Tools of Macroeconomic Policy

The principal tools of macroeconomic policy are monetary policy and fiscal policy. Monetary policy in the United States is under the control of the Board of Governors of the Federal Reserve System. The Federal Reserve controls the supply of money and credit in a number of ways. The most important Federal Reserve instrument stems from its authority to purchase and sell government securities in the so-called open market. Credit tightening, for example, may be accomplished by an open-market sale. The purchases of the government securities transmit money balances to the Federal Reserve, thereby reducing the nation’s money supply. This, in turn, reduces bank lending power and drives up the cost of borrowing. The hoped for outcome is less borrowing and spending by the private sector of the economy. The Federal Reserve is also empowered to lend funds to its member banks. It may raise or lower the interest rate (the rediscount rate) at which it lends the funds, thereby discouraging or encouraging bank borrowing.

The other principal tool of macroeconomic policy is fiscal policy. This means the use of the federal budget to add or subtract purchasing power from the economy. To stimulate the economy, government expenditures may be raised directly or taxes may be reduced, thereby site set of policies could be employed if aggregate demand is excessive, because higher taxes and less government spending would reduce total spending and help slow inflation.

The principal vehicle of fiscal policy is the federal budget. The annual budget plan is developed by the administration and submitted for review by the congressional budget committees. Changes in the tax code must be legislated by the Congress, and the tax system is administrated by the Internal Revenue Service under the general supervision of the Secretary of the Treasury.

Huge deficits make it very difficult to use fiscal policy as a tool of economic stabilization in as much as tax cuts to stimulate the economy would further add to the size of the deficit. Some macroeconomists bemoan the virtual loss of fiscal policy as a stabilization tool, and others, usually described as monetarists, welcome it because they have never believed in the efficiency of fiscal policy as a stabilization tool.

 

Вариант №4

I. Спишите, подчеркните сказуемое. Определите видовременную форму и залог глагола. Переведите предложения на русский язык:

1. He studied many subjects.

2. The students had passed the exam by two o’clock yesterday.

3. You are playing chess, aren’t you?

4. I’m sorry I haven’t written before because I’ve been very busy lately.

5. This book was written by our teacher.

6. The students are translating the sentences from English into Russian now.

7. The letter had been written before we came.

8. Who was talking on the telephone at that time?

9. They may take my book.

10. Will you try to enter the university?

II. Запишите предложения в вопросительной и отрицательной форме. Задайте специальный вопрос к выделенным словам:

1. Den studies at the University.

2. I translated many articles every day.

3. He has just spoken to her.

4. We will take our final exams in June.

5. The students were working very well.

III. Спишите, подчеркните причастие II на русский язык, определите его функцию и переведите предложения на русский язык:

1. All books taken from the library must be returned in time.

2. Asked whether he intended to return soon, he replied that he would be away for about 3 months.

3. They showed us a list of the goods sold.

4. The goods are discharged.

IV. Спишите и переведите, обращая внимание на перевод сложного дополнения (Complex Object ):

1. I would like the German company to change the contract terms.

2. We heard the manager saying we would buy some computers from BML.

3. - You expect the design of the model to be changed, don’t you? - Yes, we do. But I’m afraid it won’t be changed.

4. - When do you want the exhibits to be sent to the international exhibition? - In May.

V. Прочитайте текст и выполните задания к нему:

Helping Foreign Trade

There are some institutions and policies in the world that foster international trade. If these institutions did not exist, many companies would not be able to go international. The U.S. government created the Export-Import Bank (Eximbank) in order to reduce unemployment in the country. Eximbank loans to U.S. exporters and foreign buyers of U.S. imports if private financing is not available. A firm can also buy insurance from the Foreign Credit Insurance Association (FCIA) to cover political risk (such as expropriation and loss due to war). The exporter can also buy insurance coverage on credit sales to foreign customer.

More known are the International Bank for Reconstruction and Development (World Bank) and the International Monetary Fund (IMF).

The former fosters the economic development of member nations by making loans to them. The latter eliminates trade barriers and promotes financial cooperation among member countries. Thus, if firms in Argentina wish to buy from American firms but Argentina lacks American dollars, Argentina can borrow USD from IMF. Then it pays the loan back.

- Выпишите из текста предложения, в которых использованы модальные глаголы или их эквиваленты, и переведите их на русский язык.

- Ответьте на вопросы письменно:

1. What can foster international trade?

2. What would happen to many companies if these institutions and policies did not exist?

3. What institution did the U.S. government create in order to reduce unemployment in the country?

4. When does Eximbank make loans to U.S. exporters and foreign buyers?

5. What can a firm buy from FCIA?

6. What sort of a risk does FCIA insurance cover?

7. What can an export do if he is not sure of his customer’s creditability?

8. What are the World Bank and IMF known for?

9. How can IMF help a foreign firm to buy, say, American products?

VI. Переведите текст письменно:

Microeconomics

The word “micro” means small, and microeconomics means economics in the small. The optimizing behavior of individual units such as households and firms provides the foundation for microeconomics.

Microeconomists may investigate individual markets or even the economy as a whole, but their analyses are derived from the aggregation of the behavior of individual units. Microeconomic theory is used extensively in many areas of applied economics. For example, it is used in industrial organisation, labor economics, international trade, cost-benefit analysis, and many other economic subfields. The tools and analyses of microeconomics provide a common ground, and even a language, for economists interested in a wide range of problems. At one time there was a sharp distinction in both methodology and subject matter between microeconomics and macroeconomics.

The methodological distinction became somewhat blurred during the 1970s as more and more macroeconomic analyses were built upon microeconomic foundations. Nonetheless, major distinctions remain between the two major branches of economics. For example, the microeconomist is interested in the determination in the general price level and its change over time.

Optimization plays a key role in microeconomics. The consumer is assumed to maximize profit or minimize utility or satisfaction subject to the constraints imposed by income or income earning power. The producer is assumed to maximize profit or minimize cost subject to the technological constraints under which the firm operates. Optimization of social welfare sometimes is the criterion for the determination of public policy.

Opportunity cost is an important concept in microeconomics. Many courses of action are valued in terms of what is sacrificed so that they might be undertaken. For example, the opportunity cost of a public project is the value of the additional goods that the private sector would have produced with the resources used for the public project.

 

 

Вариант №5

I. Спишите, подчеркните сказуемое. Определите видовременную форму и залог глагола. Переведите предложения на русский язык:

1. He was much spoken to.

2. Man proposes, God disposes.

3. He studies at our institute.

4. They lived in London for a long time, but now they live in Edinburgh.

5. When I saw him he was going home.

6. In five years he will work as a manager.

7. We shall be writing our tests at 10 o’clock.

8. He has decided to sign this contract.

9. I’m often asked at the seminars.

10. - Is Mr. Brown working this week? - No, he is on holiday.

II. Поставьте предложения в вопросительную и отрицательную форму. К выделенным словам задайте специальные вопросы:

1. The chief was talking on the phone at that time.

2. They have obtained a license lately.

3. I trust him.

4. She saved up to go abroad.

5. There were only some days on doing that.

III. Спишите, подчеркните причастие II, определите его функцию и переведите предложение на русский язык:

1. The question discussed at a number of meetings last month has been now decided.

2. Sent to the wrong address the letter didn’t reach him.

3. The captain informed us of the quantity of wheat loaded.

4. Part of the cargo was placed on deck.

IV. Спишите и переведите. Обращая внимание на перевод сложного дополнения (Complex Object ):

1. I would like the secretary to make an appointment with the marketing manager.

2. Our manager heard Mr. Brown promising to deliver the machines promptly.

3. - You expect the compressors to be shown in operation, don’t you? - Yes, we do. But I’m afraid that won’t be shown.

4. - When do you want the goods to be delivered? - By the end of the year.

V. Прочитайте текст и выполните задания к нему:

An Offer, its Kinds

An offer (a quotation) is a statement by the Sellers usually in written form expressing their wish to sell the goods. But it is not legal document i.e. if the Sellers for this or that reason decide not to sell, the Buyers have no legal remedy. An offer is only the first step in a contract.

Offers (quotations) will as a rule include the following information:

a) the description of the goods offered (their quality, quantity);

b) details of prices, discounts and terms of payment;

c) the date or the time and place of delivery.

There may be different kinds of offers.

Sometimes the Sellers may offer their goods to their regular customers without waiting for an inquiry or they may be forced to take the initiative under present competitive conditions and to send their quotation to those who may be interested in their goods. These are voluntary offers of sometimes they are called free offers. In this case there must be an indication in the offer that it is made subject to the goods being unsold (available) when the order is received. The opening phrases in voluntary offers may be: “We think you will be interested in our quotation for the goods” or “We have pleasure in enclosing our latest catalogue (or the price-list of our products)”.

- Выпишите из текста предложения с модальными глаголами и переведите их на русский язык.

- Выпишите из текста предложения, где сказуемые используются в страдательном залоге.

- Ответьте на вопросы к тексту письменно:

1. What is an offer?

2. What information is usually included in an offer?

3. What kinds of offers do you know?

4. What is a free offer?

5. When are free offers made?

6. What qualifying words in an offer indicate that it is a voluntary one?

7. What are the usual opening phrases in voluntary offers?

VI. Переведите тексты на русский язык письменно:

Theory of the Consumer

The individual consumer or household is assumed to possess a utility function which specifies the satisfaction which is gained from the consumption of alternative bundles of goods. The consumer’s income or income-earning power determines which bundles are available to the consumer. The consumer then selects a bundle that gives the highest possible level of utility. With few exceptions, the consumer is treated as a price taker - that is, the consumer is free to choose whatever quantities income allows but has no influence over prevailing market prices. In order to maximize utility the consumer purchases goods so that the subjective rate of substitution for each pair of goods as indicated by the consumer’s utility function equals the objective rate of substitution given by the ration of their market prices. This basic utility - maximization analysis has been modified and expanded in many different ways.

Theory of the Producer

The individual producer or firm is assumed to possess a production function, which specifies the quantity of output produced as a function of the quantities of the inputs used in production. The producer’s revenue equals the quantity of output produced and sold times its price, and the cost to the producer equals the sum of the quantities of inputs purchased and used times their prices. Profit is the difference between revenue and cost. The producer is assumed to maximize profits subject to the technology given by the production function. Profit maximization requires that the producer use each factor to a point at which its marginal contribution to revenue equals its marginal contribution to cost.

Under pure competition, the producer is a price taker who may sell at the going market price whatever has been produced. Under monopoly (one seller) the producer recognizes that prices the price paid for an input increases as purchases are increased.

 

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