Text 12. Macroeconomic Goals

Full employment, stability, and economic growth are the three macroeconomic goals most relevant to the aggregate economy and consequently are of prime importance to the study of macroeconomics.

Full Employment. Full employment is achieved when all available resources (labor, capital, land, and entrepreneurship) are used to produce goods and services. This goal is commonly indicated by the employment of labor resources (measured by the unemployment rate). However, all resources in the economy - labor, capital, land, and entrepreneurship - are important to this goal. The economy benefits from full employment because resources produce the goods that satisfy the wants and needs that lessen the scarcity problem. If the resources are not employed, then they are not producing and satisfaction is not achieved.

Stability. Stability is achieved by avoiding or limiting fluctuations in production, employment, and prices. Stability seeks to avoid the recessionary declines and inflationary expansions of business cycles. This goal is indicated by month-to-month and year-to-year changes in various economic measures, such as the inflation rate, the unemployment rate, and the growth rate of production. If these remain unchanged, then stability is at hand. Maintaining stability is beneficial because it means uncertainty and disruptions in the economy are avoided. It means consumers and businesses can safely pursue long-term consumption and production plans. Policy makers are usually most concerned with price stability and the inflation rate.

Economic Growth. Economic growth is achieved by increasing the economy's ability to produce goods and services. This goal is best indicated by measuring the growth rate of production. If the economy produces more goods this year than last, then it is growing. Economic growth is also indicated by increases in the quantities of the resources--labor, capital, land, and entrepreneurship-used to produce goods. With economic growth, society gets more goods that can be used to satisfy more wants and needs-people are better off; living standards rise; and scarcity is less of a problem.

 

Exercise 83 . Answer the questions.

1. What are the three macroeconomic goals? 2. Why are they relevant to the study of macroeconomics? 3. When is full employment achieved? 4. How does economy benefit from full employment? 5. How is stability achieved? 6. What economic measures are used to indicate stability? 7. Why is maintaining stability beneficial? 8. How is economic growth achieved? 9. How is this goal indicated?

 

Exercise 84. Make sure you can translate the following phrases.

Prime importance, consequently, available resources, entrepreneurship, goods and services, the employment of labour resources, unemployment rate, to lessen the scarcity problem, to achieve satisfaction, to limit fluctuations, recessionary declines, inflationary expansions, long-term consumption, to measure the growth, rate of production, living standards.

 

Exercise 85. Put special questions to the sentences.

 Policy makers are mast concerned with price stability and the inflation rate.

 

Exercise 86. Analyze the -ing form.

1. Famous for its Windows operating system, Microsoft is the world’s №1 software company. 2. Stop trying to make the company expand. 3. A three-day weekend will reduce the factory’s heating costs. 4. Stability is achieved by avoiding or limiting fluctuations in production, employment, and prices. 5. Maintaining stability is beneficial because it means uncertainty and disruptions in the economy are avoided. 6. Economic growth is achieved by increasing the economy's ability to produce goods and services. 7. With economic growth, society gets more goods that can be used to satisfy more wants and needs-people are better off; living standards rise; and scarcity is less of a problem.

 

Exercise 87. Learn the words and phrases from the text.

gross domestic product	– валовий внутрішній продукт
trough	– найнижча точка; дно
recovery	– відновлення; підйом
output	– продукція; випуск

Exercise 88. Read, translate and give the gist of text 13.

Text 13. Business Cycles

Business cycles are more-or-less-regular fluctuations in the level of economic activity. These are the up and down phases that accompany the increases or decreases in gross domestic product. Each business cycle goes through four phases: peak, recession, trough, and recovery. These are positions on the cycle and indicate the level of income, output, and employment. Figure 2 is a business cycle with the phases identified. The peak is the highest point; the declining period is the recession. A deeper, longer recession is sometimes called a depression. The trough is the lowest point and recovery is the upwards wing. Although all business cycles follow the same pattern of peak, recession, troughs, and recovery, not all cycles are the same. Some peaks are higher than others, some recessions are longer and more severe, and other variations occur from cycle to cycle. The lower portions of the cycle are usually accompanied by high rates of unemployment. Yet upward movements on the business cycle that reduce unemployment may result in increased inflation. The term unemployment is frequently used in macroeconomics. Unemployment means that there are people looking for a job but are unable to find work at the going wage. There may be work available that they are not trained to do, or there may be work available in other areas of the country. But these people cannot find work that they are capable of doing, that would not require relocating, or that would pay a wage they are willing to accept.

Figure 2. Business Cycle

This figure shows the phases of the business cycle. The high point is the peak, the declining portion is the recession, the low point is the trough, and the rising portion is the recovery.

 

Exercise 89. Give Ukrainian equivalents.

More-or-less-regular fluctuations, up and down phases, increases or decreases in gross domestic product, indicate the level of income, employment, pattern, to be accompanied by, high rates of unemployment, to reduce unemployment, to result in increased inflation, macroeconomics, to require relocating, wage.

Exercise 90. Answer the questions.

1. What is business cycle? 2 What phases does each business cycle go through? 3. What do positions on the cycle indicate? 4. Are all cycles the same? 5. What does the term unemployment mean? 6. What are the main reasons why people can’t find work?

 

Exercise 91. Find a grammar mistake in each sentence.

1. In some years, most industries is booming and unemployment is low; in other years, most industries are operating well below capacity and unemployment is high.2. Periods of economic prosperity are typically call expansions or booms; periods of economic decline are called recessions or depressions. 3. During an expansion, not only does output rise, but also employment rise and unemployment falls. 4. Conversely, during a recession, the output of goods and services declines, employment falls, and unemployment rise. 5. Just as there no regularity in the timing of business cycles, there is no reason why cycles have to occur at all. 6. Monetary policy, in particular, appears to have to played a crucial role in causing business cycles. 7. Since the World War II, most business cycles has lasted three to five years from peak to peak.

 

Exercise 92. Use the words in brackets to make intentions with “going to”.

 

e.g. I have decided to accept the job. - I’m going to accept the job.

          

1. I have decided to leave on the 17^th at 9.30 a.m. 2. This is where we are planning to build the new office. 3. I have decided to buy a BMW. 4. They have decided not to go abroad this year. 5. We have decided to change our price policy to ease financial stress. 6. I have decided to understand their businesses and help them meet their goals.

Exercise 93 Learn the following words and word combinations.

 

solar flare	– спалах на сонці
business inventory	– комерційні товарні запаси
GDP (gross domestic product)	– валовий внутрішній продукт
technological innovations	– технологічні нововведення, технологічні досягнення
spin-off	– побічний результат
refiner	– нафтопереробний завод
replacement level	– рівень відновлення
hands-off attitude	– позиція невтручання
laissez-faire	– невтручання держави в економіку
Say's Law	– закон Сея (згідно якого пропозиція сама створює попит)

Exercise 94. Read, translate and give the gist of text 14.

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