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Unemployment has negative sides both for economy as a whole and for individuals. The most obvious economic cost of unemployment is the loss of output and the loss of income. Loss of tax revenue is another economic cost – unemployed people aren’t earning and they therefore aren’t paying tax. Apart from that, a high rate of unemployment is followed by an increase in government expenditure – the government has to pay out benefits to support the unemployed. Along with the loss of tax this is a ‘double whammy’.

The main cost of unemployment is a personal one. Prolonged unemployment seriously lowers the value of a person’s human capital, i.e. the value of a person’s education and acquired skills.

Besides, when people cannot earn an income from legitimate work, they sometimes turn to crime. A final cost that is difficult to quantify is the loss of self-esteem that is human dignity, which afflicts people.

The unemployment rate is determined by three different types of unemployment: frictional, structural, and cyclical.

Frictional unemployment is caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labour force, re-entering the labour force, or seasonally unemployed.

Structural unemployment is unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities. Changes in the structure of the economy create the following three causes of structural unemployment.

First, workers might face joblessness because they lack the education or the job-related skills to perform available jobs. Second, a shift in demand for goods and services may force workers to look for jobs in another industry or in another location. Third, implementation of the latest technology may also increase the pool of structural unemployment in a particular industry and region.

Cyclical unemployment is unemployment caused by the lack of jobs during a recession.

Because both frictional and structural unemployment are present in good and bad times, full employment does not mean “zero percent unemployment.” Full employment is the situation in which an economy operates at an unemployment rate equal to the sum of the frictional and structural unemployment rates. Full employment therefore is the rate of unemployment that exists without cyclical unemployment.

Project

Prepare a presentation on one of the following issues:

1.The situation in the job market in Belarus/the USA/Great Britain regarding different types of unemployment.

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2.The effects of inflation on economy and people’s well-being (choose any country you like).

Use any sources available.

Section III. LEXICAL-GRAMMAR TESTS

Grammar material to be revised:

1.Verb. Tenses in the Active and PassiveVoice.

2.Non-finite Forms of the Verb (Infinitive, Participle I, II, Gerund) and their Constructions.

TEST I

I. Read the textand answer the questions thatfollow.

Economic Goals

1.Nearly every economic system has as its broad goals: stability, full employment, and growth.

2.Stability. In economic terms, stability is the condition in which the balance between the money available in an economy and the goods produced in that economy remains about the same. As a consequence, prices for consumer goods, interest rates, and wages paid to workers change very little. Stability helps maintain equilibrium and predictability for businesspeople, consumers, and workers.

3.The biggest threat to stability is inflation. Inflation is a period of widespread price increases throughout the economic system. For example, a pair of Levi's jeans that costs $35 todaycost $29 ten years ago and $18 twenty years ago.

4.Inflation is not the only threat to economic stability, however. Suppose the major factory in your home town closes. Hundreds or even thousands of workers would lose their jobs. If other companies in the area do not have jobs for them, these unemployed individuals will curtail their spending. As a result other local businesses will see their sales drop off and may cut back their own workforces. The resulting recession, characterized by a decrease in employment, income, and production, may spread across a city, state, or even the nation. A particularly severe arid long-lasting recession, like the one that affected much of the world in the 1930s, is called a depression.

5.Full Employment. The second goal of many economic systems is full employment, although there is some disagreement about what "full employment" actually is. In its most basic sense full employment means that everyone who wants to work has an opportunity to do so. In reality, full employment is impossible. There will always be people looking for work. Thus unemployment

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can be defined as the level of joblessness among people actively seeking work. There are four different forms of unemployment. Some people are out of work temporarily while looking for a new job, a situation known as frictional unemployment. Other people are out of work because of the seasonal nature of their jobs, a situation known as seasonal unemployment. Sometimes people are out of work because of reduced economic activity, a situation known as cyclical unemployment. Finally, some people are unemployed because they lack the skills needed to perform available jobs, a situation known as structural unemployment.

6. Growth. The final goal of most economic systems is growth, an increase in the amount of goods and services produced by a nation's resources. In theory, we all want our complete system to expand—more businesses, more jobs, more wealth for everyone. In practice, however, it is difficult to achieve growth without triggering inflation or other elements of instability. On the other hand, an extended period of no growth may eventually result in an economic decline – business shutdowns, a loss of jobs, a general decrease in overall wealth, and a lower standard of living for everyone.

to curtail [kE:'teIl] сокращать, укорачивать; уменьшать Syn: diminish, reduce arid ['ærId] сухой, бесплодный

to trigger–инициировать, запускать

1.What are the main goals of every economic system?

2.What threatens stability?

3.Does full employment mean absolute absence of unemployment?

4.What are the types of unemployment? Give an example of each. What may economic growth / no growth result in?

II. Translate paragraphs 4 and 6 of the text into Russian/Belarusian.

III. Fill in the gaps using the correct word from the table.

Executive Summary: 12-month economic forecast

The Central Bank 1____ keep interest rates low next year in order to stimulate economic growth, and so we 2___ the economy to continue growing at about 4%. This means that unemployment 3___ in most sectors of the economy next year. Exchange rates are very difficult to predict, but the currency 4___

remain relatively stable against the dollar. This is important as 40 % of our revenue is in dollars.

Some important events 5___ take place in the political field. The president 6___ call elections within the next 12 months, and so by the middle of next year

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the election campaign 7___ . The government 8___ on a platform of honesty and competence, and it 9___ introduce reforms to the legal system so that judges can investigate the misuse of public funds more easily. When that 10___

, international investor confidence should increase rapidly.

IV. Rewrite the sentences in the Passive.

1.A promising new drug has been discovered by our R&D department.

2.Millions of chips are produced by Intel every year. 3. The company was founded by the father of the present Chairman. 4. Millions of chips are produced by Intel every year. 5. Structural unemployment was caused by important changes in the structure of consumer demand.

V.Rewrite thesentences in the Active.

1.They have closed twenty retail outlets over the last year. 2. In the recent study they have projected a decline in the cyclical unemployment in the region. 3. When replying to an advertisement, candidates often fill in an application form. 4. Sometimes candidates will take a psychometric test before the interview to assess their mental ability and reasoning skills. 5. These days many applicants

submit their CVs speculatively to companies they would like to work for. 6. They were asking the new employee all sorts of highly technical questions.

VI. State the form of the gerund. Translate the sentences into Russian/Belarusian.

1. I didn’t think the business was worth investing. 2. The manager went on collecting data on international trade. 3. This proprietor succeeds in making profits. 4. It is impossible to succeed in business without advertising its products and services. 5. He insisted on the contract being signed immediately.

VII. Open the brackets, use the correct form of the infinitive or the gerund.

1. I enjoy (be) taken out for expensive meals. 2. The Minister denied (be) given a bribe. 3. The Minister refused (be) questioned about the bribe. 4. I ex-

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pect (be) asked some tough questions at the interview. 5. All our staff are going to be busy. Do you mind (be) picked up by taxi? 6. How awful! Imagine (be) asked to give a presentation at such short notice!

VIII. Choose the correct form of the verb.

1. We decided to close down/ closing down the plant in Slovakia. 2. I considered to call/calling him, but I decided it was better to send an email. 3. If we don’t decide soon, we risk to lose/losing the whole contract. 4. She agreed to prepare/preparing some figures before the next meeting. 5. May I suggest to postpone/postponing the presentation of the project until next week? 6. He refused to sign/signing the contract until he had spoken to his boss.

IX. Complete the sentences with one of these verbs in the form of gerund or infinitive.

1.They agreed ______ us thirty more days to pay the invoice. 2. There’s no point _____ this brand on TV. It would cost too much. 3. We are expecting

_____ some more stock early next week. 4. I work in PR. My job involves

_____ contact with the media. 5. I can’t help ______ that something is going to go wrong. 6. I can’t promise _____ you with this problem, but I’ll do my best.

X.Paraphrase the sentences using participles.

1.As he received his salary, he deposited half of it on his savings account. 2. While she was in the process of changing jobs, she was seeking reemployment. 3. In the society there are always some young people who search for their first job. 4. As structural unemployment lasts long, it is regarded as more serious. 5. When you draw up a contract for the sale of goods, it is necessary to give a detailed description of the goods. 6. When he received the information, he rang up the director.

TEST II

I. Read the textand answer the questions thatfollow.

Solutions to the Unemployment Problem

1.The United States and other countries should take different approaches to help reduce their unemployment rates. First, the methods of accumulation and dissemination of information on available jobs and workers could be improved.

2.There is a suggestion to follow the Swedish model, in which job centers have a nationwide, integrated database of jobs, employers, and available employees. This type of database could reduce the time spent by an average

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worker on the unemployment roll and thus reduce the unemployment rate. Second, unemployment agencies could tighten their job acceptance requirements. Third, there could be improvements to the education and training provided to young people, with a greater focus on vocational skills. Finally, countries need to ensure that their welfare systems do not provide disincentives to work.

3.There may also be unemployment programs that target various groups of jobless persons. We surveyed the unemployment programs aimed at reducing cyclical, frictional, seasonal, and structural unemployment in the United States. Some of these programs aim to change people to match existing jobs while others create jobs to match existing worker skills. The change in focus over time and the short duration of many programs make evaluation difficult. Many programs appear to do little more than reorder the line of unemployed people, though obviously they have the potential to fulfill an equity function in the labor market. Labor market programs can be a cost-effective means of managing the pool of unemployment.

4.A number of other solutions to the unemployment problem have been advanced in the literature. For example, work sharing, early retirement, and reduced migration have been discussed. These policies affect the labor market by reducing the supply of labor. However, they have not won a great deal of support among economists.

1.What approaches should be taken by the US and other countries to reduce the unemployment rates?

2.What is meant by the Swedish model of reducing the unemployment rate?

3.In what way can the database of jobs be helpful for those who are seeking for jobs.

4.What are most unemployment programs aimed at?

5.What other solutions to the unemployment problem have been discussed in the literature?

II. Translate paragraphs 3 and 4 of the text into Russian/Belarusian.

III.Open the brackets, use the correct form of the verb.

1.The company is doing very well. Last year sales (go up) 15%, and so far this year they (go up) another 12%. 2. We (operate) all over Latin America. Recently we (set up) branches in Peru and Colombia. 3. This (not look) like the right block. Are you sure we (come) to the right address? 4. How long (you produce) cars at this site? About four years. We (invest) around twenty million dollars in plant and machinery. 5. We (take) a big risk if we go ahead with the project. 6. After she (make) a few notes, she (start) writing the introduction to the Annual Report. 7. By the time all the legal documents are ready, the dead-

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line for the proposal (pass). 8. I (see) Nick tomorrow, so I can give him your message.

IV. Rewrite thesentences in the Passive.

1. Somebody damaged the goods in transit. 2. We are reviewing all of our IT systems. 3. We cannot ship your order until we receive payment in full.

4.The representative of the London Business School opened the conference.

5.Our assistant will show you round the factory, and then you will meet the sales team. 6. The Government has brought inflation under control.7. The ECB raised interest rates by 0.25%. 8. Millions of people see this ad every day.

V.State the form of the infinitive. Translate the sentences into Russian/Belarusian.

1.The effect of a supply shock is to raise the level of input prices above the level that firms have expected. 2. To reduce prices you should reduce the cost of the product. 3. When sellers are unable to supply all the goods and services buyers demand, sellers respond by raising prices. 4. If the total demand continues to increase, a full employment situation will be reached. 5. The amount to be paid includes the cost of packing. 6. It was difficult for the company to pay off all its overseas debts.

VI. State the form of the gerund. Translate the sentences into Russian/Belarusian.

1. I suggested employing another sales rep but no one agreed. 2. There are different ways of reducing input prices. 3. Before being sent to the warehouse, the goods were counted and marked. 4. It’s no use changing the policy of the company. 5. The secretary remembers having been asked to inform the staff about the merger. 6. The agent informed the firm of the buyer’s having insured the goods.

VII. Paraphrase the sentences using participles.

1. One possible cause of inflation is an expansion of government spending which is usually financed by borrowing from the banks. 2. Inflation is an increase in the general level of prices which results from an increase in the cost of production. 3. As we had fulfilled the terms of the contract, we refused to admit the claim of the firm. 4. The price they insisted upon during the negotiations was very high. 5. As they signed the contract for the delivery of goods, they gave a detailed description of the products. 6. The firm is interested in the purchase of computers which were produced by our plant.

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UNIT IV

MONEY AND BANKING

Section I. WORD LIST

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Section II. READING MATERIAL

TEXT A. Money and its Functions

Task: read the text and do the tasks that follow.

Money is something which is generally accepted in payment for goods and services and in settling debts. Historically, many commodities, ranging from precious metals to cigarettes, have been used as money. In prisoner-of-war camps, cigarettes served as money. In the nineteenth century money was mainly gold and silver coins. These are examples of commodity money, ordinary goods with industrial uses (gold) and consumption uses (cigarettes) which also serve as a medium of exchange. The value of commodity money comes from a commodity out of which it is made.

In most modern societies, however, commodities are rarely used as money because they are expensive. Instead, they use fiat money, that is mainly paper currency issued by governments and deposits in checking accounts that are accepted as a means of payments for goods and services. Fiat money is sometimes called token money. The essential condition for the survival of fiat money is the restriction of the right to supply it. Private production is illegal. Society enforces the use of fiat money by making it legal tender. The law says it must be accepted as a means of payment.

In modern economies, fiat money is supplemented by IOU (I owe you) money. IOU money is a medium of exchange based on the debt of a private firm or individual. A bank deposit is IOU money because it is a debt of the bank. When you have a bank deposit the bank owes you money.

Although the crucial feature of money is its acceptance as the means of payment or medium of exchange, money has three other functions. It serves as a unit of account, as a store of value, and as a standard of deferred payment.

Money, the medium of exchange, is used in one-half of almost all exchanges. Workers exchange labour services for money. People buy or sell goods in exchange for money. Money is the medium through which people exchange goods and services.

The unit of account is the unit in which prices are quoted and accounts are kept. In Britain prices are quoted in pounds sterling; in America in dollars. It is usually convenient to use the units in which the medium of exchange is measured as the unit of account as well.

Money is a store of value because it can be used to make purchases in the future. Nobody would accept money as payment for goods supplied today if the money was going to be worthless when they tried to buy goods with it tomorrow. But money is neither the only nor necessarily the best store of value. Houses, stamp collections, and interest-bearing bank accounts all serve as stores of value.

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