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V.

ECONOMIC POLICY

Objectives:

-specific macroeconomic vocabulary and concepts


-phrasal verbs

Reading comprehension
1. Skim the text and make the difference between regulated and deregulated free market.
The development of capitalism began in the sixteenth century and it was accompanied by
political and economic liberalism that has been responsible for pulling more human beings out of
misery than any other known form of social organization. Ever since the inception of capitalism,
a fierce debate has raged on more or less regulation of free markets. Classical economists believe
that more often than not, unregulated markets work well, but Keynes 1 believed that it was the
responsibility of the government to intervene in market. By reducing the volatility of business
cycles, government intervention in the economy prevents large increases in unemployment
during recessions. The government spendings and taxes stabilize business cycle through fiscal
policies. Central banks throughout the world control recession by actively lowering the interest
rate to stimulate private demand making their monetary policy. Democratic political systems
have created institutions and policies to implement new theories and guide economy deep into
the century.
Fiscal policy comes from the government in the form of taxation and budgeting policies. While
fiscal policy can be very effective in specific cases to spur growth in the economy, most market
watchers look to monetary policy to do most of the heavy lifting in keeping the economy in a
stable growth pattern. Monetary policy is defined as any action to limit or increase the amount of
money that is circulating in the economy, thereby encouraging spending to spur the economy and
constricting access to capital when growth rates are reaching what are deemed unsustainable
levels.

VOCABULARY
policy
1. A definite course of action adopted for the sake of expediency, facility, etc.:
We have a new company policy.

1 John Maynard Keynes (1883-1946) an English economist whose ideas fundamentally changed the
theory and practice of modern macroeconomics
2. A course of action adopted and pursued by a government, ruler, political party, etc.:
Our nation's foreign policy.
3. Action or procedure conforming to or considered with reference to prudence or expediency:
It was good policy to consent.
4. sagacity; shrewdness:
Showing great policy, he pitted his enemies against one another.
5. Rare. government; polity

I. Matching the missing collocations with their corresponding blanks you will find the
main differences between economic policies:
competitive market pressures; free market rhetoric; free-market economic policies;
mainstream economic theory; economic globalization process; economic policy thinking

There has been a huge shift in the hegemony of macroeconomic thinking and actual
macroeconomic policy between the period after World War II until the late 1970s and the period
since the late-1970s until the present. The shift has been commonly identified as an ideological
move to a) ..-. . . which is fundamentally related to contending views of the
regulation role of the state. The ideology of free market capitalism is the motive force behind the
globalization that occurred since the late-1970s. During the post-WII period, most national
economies were placed under the control of the state, even in economies where markets played a
strong role. But the economic systems after WWII were much influenced by views that
considered social structures of solidarity necessary to offset the social tensions caused by the
negative effects of b) . .. . The role of the state extensive regulation was central to
the widely accepted solutions to deal with the domestic and international macroeconomic
instability inherent in free market capitalism. The shift of Golden Age time of the late 1970s to
the current neoliberal era economic thinking has had a huge impact on society. The change led
to a renewal process of c) . . of trade and financial markets. This liberalization
drove a process of global integration of goods and financial markets which in turn reinvigorated
the laissez faire ideology in mainstream academic and d) .. .. Later, the
political and economic changes in Eastern Europe and the collapse of the Berlin Wall served to
reinforce the e) .. .. of the policy makers who have widely developed the
acceptance of the curtailing role of the state in the economy. The ideas of anti-state ideology
replaced, alternatively, the ideology of the smooth functioning of capitalism requiring the balm
of state oversight and regulation to cure the potential excesses inherent in free markets. Within a
short time, f) . . appropriated the ideas of neoclassical economics and
created a hybrid that supported laissez faire ideology and disapproved the state involvement in
economy.

II. Find the appropriate title for each paragraph:


prices and incomes policy, fiscal policy, national debt management policy, exchange rate
policy, monetary policy
A. ______________________

Its purpose is to control some measures of the money supply an/ or the level and structure of
interest rates. The importance attached to it within the government's policy package will depend
upon its view of the operation of the economy and upon the decision it has reached regarding the
priority given to different objectives.

B. ______________________
It is concerned with decisions regarding the level and structure of government expenditure and
taxation. It has traditionally been regarded as having its impact through its influence on the level
of aggregate demand within the economy; an expansionary fiscal policy would involve
increasing government expenditure relative to taxation in order to boost the level of spending
within the economy and there by bringing more people into employment and enhancing
economic growth. Alternatively, a compressing fiscal policy would involve raising taxation
relative to government expenditure, with the purpose of reducing aggregate demand and
lowering inflation and the demand for imports.

C. ______________________
It involves the targeting of a particular value of the exchange rate. One of its major purposes is to
influence the flows within the balance of payments, and may perhaps be used in conjunction with
other policies such as exchange control, import tariffs and quotas.

D. _____________________
It is intended to influence the rate of inflation by means of either statutory or voluntary
restrictions upon increases in wages and/or prices. The range of prices and incomes over which
such a policy may prevail, and the degree of statutory control involved, is subject to considerable
variation.

E. ______________________
It is concerned with the manipulation of the outstanding stock of government debt instruments
held by the domestic private sector with the objective of influencing the level and structure of
interest rates and/or the availability of reserve assets to the banking system. It involves decisions
regarding the issue of new government securities and monetary policy has as one of its concerns
the level of interest rates.

GRAMMAR BYTE
Phrasal Verbs
Verbs are often followed by particles like back, off, through, up, etc that can change the meaning
to the verb. The term phrasal verb is used to name the verbs that change their meaning when
associated to a named particle. They can separate verbs from their object or they can be
inseparable from the verb and make the object come after the particle.
Ex.
Within the course of one week, in late December 2015, Whyte Bootsman took over as Executive
Director.
He is referred to as a barbarian handler which means that his job is to deal with foreigners.

Separable phrasal verbs:


The two parts of the phrasal verb can be made distinct by the interference of the object and refer
to different meanings.
Fill in this form for me, please.
Can you fill this form in?
Have you backed the document up?
Will you back me up in the meeting?
The management decided to cut their advertising budget back.
They decided to draw a new contract up.
The Central Bank was successful in keeping the inflation down.
They drove down the street.
She sorted the needed documents out.
Inseparable phrasal verbs
Some phrasal verbs cannot be separated from the verb. The object must come after the particle.
She said that she needs to call on his client on today.
The government prefers to deal with the companies that already signed the convention.
Did you come across the information that
I couldnt do without my personal fringe benefits.
She asked me to look after the dog while shes away.
You must check-in three hours before taking off.
Hang on for a moment, please!
I have looked out through my files but I didnt find it.

Many of them are intransitive, so they do not have object to follow.


The computer has broken down.
The negotiations fell through the last minute.
The PM stepped down after the corruption inquiry.
The teacher can turn up at any moment.

III. Use the following missing phrasal verbs in the sentences and give them an
appropriate grammar form: deal with; set aside; map out; scare away; trade away;
fill in; scale back; credit with; take up; pay back; wind back

1. Jim is .. convincing the staunch American allies to join Beijing regional


development bank.
2. I have direct experience of how ministers dislike having to . scientific evidence
that contradicts their policy.
3. The AIB offices .. 30,000 sq meters in an office tower in Beijings financial
street.
4. The city government has .. 6.2 ha of prime real estate for the building that will
eventually house 6,000 employees.
5. It has been rumored that researchers found culpable of lobbying would be made to
the money .. .
6. This directive appears to have been designed to .. researchers . from issues the
government doesnt want explored.
7. The government will focus on explicit and short-term tax breaks to . . medium-
term plans.
8. The government is . expectations of significant tax policy change in the
budget.
9. The government has scrapped plans to .. annual work-related deductions.
If they ask me to a form, I would lie about the information they need," Tan
said.

10. The scope to make big contributions on this basis is about to be .. imminently.

IV. Find the missing particles of the phrasal verbs in the following text:

Sharing economy

The sharing economy started in America 15 years ago. Having made the first successful purchase
from, say, Amazon, people felt safe buying elsewhere. Similarly, using a car-hire service for the
first time encouraged people to try different offerings. A peer-to-peer market place is now
dominated by professional power sellers who started as ordinary users. The same may
happen with the sharing economy which provides new opportunities for enterprise. Some people
have bought cars solely to rent them ., for example. Avis, a car-hire firm has a share in a
sharing rival and so do GM and Daimler, two carmakers. Companies may develop hybrid models
on peer-to-peer production sites. Online sharing will shake . transport, tourism, equipment-hire
and more. Officials are using listings to track .. unlicensed hotels. The sharing economy is
the latest example of the internets value to consumers. This emerging model is now big and
disruptive enough for regulators and companies to have woken .. to it. That is a sign of its
immense potential. It is time to start caring about peering . future.

SPEAKING
I. Find a representative economic statement belonging to each of the following names.
Develop their meaning.
1. Adam Smith; 2. John Maynard Keynes; 3. Ronald Reagan, 4. Margaret Thatcher

WRITING

I. Write a 250 word essay on one the following assumptions:


Good environmental policy is good economic policy. (Bernie Sanders)
An investment in knowledge pays the best interest (Benjamin Franklin)
Some people regard private entreprise as a apredatory tiger to be shot. Otrhers look on it
as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy
wagon. (Winston Churchill)

TRANSLATION

Translate into English using the following vocabulary: knowledge, wage, wages, salary,
skills, dangerous, dirty, inconvenient, tedious jobs; cost of living; clothing; support a
person's life, subsistence wages are; compensating differentials; purchasing power;
progressive or redistributive tax.

A
1. Suma de bani pe care un muncitor o primete pentru o sptmn de munc, n numerar se
numete salariu.
2. Angajaii permanent ai societtii noastre i primesc venitul lunar prin transfer bancar sau cec.
3. Puterea de cumprare a sczut anul trecut cu un procent de 5 %.
4. Calificarea, cunotinele i experiena acumulat prin educaie sau specializare profesional
reprezint capitalul uman i este remunerat corespunzator.
5. Societatea pltete persoanelor cu un nivel sczut de colarizare salarii difereniat
compensatorii pentru a accepta munci periculoase, murdare, dificile, stresante.
6. Salariul mediu pe economie trebuie s poat asigura existena zilnic a unei persoane.
7. Impozitul progresiv sau global este menit s reduc inegalitile veniturilor.
8. Costul existenei este acea suma necesar pentru hran, cas, mbrcminte, i altele.
9. Nimic nu e mai scump decat ce primesti gratis.

B.

1. Dup o perioad de 5 ani de rapid cretere a nivelului omajului, acesta a nceput n sfr it s
scad. (level off)
2. Din cauza recesiunii economice pronunate, preurile la produsele de larg consum au crescut
semnificativ.
3. A fost necesar s se nchid fabrica i s fie concediai toi muncitorii. (close down; lay off)
4. El frunzrete ziarele n fiecare zi, dar nu a gsit prea multe oferte de munc pn acum.
5. omerii gsesc uneori locuri de munc ocazionale. (casual work)
6. Banca a redus din personal. (cut back on the staff).
7. Din cauza recesiunii economice o parte din investitori s-au retras de pe pie ele nou aprute sau
i-au redus activitatea. (emerging markets; pull out of, scale down)
8. Conducerea a decis restrangerea activitii societii ( put off) i restructurarea serviciilor
administrative.(carry out restructuring)
9. Preul serviciilor bancare a crescut pentru ca ele s devin profitabile n condi iile infla iei
ridicate.
10. Guvernul duce o politic de austeritate (austerity) menit s reduca inflaia, importurile,
cheltuielile bugetare (government spending).

C.
Frmiarea statal, ndelungata stpnire strin nsoit de stoarcerea necrutoare a resurselor,
nesfitele rzboaie purtate pe locurile acestea, au determinat o stare de napoiere economic,
fiind frnat dezvoltarea unor structuri productive asemenea celor formate deja n rile avansate
din Europa Apusean. In prima jumtate a secoului trecut, n ara Romneasc i Moldova
industria era slab, n agricultur persistau rmite feudale, piaa intern continua s fie ngust.
Doar Transilvania se afla ntr-un stadiu relativ mai avansat.
Dificulti deosebite creau dezordine n circulaia bneasc, ntruct se foloseau bani provenii de
pretutindeni, n jur de 80 de monede strine diferite: era urmarea faptului c lipsea un sistem
monetar naional, chiar dup nfptuirea Unirii, o lacun creia i se va pune capt abea n 1867,
cnd s-a instituit sistemul bnesc al leului i au nceput s circule instrumente monetare emise n
ar. Dincolo de Carpai situaia era numai n aparen mai bun, populaia romneasc resim ind
din plin repetatele crize monetare izbucnite n Imperiul habsburgic.
In condiiile date, acumularea intern a capitalului rmnea insuficient pe intreg teritoriul, iar
sistemul de credit avea s pstreze, pn destul de trziu, trsturi desuete, rmase de la
cmtaria medieval. Implicit, a fost favorizat penetrarea capitalului strin, care i va consolida
cu timpul poziiile n economia romneasc.