international money markets comes from people who want to sell euros. If people want to buy imports from countries outside the Kurozone. or if they want to invest in countries outside the Kurozone, they must sell their euros to buy other currencies. So the supply of euros increases.