Inflation Causes and Effects
Older people often talk about how cheap things were when they were young. A brand new car may have cost only $5,000 compared to $20,000 today, or petrol that cost only a few cents in the 60s costs over a dollar today. Inflation happens when money loses some of its value. We measure the rise of inflation in percent. For example, 2% inflation means that a $1 bottle of milk will cost $1.02 next year.
Inflation has many causes. In times when the economy is good and people have enough money they want to buy more products than factories can produce, so the prices go up. Inflation can also happen when workers demand more money or when the raw materials that producers need rise in price. The end product becomes more expensive and has to be sold at a higher price.
Some economists say that central banks do not do enough to control how much money there is in a country. There may be more money around than there are goods. Consumers want to buy more products, the demand gets higher and prices go up. Sometimes low interest rates on loans make people borrow money to buy houses or cars. These prices go up as well. Inflation is not produced by one country alone. Sometimes a country cannot control the prices of certain goods as it would like to. A country that does not have any energy supplies of its own has to import energy. It has to pay a high price for oil and gas.
Inflation is a sign that the economy is growing. It is normal when prices go up only a few percent every year. High inflation, on the other hand, leads to uncertainty in the population. Industries may not want to borrow money and invest when inflation is high. People dont want to buy goods any more. Factories may get stuck with products they cannot sell and as a result workers get unemployed.
It is very difficult to fight inflation. Governments have an effect on inflation when they raise or lower taxes. They can also try to control wages and prices as far as possible.
V. :
Why does high inflation lead to uncertainty in the population?
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I. :
1) budget a) how much people want something
2) demand b) money paid regularly for work done
3) inflation c) employees
4) commodity d) the amount of money you have for something
5) wages e) someone who sets up a new business of their own
6) staff f) what a company produces
7) output g) something you can buy or sell
8) entrepreneur h) rising prices
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II. :
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1. Some say that the purpose of business is to make .; others say that it must have social aims.
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2. If you are late for a business meeting, just say that you were stuck in the
3. Levels of . are so high that we cant find the people were looking for.
4. Those who really need.usually dont like it and, anyway, they are not able to follow it.
5. We regularly win industry awards for our levels of customer .
6. The.of a product is very important: the company has to think carefully about how the product should look.
7. If you want to know what people think about a product, you do some market .
8. You employ an advertising .to create a product image.
III.
1.ADVERTISING / ADVERTISEMENT
a) Our budget is 10% less than last year.
b) Did you see the big for a new Managing Director for Acme in this morning's newspapers?
2. LINE / STAFF
a) A manager works directly on the production of goods.
b) A manager gives service support to the managers in production.
3.PERSONNEL / PERSONAL
a) Smith has aproblem: his wife wants to leave him.
b) Smiths company has a problem: their employees want a 20% pay increase.
4. RAISING / RISING
a) Prices are.at a rate of about 4% per year.
b) The company is its prices by 5% this year.
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| a | b | a | b | a | b | a | b |
