The teacher said to the mathematician's child, «Johnny, how long?» and little Johnny said, «One day, teacher.»

The teacher looked at the economist's child and said, «John Maynard, is that right?»

Little John Maynard said, «Teacher, it all depends.»

aghast – пораженный ужасом, ошеломленный

dig – копать

ditch – канава

explanation – объяснение

extremely – в высшей степени

forecast – прогнозировать

mailman – почтальон

announce – объявлять

brothel – груб. публичный дом

predict – предсказывать

proudly – гордо

recession – спад (в эконо – мике)

reveal – показывать, открывать, обнажать

shovel – лопата

shyly – скромно, застенчиво

do for a living – зарабатывать на жизнь

how long would it take – сколько это заняло бы времени

it depends – это зависит (от многих обстоятельств)

Exercise 1

Answer the questions:

1. Who is economics most useful for?

2. What will economist know tomorrow?

3. Why do economists answer questions when asked?

4. When is the best time to buy things, according to economics?

5. Why couldn't Billy's father explain to his son what he did for his living?

3

Two government economists were returning home from a field meeting. As with all government travellers, they were assigned the cheapest seats on the plane so they each were occupying the centre seat on opposite sides of the aisle.

They continued their discussion of the knotty problem that had been the subject of their meeting through takeoff and meal service until finally one of the passengers in an aisle seat offered to trade places so they could talk and he could sleep. After switching seats, one economist remarked to the other that it was the first time an economic discussion ever kept anyone awake.

One of the principal monetarist propositions is the association between money growth and inflation: inflation is produced if sustained money growth exceeds the growth of output. If a government wants to end inflation or produce deflation, money growth must be lower than the growth of output. In the years since World War II, almost all countries experienced inflation. Some countries, such as Chile, Israel, Brazil, Argentina, Italy, Japan, Turkey, and the United States have increased or reduced inflation at different times by speeding up or reducing the rate of money growth. In some of these countries the changes in money growth and inflation have ranged over hundreds or thousands of percentage points.

The Federal Reserve System (the US Central Bank) increased money growth in the late sixties to finance government spending for the Vietnam War and for the War on Poverty. As the result inflation increased. By the late seventies money growth was nearly 7 percent a year on average and inflation reached an 8 percent average. On the whole prices doubled in less than a decade. Money growth slowed and remained low after the middle eighties. In the five years ending in 1991, inflation and money growth were back at the levels of 1965 to 1969. Table

1 shows these and other periods.

U.S. Money Growth and Inflation

(compound annual rates in percent)

Money Growth Inflation

1960–64 2.8 1.6

1965–69 4.9 3.7

1970–74 6.0 6.0

1975–79 6.9 7.9

1980–84 6.6 7.3

1985–89 7.2 3.5

1987–91 4.4 3.8

There is a general association between money growth and inflation, but this relation is not mechanical. Although average money growth remained high in the years from 1985 to 1989, inflation fell. It shows that money growth in excess of output growth is a necessary but not the only condition for inflation.