1. Central banking. Gabriel Mongano is an economics research student ,
specializing in monetary policy. You will hear him outlining the functions of a central
bank ,and discussing whether it should be independent from the government, and run by bankers ,or under the control of the government.
1a Discussion
Do you know whether the central bank in your country is independent?
What about these banks? Do you know if they are independent?
1. the Bank of England
2. the Federal Reserve Board(USA)
3. the Bundesbank (Germany)
4. the Japanese central bank
5. the Chinese central bank
1c Vocabulary
Read the six sentences below, which also summarize central banking functions, but slightly
Differently, and match them with the six expressions you have written in 1b.
A controlling the amount of banknotes in circulation
B establishing maximum and minimum lending rates, thereby controlling the credit system
C ensuring that banks have a sufficient liquidity ratio to allow customers to withdraw their
deposits when they want
D intervening on foreign exchange markets, buying or selling large amounts of the national
currency, to prevent major fluctuations
E lending money to a commercial bank in danger of going bankrupt
F selling government bonds to commercial banks or buying them back, in order to alter the
amount of credit the banks can offer (and thereby alter the money supply)
1e Discussion
Does (or would) the government in your country exploit the ‘political business cycle’ by
increasing the money supply or government spending, or lowering taxes, in order to increase economic activity in the months before an election, despite the long-term inflationary consequences?
Do you agree that central banks should be controlled by (unelected) bankers rather than by elected governments – which will often do everything possible to get reelected?
Do you agree that price stability (i.e. keeping inflation low ) is more important than other economic aims, such as attempting to reduce unemployment?
2 Taxation
2a Discussion
Benjamin Franklin, who wrote that ‘In this world nothing cam be said to be certain except death and taxes!’
The last sum of money you received had probably already been taxed, or will be liable to taxation, depending on which country you are in. Similarly, the last sum of money you spent probably included a percentage of tax.
Make a list of all the different types of taxes you can think of. If you do not know the actual names, try to describe the different taxes, e.g. ‘Tax you pay if you import something from another continent,’ and so on.
2b Vocabulary
Which terms do the following sentences define?
1. The tax people pay on their wages and salaries is called
A capital transfer tax B income tax C wealth tax
2. A tax on the wages and salaries or on company profits is a
A direct tax B indirect tax C value-added tax
3. A tax levied at a higher rate on higher incomes is called a
A progressive tax B regressive tax C wealth tax
4. A tax paid on property, sales transactions, imports, and so on is a / an
A direct tax B indirect tax C value-added tax
5. A tax collected at each stage of production, excluding the already-taxed costs from prvious
stages, is called a / an
A added-value tax B sales tax C value-added tax
6. Profits made by selling assets are generally liable to a
A capital gains tax B capital transfer tax C wealth tax
7. Gifts and inheritances over a certain value are often liable to a
A capital gains tax B capital transfer tax C wealth tax
8. The annual tax imposed on people’s fortunes (in some countries) is a / an
A added-value tax B capital gains tax C wealth tax
9. Making false declarations to the tax authorities is called
A fiscal policy B tax avoidance C tax evasion
10. Reducing the amount of tax you pay to a legal minimum is called
A creative accounting B tax avoidance C tax evasion
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