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A.: |
Oh! I came to know very much about some things I’ve never heard. Thanks a lot. |
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B.: |
You’re welcome. |
Exercise 6. Create communicative situations:
1. Although economists know a great deal about how to stabilize the economy, our system still goes through periods of expansion and contraction. Describe some of the problems facing decision makers who are trying to use fiscal and monetary policies to keep the economy growing steadily.
2. As the economy moves from “recession” to “expansion”, what is likely to happen to wages, investment, employment, profits?
3. During which phase of the cycle (“recession or “expansion”) is production
increasing? Why?
Unit 3. Inflation
Active Vocabulary
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inflation deflation relative price nominal price real income money illusion Consumer Price Index inflation rate price stability demand-pull inflation cost-push inflation |
інфляція дефляція відносна ціна номінальний доход реальний доход грошова ілюзія індекс споживчих цін темп інфляції стабільність цін інфляція спричинена попитом інфляція спричинена вартістю |
Most people associate inflation with price increases on specific goods and services. The economy is not necessarily experiencing an inflation, however, every time the price goes up. We must be careful to distinguish the phenomenon of inflation from price increases for specific goods. Inflation is an increase in the average level of prices, not a change in any specific price.
We first determine the average price of all output — the average price level — then look for changes in that average. A rise in the average price is referred to as inflation.
The average price level may fall as well as rise. A decline in average prices — a deflation — occurs when price decreases on some goods and