Text-study

I. Learn the following words:

To account for – объяснять;

to bust – обанкротиться;

slump – резкое падение;

downturn – спад, понижение;

recession – падение, спад;

to dampen – ослаблять, останавливать;

pace – темп;

unsustainable – непостоянный;

bubble – дутое предприятие, бум;

to inflate – проводить инфляцию;

to slide – понижаться;

to stall – задерживать, уклоняться;

to tighten – ужесточать.

II. Answer the following questions:

1. What are the reasons for the IT boom turning to bust being a serious question?

2. How can an unsustainable pace of IT investment affect productivity growth?

3. What is the difference between Japan's bubble in the 1980s and the American one in the late 1990s?

4. What is the main difference between Japan's investment of the 1980s and that in the United States today?

5. What is the reason why investment in America is unlikely to fall so sharply as in Japan?

6. What does a faster rate of depreciation mean?

7. What factor does the rate of nominal IT spending depend on?

III. Complete the following sentences with the words from the box:

investment in information technology; the tech bubble; slump in investment; composition of capital spending; to reduce IT spending; a fall in nominal spending

1. A growing number of economists think that … that is now popping, along with firms' own inflated expectations about future returns, encouraged excessive investment.

2. Indeed, in the past five years, … has increased by an annual average of around 25% in real terms, accounting for no less than one-quarter of the country's total GDP growth.

3. A severe … could turn a mild economic downturn into a deeper recession.

4. One reason why investment in America is unlikely to fall so sharply as in Japan is the different … .

5. If firms decided … by enough to slow the growth in the ratio of the IT stock to GDP back to its average pace of the past decade, this would imply an 8% … .

IV. Give Russian equivalents for the following words and phrases used in the text:

productivity gains; a splurge in spending; communications equipment; the country's total GDP growth; the IT boom turning to bust; a severe slump in investment; labour productivity growth; business investment; inflated expectations; future returns; excessive investment; vigorous growth; depreciation; a firm's capital stock; gross investment.

V. Translate the following text into Russian in writing:

In the past five years, investment in information technology has increased by an annual average of around 25% in real terms, accounting for no less than one-quarter of the country's total GDP growth. The recent profit warnings from high-tech firms are therefore rather alarming: their sales so far this year are well below expectations. The current conventional wisdom is that Japan's investment was a near-total waste; and that, unlike that in the United States today, it did not yield an increase in productivity growth. After its bubble burst at the start of the 1990s, Japanese business investment collapsed and productivity growth stalled. High depreciation means that gross investment is also larger in relation to GDP. It means that the short-term impact on the economy of a decline in investment is more severe. But any adjustment to the desired size of capital stock may be swifter, so reducing the risk of a prolonged, Japanese-style downturn.