Vocabulary Focus

Ex. 1. Match the Russian words and word combinations in column A with their English equivalents in column B.

A	B
работать на полную мощность	boom
платежный баланс/ сальдо	to work at full capacity
влезать в долги	peak
отрицательгный рост	balance of payments
экономический подъем	tax cut
пик, высшая точка цикла	recession
низшая точка цикла	negative growth
экономический спад	trough
снижение налогов	to work at below potential
работать ниже потенциальных возможностей	to run up debts

Ex. 2. Express in one word.

Beliefs about what will happen in the future.

1. Money borrowed in order to buy a house or flat (GB) or apartment (US).

2. Money paid for the use of a house or flat owned by somebody else.

3. The amount of something produced by a company, a country, and so on.

4. Spending on new machines, factories, and so on.

5. Owners or managers of manufacturing companies.

6. Spending on goods and services.

7. To dismiss employees.

8. Concerning the number of births, deaths, population movements, and so on

9. An absence of luxury and comfort.

Words for reference: mortgage, investment, lay off, expectations, rent, demographic, consumption, austerity, industrialist, output.

Ex. 3. Complete the sentences using the words given below.

1. Recurrent rises and falls in real GDP over a period of years is called the _________ .

2. A (an) __________ is officially defined as two consecutive quarters of real GDP decline.

3. ____ is measured by the annual percentage change in real GDP in a nation.

4. The _______ is the difference between full-employment or potential real GDP and actual real GDP.

5. The phase of the business cycle during which real GDP reaches its maximum after rising during a recovery is called a _______ .

6. A _______ is a phase of the business cycle during which real GDP reaches its minimum after falling during a recession.

7. An upturn in the business cycle during which real GDP rises is called a ___.

Words for reference: recovery; peak; trough; economic growth; GDP gap; business cycle; recession.

Comprehension

Ex. 1. Match up the following half sentences:

A	B
Companies may have to reduce investment or the size of the work force Companies only invest During a period of economic growth External theories of the business cycle Governments often stimulate the economy Increases in interest rates Internal theories of the business cycle People can demand higher pay People tend to spend less	consumers borrow a lot of money. if labour costs increase too much. if their company's sales are increasing. include psychological factors. include technological and population changes. prior to general elections. result in higher rents and mortgages. when they are afraid of becoming unemployed. while consumption is increasing.

Ex. 2. Choose the right answer.

1. The _______ phase of the business cycle follows a recession.

1. recovery;

2. recession;

3. peak;

4. trough.

1. The GDP gap is the difference between:

1. frictional unemployment and actual real GDP;

2. unemployment rate and real GDP deflator;

3. full-employment real GDP and actual real GDP;

4. full-employment real GDP and real GGDP deflator.

1. A recession is a business contraction lasting at least:

1. one years;

2. six months;

3. three months;

4. one month.

1. When is the GDP gap largest?

1. During peak periods in the business cycle;

2. During trough periods in the business cycle;

3. When unemployment rates are relatively low;

4. When cyclical unemployment is close to zero.

Ex. 3. Answer the questions on the text.

1. What is a business cycle?

2. Which of the various theories of the business cycle mentioned in the text do you find the most convincing?

3. What is the current economic situation in your country? Why?

4. Are most of the people you know currently optimistic or pessimistic about the future? Would you say that they are saving money for bad times ahead, or spending and borrowing without worrying too much about the future? Either way, can you see anything coming that might cause them to change their behaviour?

Text 2

Skim the text to define unemployment, its negative and positive sides.