- •Business issues Проблемы бизнеса
- •Contents
- •Введение
- •Part I. Bisiness chapter I. Management key vocabulary
- •I. Remember the correct pronunciation of these words
- •II. Learn the following English terms and their Russian equivalents. Give your own sentences with them
- •III. Read the following verbs and verbal phrases and pay attention to the prepositions used after them
- •IV. Listen, read and translate the text management
- •Grammar practice
- •Language practice
- •IX. Translate the following sentences into English
- •X. Answer the questions about the text
- •XI. Find in the dictionary the definitions of the synonyms with the meaning of «управлять, руководить»
- •XII. Read the text and divide it into some meaningful parts, giving the proper title to each of them general concept on management
- •XIII. Write a summary of the text
- •XV. Work in groups of two or three, talk about management
- •Chapter 2. Marketing key vocabulary
- •I. Remember the correct pronunciation of these words
- •II. Learn the following English terms and their Russian equivalents. Give your own sentences with them
- •III. Read the following verbs and verbal phrases and pay attention to the prepositions used after them
- •IV. Listen, read and translate the text marketing
- •Grammar practice
- •V. Find in the text four sentences of at least two different tenses in the Active Voice, copy them into your exercise books, give simple grammar analysis of these sentences
- •Language practice
- •VI. Look through the text to find the English equivalents of the following terms and give the sentences with them
- •VII. Find in the text the sentences that correspond to the following statements
- •VIII. Translate the following sentences into English
- •IX. Answer the questions about the text
- •X. Find in the dictionary the definitions of the synonyms with the meaning of «прибыль, доход»
- •XI. Read the text and divide it into some meaningful parts, giving the proper title to each of them
- •XII. Write a summary of the text
- •Speaking
- •XIII. Practice talking about the following situations
- •XIV. Work in pairs of two or three and talk about marketing
- •Chapter 3. Types of enterprises section 3.1. Concept of small business key vocabulary
- •Small business
- •Grammar practice
- •V. Find in the text four sentences of at least two different tenses in the Passive Voice, copy them into your exercise books, give simple grammar analysis of these sentences. Language practice
- •VI. Look through the text to find the English equivalents of the following terms and give the sentences with them
- •VII. Find in the text the sentences that correspond to the following statements
- •VIII. Translate the following sentences into English
- •IX. Answer the questions to the text
- •X. Find in the dictionary the definition of the synonyms with the meaning of:
- •XI. Read the text and divide it into some meaningful parts giving the proper title to each of them which is better – to buy an existing firm or start
- •X II. Write a summary of the text
- •Speaking
- •XIII. Practice talking about the following situations
- •Section 3.2. Different types of business: sole proprietorship and partnership key vocabulary
- •Read and remember the pronunciation the following words
- •II. Read and translate the following groups of words
- •III. Remember the words given
- •IV. Define the part of speech of the following words
- •V. Make nouns of these verbs
- •VI. Listen, read and translate the text sole proprietor
- •Grammar practice
- •VII. Find in the text two sentences in the Passive Voice, copy them into your exercise books, give simple grammar analysis of these sentences.
- •VIII. Find in the text sentences with the Infinitive and define its form and function. See Grammar in Use section if necessary. Language practice
- •IX. Fill in the blanks using the words given below:
- •X. Match the synonyms
- •XI. Match the antonyms
- •XII. Make up antonyms of the words given using proper prefixes
- •XIV. Make up sentences using the following words
- •XVI. Put questions to the words in italics
- •XVII. Put the verbs in brackets into the correct form
- •XVIII. Answer the following questions
- •XIX. Read and translate the text and define the advantages and drawbacks of the business organization in question partnership
- •Speaking
- •Section 3.3. Joint stock company key vocabulary
- •III. Listen, read and translate the text joint stock company
- •Grammar practice
- •Language practice
- •Speaking
- •Section 3.4. Joint venture key vocabulary
- •III. Read the following verbs and verbal phrases and pay attention to the prepositions used after them
- •IV. Listen, read and translate the text joint venture
- •Introduction
- •Market study
- •Initial representation
- •Further discussions
- •Choice of partners
- •Local management
- •Partnership
- •Financial considerations
- •Legal and other fees
- •Grammar practice
- •V. Find in the text sentences in the Active Voice, copy them into your exercise books, give simple grammar analysis of these sentences.
- •VI. Find in the text sentences with the Infinitives and define their forms and functions. See Grammar in Use section if necessary. Language practice
- •VII. Look through the text to find the English equivalents of the following Russian terms and give the sentences with them
- •VIII. Find in the text the sentences that correspond to the following statements
- •IX. Translate the following sentences into English
- •X. Answer the questions about the text
- •XI. Find in the dictionary the definitions of the synonyms with the meaning of «заем»
- •XII. Read the text and divide it into some meaningful parts, giving the proper title to each of them transfer of technology
- •XIII. Write a summary of the text
- •XIV. Reproduce the main text using the words given in Exercises I, II, III.
- •XV. Practice talking about the following situations
- •XVI. Work in groups of two or three, talk about joint venture activity
- •Section 3.5. Business planning key vocabulary
- •I. Remember the correct pronunciation of these words
- •II. Learn the following English terms and their Russian equivalents. Give your own sentences with them
- •III. Remember the following word combinations
- •IV. Listen, read and translate the text business planning
- •Grammar practice
- •Language practice
- •X. Translate the following sentences into English
- •XI. Answer the questions about the text
- •XII. Find in the dictionary the definitions of the synonyms with the meaning of «расход, издержки»
- •XIII. Read the text and divide it into some meaningful parts, giving the proper title to each of them the stages of a business
- •XIV. Write a summary of the text according to the following plan
- •Speaking
- •XV. Reproduce the main text using the words given in exercises I, II, III.
- •XVI. Practice talking about
- •Chapter 4. Banks and money section 4.1. Money key vocabulary
- •I. Remember the correct pronunciation of these words
- •II. Read and translate the following groups of words
- •III. Remember the words and word combinations given
- •IV. Define the part of speech
- •V. Make nouns of the following verbs
- •VI. Listen, read and translate the text money and its functions
- •The functions of money
- •Grammar practice
- •Language practice
- •XVII. Fill in the gaps with proper prepositions
- •XVIII. Make questions to the words in italics
- •XIX. Fill in the gaps using the verbs given in brackets
- •Speaking
- •XX. Answer the following questions. Give the examples to describe your opinion
- •XXI. Work in pairs. Discuss the importance of this or that form of money.
- •XXII. Work in small groups
- •Regulation and token money
- •Section 4.2. Banking and financing key vocabulary
- •III. Read the following verbal phrases and pay attention to the prepositions used after them
- •IV. Listen, read and translate the text the commercial banks
- •Grammar practice
- •Language practice
- •IX. Translate the following sentences into English
- •Speaking
- •Financing of international trade
- •The foreign exchange market
- •XIV. Write a summary of the text
- •XV. Practice talking about the following situations
- •XVI. Work in groups of two or three, talk about banking and payment
- •Section 4.3. Inflation key vocabulary
- •I. Read the words below and remember the correct pronunciation of them
- •II. Read and translate the following groups of words
- •III. Remember the words and word combinations given
- •IV. Define the part of speech of the following words
- •V. Make nouns of the following verbs
- •VI. Listen, read and translate the text types of inflation
- •Grammar practice
- •Language practice
- •XVIII. Put prepositions into the blanks
- •XIX. Put question to the words in italics
- •XX. Fill in the blanks using the necessary forms of the verbs given in brackets
- •Speaking
- •XXI. Work in pairs. Student a asks questions, student b answers them
- •XXIII. Read and translate the text the effects of inflation
- •Chapter 5. Fairs and exhibitions key vocabulary
- •Fairs and exhibitions
- •Grammar practice
- •Language practice
- •X. Translate the following sentences into English
- •XI. Answer the questions about the text
- •XII. Find in the dictionary the definitions of the following synonyms with the meaning of «показ; демонстрация»
- •XIII. Read the text and divide it into some meaningful parts giving the proper title to each of them rules and regulations
- •XIV. Write a summary of the text with to the following phrases
- •Speaking
- •XV. Reproduce the main text, using the words given in exercises I, II, III.
- •XVI. Practice talking about the folloving situations
- •XVII. Work in groups of two or three, talk about your firm's participation in the exhibition, using the information about conditions of participation
- •Chapter 6. Business contacts key vocabulaty
- •I. Remember the correct pronunciation of these words
- •II. Learn the following English word combinations and their Russian equivalents. Give your own sentences with them
- •III. Read the following verbal phrases and lexical combinations and pay attention to the prepositions used after them
- •Listen, read and translate the text business contacts
- •Grammar practice
- •Language practice
- •XI. Translate the following sentences into English
- •XII. Answer the questions about the text
- •XIII. Find in the dictionary the definitions of the synonyms with the meaning of «договоренность»
- •XIV. Read the text, divide it into some meaningful parts giving the proper title to each of them kioge-97 – the 5th kazakhstan international oil and gas exhibitions
- •XV. Write a summary of the text with the following phrases
- •Speaking
- •XVI. Reproduce the main text, using the words given in exercises I, II, III.
- •XVII. Work in groups of two or three, talk about business matters
- •XVIII. Practice talking about:
- •Chapter 7. Contracts and agreements key vocabulaty
- •I. Remember the correct pronunciation of these words
- •II. Learn the following English terms and their Russian equivalents. Give your sentences with them
- •III. Read the following verbs and pay attention to the prepositions used after them
- •Listen, read and translate the text
- •Languge practice
- •V. Look through the text to find English equivalents of the following terms and give your sentences with them
- •VI. Find in the text the sentences that correspond to the following statements
- •VII. Translate the following sentences into English
- •VIII. Answer these questions about the text
- •IX. Find in the dictionary the definitions of the synonyms with the meaning of
- •X. Read the text and divide it into some meaningful parts, giving the proper title to each of them
- •Articles
- •XI. Write a summary of the text
- •Speaking
- •XII. Reproduce the main text, using the words given in exercises I, II, III.
- •XIII. Work in groups of two or three, talk about contracts and agreements
- •XIV. Practise talking about:
- •Chapter 8. Business letters key vocabulaty
- •I. Remember the correct pronunciation of these words
- •II. Learn the following English words and phrases and their Russian equivalents. Give your sentences with them
- •III. Listen, read and translate the text business letter
- •Language practice
- •VIII. Translate the following sentences into English
- •IX. Answer the questions about the text
- •X. Study the contents of business letters
- •XI. Find in the dictionary the definitions of the synonyms with the meaning of «удобство»
- •XII. Read the text, divide it into some meaningful parts giving the proper title to each of them
- •X III. Write a summary of the text
- •XIV. Read and learn the registration form, the application for accommodation, the layout of the letter, the order form for catalogue and some samples of letters Registration Form
- •Accommodation
- •The layout of the letter
- •The Samples of Letter
- •2. Text of entry 2. Текст
- •XVI. Write the letters using the samples given in exercise хv
- •XVII. Reproduce the main text
- •I. Read and remember the words given
- •Individual and society
- •Grammar practice
- •Language practice
- •XII. Fill in the blanks with prepositions
- •XIII. Fill in the gaps with the verbs given in brackets
- •XIV. Response on the following
- •XV. Make up questions to the following sentences
- •XVI. Translate from Russian into English
- •Speaking
- •Section 1.2. Scarcity and choice key vocabulaty
- •Read and translate the groups of words given
- •III. Listen, read and translate the text scarcity and choice
- •Grammar practice
- •Language practice
- •X. Fill in the gaps
- •XI. Join the sentence halves below
- •XII. Answer the question below
- •XIII. Translate from Russian into English
- •The role of the market
- •Grammar practice
- •Language practice
- •XVI. Fill in the blanks with the correct forms of the verbs given in brackets
- •XVII. Answer the questions
- •XVIII. Translate from Russian into English
- •Speaking
- •XIX. Work in pairs or small groups. Think of the example of any seller and prove that it is profitable for him to be in the business.
- •XX. Making a report. Make a report on the role of the market. Use simple language
- •Section 2.2. The command economy, the free market economy and the mixed economy key vocabulaty
- •I. Read and remember the following words
- •II. Translate and remember the following word combinations
- •III. Find the English equivalents to the following word expressions
- •IV. Listen, read and translate the text the command economy, the free market economy, the mixed economy
- •Grammar practice
- •Language practice
- •IX. Answer the questions
- •X. Translate from Russian into English
- •Speaking
- •Chapter 3. Macroeconomics and microeconomics section 3.1. What is macroeconomics? key vocabulaty
- •Find Russian equivalents to the following English word combinations
- •III. Find the English equivalents to the following word expressions
- •IV. Listen, read and translate the text what is macroeconomics?
- •Grammar practice
- •Language practice
- •Speaking
- •Section 3.2. What is microeconomics? key vocabulary
- •II. Find the equivalents to the following word combinations
- •III. Give the English for the following
- •IV. Listen, read and translate the text microeconomics
- •Grammar practice
- •Language practice
- •XII. Match the terms and their definitions
- •XIII. Answer the following questions for general understanding
- •XIV. Translate into Russian
- •XV. Translate from Russian into English
- •XVI. Writing a summary is a useful activity to prepare for any oral task such as retelling or discussion.
- •XVII. Imagine, you are a participant at a scientific conference on economics. You have to make a 3 minutes report on the topic «Macro – and Microeconomics»
- •I. Read and remember the following words
- •II. Find equivalents in Russian
- •III. Give English for the following
- •IV. Listen, read and translate the text the market
- •Grammar practice
- •Language practice
- •XI. Translate into Russian
- •XII. Translate from Russian into English
- •XIII. Write a summary to the text «Market»
- •Speaking
- •XIV. Work in small groups. Think of the model of any market, say fast food, fashion goods or pharmaceutical goods, study the features of that market and see how it works in practice
- •Section 4.2. Demand, supply, and equilibrium key vocabulary
- •I. Read and remember the following words
- •Demand, supply, and equilibrium
- •The demand for and the supply of chocolate
- •Grammar practice
- •Language practice
- •XI. Make up questions to the following sentences
- •XII. Answer the following questions for general understanding
- •XIII. Read each statement given and decide which of the following is not true
- •XIV. Translate from Russian into English
- •XV. Look through the text once again and write a summary of this text
- •Speaking
- •X VI. Work in small groups. Think about examples of storable commodities, decide whether it is necessary in some economies to stock them and present your ideas to the class
- •XVII. Work in pairs. Read the information given below and think of and discuss the examples of the Giffen and the Veblen effects
- •X VIII. Make a brief report on the subject: «Demand and supply, and the Market»
- •Chapter 5. Competition section 5.1. The limiting cases of market structure key vocabulary
- •I. Read and remember the following words
- •II. Match each expression with its meaning
- •III. Read and translate the groups of words
- •IV. Translate the word combinations from Russian into English
- •V. Listen, read and translate the text the limiting cases of market structure
- •Grammar practice
- •Language practice
- •X. Read each statement below and decide which of the following is not true
- •XI. Make up questions to the following sentences
- •XII. Answer the following questions
- •XIII. Translate from Russian into English
- •Speaking
- •Section 5.2. Perfect competition key vocabulary
- •Perfect competition
- •Grammar practice
- •Language practice
- •XII. Join the halves of the sentences below
- •XIII. Make up questions to the following sentences
- •XIV. Answer the following questions
- •XV. Translate from Russian into English
- •Speaking
- •XVI. Talk to your partner and give one or two examples of a perfectly competitive market where neither buyers nor sellers believe that their own actions affect the market price.
- •XVII. Firstly work as a class and read the information below. Then think of examples of some firms and prove they are really perfectly competitive ones
- •Section 5.3. Competition in world markets key vocabulary
- •Read and remember the following words
- •II. Translate the following word combinations from Russian into English
- •III. Translate the word combinations from English into Russian
- •IV. Listen, read and translate the text competition in the world market
- •Grammar practice
- •Language practice
- •X. Fill in the gaps with the verbs given in brackets
- •XI. Answer the following questions
- •XII. Translate from Russian into English
- •Speaking
- •X IV. Prepare a 2 minutes report on the topic «Competition on the World Market»
- •Section 5.4. Oligopoly key vocabulary
- •I. Read and remember the following words
- •II Guess the meaning of the following word combinations from the text
- •III. Give English for the following
- •IV. Listen, read and translate the text oligopoly
- •Grammar practice
- •Language practice
- •Exercises
- •I. Open the brackets using the verbs in one of the following tenses: the Present Continuous, Present Simple, Past Simple or Future Simple
- •II. Open the brackets using the verbs in one of the following tenses: the Present Continuous, Present Simple, Past Indefinite or Future Simple
- •III. Open the brackets using the verbs in one of the following tenses: the Present Continuous or Past Continuous
- •IV. Open the brackets using the verbs in one of the following tenses: the Past Simple or Past Continuous
- •V. Open the brackets using the verbs in one of the following tenses: the Present, Past, Future Simple, Present, Past Continuous
- •VI. Open the brackets using the verbs in the following tenses: the Past Simple or Present Perfect
- •VII. Open the brackets using the verbs in the following tenses: the Past Simple or Present Perfect
- •VIII. Open the brackets using the verbs in the following tenses: the Past Simple or Past Perfect
- •IX. Open the brackets using the verbs in one of the following tenses: the Past Simple, Past Continuous or Past Perfect
- •X. Open the brackets using the verbs in one of the following tenses: the Present Perfect, Past Simple, Past Continuous or Past Perfect
- •XI. Put the verbs in brackets into the Present, Past or Future Perfect Continuous Tense
- •XII. Form the questions with the question word given
- •XIII. Translate into English
- •Section 1.2. The passive voice
- •Exercises
- •I. Answer the following questions
- •II. Transform the sentences from Active into Passive
- •III. Fill in each blank with the necessary form of the verb in the Passive Voice
- •IV. Put questions to the words given in bold type
- •V. Translate the following sentences into Russian
- •VI. Translate into English
- •VII. Put the verbs in brackets into the correct tense-form
- •VIII. Transfer the verbs in brackets into the correct tense form
- •IX. Translate from Russian into English
- •X. Translate into Russian
- •XI. Change these Active constructions into the Passive ones
- •Chapter 2. Non-finite forms of the verb section 2.1. The infinitive forms of the infinitive
- •Functions of the infinitive
- •Infinitive constructions Complex Object
- •Complex Subject
- •Exercises
- •I. Translate from English into Russian
- •II. Translate from Russian into English using Complex Object where necessary
- •III. Translate from Russian into English using Complex Object
- •IV. Translate from English into Russian and underline Complex Object
- •V. Transfer complex sentences into simple ones using Complex Subject and translate them
- •VI. Translate into Russian
- •VII. Translate sentences using Complex Subject
- •VIII. Translate from Russian into English using the «for» construction
- •Section 2.2. The participle forms of the participle
- •Functions of the participle
- •Participle constructions
- •Exercises
- •I. Translate into Russian, define the form and the function of the Participle
- •II. Translate into Russian, change Participle Construction into subordinate clauses
- •III. Change subordinate clauses into Participle Constructions and translate them into Russian
- •IV. Translate into English
- •V. Translate into English using the Objective Participial Construction
- •VI. Translate into Russian paying attention to the Absolute Participle Construction
- •VII. Translate into Russian, define the form and the function of the Participle
- •VIII. Translate into English
- •IX. Translate into Russian keeping the rule of translation of the Absolute Participle Construction
- •Complex gerund construction
- •I. Transfer the verb in brackets into the form of Gerund using the corresponding preposition
- •II. Change the subordinate clauses with the Gerund using the corresponding preposition where necessary
- •III. Translate into English using the Gerund
- •IV. Transfer subordinate clauses into the complex Gerund Constructions using the corresponding preposition
- •V. Translate into English with the help of the corresponding preposition
- •Tests tests to part I test I (chapters 1 – 3)
- •1. Упорядочение
- •2. Соответствие
- •3. Поле ввода
- •4. Заполнить пропуски. Завершите следующие фразы подходящим высказыванием:
- •5. Несколько полей ввода (вопрос – ответ)
- •Test II (chapters 4 – 8)
- •1. Упорядочение (распределение синонимов по группам)
- •2. Соответствие
- •3. Поле ввода
- •4. Заполнить пропуски. Завершите следующие фразы подходящим высказыванием:
- •5. Несколько полей ввода (вопрос – ответ)
- •Tests to part II test I (chapters 1 – 3)
- •1. Упорядочение по группам (объедините в группы слова близкие по значению по разделам a, b, c, d, e)
- •2. Соответствие в парах: соотнести английский вариант с русским
- •3. Поле ввода
- •4. Дайте развернутый ответ по ситуации
- •Test II (chapters 4 – 5)
- •1. Упорядочение: расположить по группам (объедините в группы слова близкие по значению: a, b, c, d, e)
- •2. Соответствие в парах: соотнести английский вариант с русским
- •3. Поле ввода
- •4. Найдите область на рисунке
- •5. Дайте развернутый ответ по ситуации
- •Answer keys to tests
- •Библиографический список
XIX. Put question to the words in italics
1. In some contexts inflation refers to a steady increase in the supply of money.
2. In an extreme form of inflation, prices rise at a phenomenal rate.
3. Germany experienced this kind of inflation in 1923.
4. By the end of that year prices were one million times greater then their pre-war level.
5. Towards the end of 1923, wages were paid daily.
XX. Fill in the blanks using the necessary forms of the verbs given in brackets
1. Other commodities, such as cigarettes, ... (to use) as money.
2. So great ... (to be) the loss of confidence in Hungary that the new currency had ... (to give) a new name.
3. Another type of inflation ... (to describe) as suppressed inflation.
4. The effect on prices ... (to minimize) by the use of such devices as price controls and rationing.
5. The most common type of inflation is that ... (to experience) since the war in Britain.
6. The causes of inflation may ... (to classify) as demand-pull or cost-push.
7. Demand inflation may ... (to define) as a situation where aggregate demand persistently ... (to exceed) aggregate supply at current prices so that the prices ... (to pull) upwards.
8. This type of inflation ... (to associate) with conditions of full employment.
9. If there are unemployed resources available, an increase in demand can ... (to meet) by bringing these resources into employment.
10. If the total demand for goods and services continues ... (to increase), a full employment situation ... (to reach).
11. In order ... (to increase) the rate of capital accumulation, resources will have ... (to transfer) from the production of consumer goods to the production of capital goods.
12. Even when the additional government spending ... (to finance) from the taxation the effect may still ... (to be) inflationary.
Speaking
XXI. Work in pairs. Student a asks questions, student b answers them
1. How can inflation be defined?
2. What is hyperinflation?
3. What happens under conditions of hyperinflation?
4. What is the only possible course of action when money becomes unacceptable as a medium of exchange?
5. What is suppressed inflation?
6. How can you characterize creeping inflation?
7. How are the causes of inflation usually classified?
8. How may demand inflation be defined?
9. What is demand inflation usually associated with?
10. When may a situation of excess demand arise?
X XII. Imagine you are a lecturer delivering lecture on inflation. Prepare not long and clear report on the topic for the first year students of school of economics Tip:
Tip:
XXIII. Read and translate the text the effects of inflation
Inflation is regarded as undesirable because it produces some serious economic and social problems.
Inflation leads to an arbitrary redistribution of real income. Although a rise in the general price level produces a corresponding rise in money incomes, all prices do not rise to the same extent and different income groups will be affected in different ways. There will be some «gainers» and some «losers».
The losers are those whose incomes are fixed, or relatively fixed, in money terms. This group will include people whose income is derived from fixed interest securities, controlled rents, or some private pension schemes. Income recipients in this category will experience a fall in their real incomes.
When incomes are directly related to prices, real income will remain relatively unchanged. The incomes of sales people, and professional groups such as architects, surveyors, and estate agents whose fees are expressed as a percentage of the value of the work undertaken, fall into this category. A large number of wage earners also come into this group since many workers have agreements which link their money wages to the Retail Price Index.
The effects on incomes derived from profits depend largely upon the kind of inflation being experienced. During demand-pull inflation, profits tend to rise. The prices of final goods and services tend to be more flexible in an upwards direction than many factor prices, some of which are fixed on fairly long-term contracts. The margins between the two price levels tend to widen because of this time lag. When there is cost-push inflation, profits may he squeezed. Since there is no excess demand some firms may find it rather difficult to pass on the full effects of rising cost in the form of higher prices.
Wage earners generally more than hold their own when the price level is rising. In the UK and most other industrial countries wages in most years have risen faster than prices, but as already mentioned, there tends to be some redistribution effect as those with superior bargaining power gain at the expense of the weaker groups.
Inflation tends to encourage borrowing and discourage lending because debtors «gain» and creditors «lose». Debtors repay in monetary units which have less purchasing power than those which they borrowed. If a person borrows a sum of money for 2 years during which time inflation is running at 10 percent per annum, the same sum repayable at the end of the term will be worth about 17 percent less in real purchasing power than the sum of money borrowed. It is for this reason that lenders demand higher rates of interest during periods of inflation.
Demand-pull inflation is associated with buoyant trading conditions and sellers' markets where the risks of trading are greatly reduced. These easy market conditions might give rise to complacency and inefficiency since the competitive pressures to improve both product and performance will be greatly weakened. This is not likely to be the case in a cost-push inflation where trading conditions are likely to place a premium on greater efficiency. Where firms cannot absorb some of the higher factor prices by improving productivity they may find it difficult to survive. It is possible that employers seeking to hold down costs will react to rapidly rising wage cost by devising means of economising in their use of labour and hence raise the level of unemployment.
Demand inflation, it is sometimes argued, is conductive to a faster rate of economic growth since the excess demand and favourable market conditions will stimulate investment and expansion. The falling value of money, however, may encourage spending rather than saving and so reduce the funds available for investment. It may also lead to higher interest rates as creditors demand some additional return to compensate for the falling value of money. Nevertheless relatively high nominal rates of interest may not be a deterrent to investment. If the nominal rate of interest is 10 percent, but the rate of inflation is 8 percent, the «real» rate of interest is only 2 percent.
In economies such as the UK which are dependent upon a high level of exports and imports, inflation often leads to balance of payments difficulties. If other countries are not inflating to the same extent, home-produced goods will become more competitive in the home market. Exports will be depressed and imports will rise. If this process continues it must lead to a balance of payments deficit on the current account. The problem will be a particularly difficult one where inflation is of the demand-pull type, because in addition to the price effects the excess demand at home will tend to «draw in» more imports. These balance of payments effects apply particularly where a country is operating a fixed rate of exchange. A floating rate of exchange means that the rise in home prices does not have such an unfavorable effect on the volumes of exports and imports.
XXIV. Work in pairs
a) Put 4 – 6 questions to each part of the text.
b) Compose a short plan to the text.
Find sentences in each passage that are not so necessary and important for the retelling of the text.
Compose a conversation on the effects of inflation.
Tip: