Unit 15.

Inflation (инфляция)

Inflation is generally defined as a persistent rise in the general price level with no corresponding rise in output, which leads to a corresponding fall in the purchasing power of money.

In this section we shall look briefly at the problems that inflation causes for business and consider whether there are any potential benefits for an enterprise from an inflationary period.

Inflation varies considerably in its extent and severity. Heme, the consequences for the business community differ according to circumstances. Mild inflation of a few per cent each year may pose few difficulties for business. However, hyperinflation, which entails enormously high rates of inflation, can create almost insurmountable problems for the government, business, consumers and workers. In post-war Hungary, the cost of living was published each day and workers were paid daily so as to avoid the value of their earnings falling. Businesses would have experienced great difficulty in costing and pricing their production while the incentive for people to save would have been removed.

Economists argue at length about the causes of, and "cures" for, inflation. They would, however, recognize that two general types of inflation exist:

• Demand-pull inflation

• Cost-push inflation

Demand-pull Inflation. Инфляция спроса

Demand-pull inflation occurs when demand for a nation's goods and services outstrips that nation's ability to supply these goods and services. This causes prices to rise generally as a means of limiting demand to the available supply.

An alternative way that we can look at this type of inflation is to say that it occurs when injections exceed withdrawals and the economy is already stretched (i.e. little available labour or factory space) and there is little scope to increase further its level of activity.

Cost-push Inflation. Инфляция издержек

Alternatively, inflation can be of the cost-push variety. This takes place when firms face increasing costs. This could be caused by an increase in wages owing to trade union militancy, the rising costs of imported raw materials and components or companies pushing up prices in order to improve their profit margins.

Vocabulary notes

a persistent rise неуклонный, постоянный подъем

with no corresponding rise in output не сопроюждаюшийся подъемом производства

briefly коротко, кратко

potential benefits потенциальные выгоды

varies considerably in its extent and severity бывает разной по длительности и остроте

hence следовательно

mild inflation мягкая, низкая инфляция

may pose few difficulties особых проблем не представляет

entails enormously high rates of inflation означает (ведет к) громадный рост инфляции

insurmountable неисчислимые, колоссальные

at length и сейчас

to pull тянуть

demand-pull inflation инфляция, вызванная превышением спроса над предложением, инфляция спроса

to push толкать

cost-push inflation инфляция, вызванная ростом издержек производ­ства, инфляция издержек

to occur происходить

to outstrip обгонять, опережать, превосходить

to stretch натягивать, напрягать

little available labour мало рабочей силы

there is little scope мало возможностей

owing to trade union militancy благодаря воинственности профсоюзов

in order to improve their profit margins чтобы увеличить прибыль (размеры прибыли)

Assignments

I. Suggest the Russian equivalents

inflation varies considerably in its extent and severity; mild inflation of a few%; rate of inflation; insurmountable problems: demand-pull (cost-push) inflation; the economy is already stretched

II. Replace the parts in italics by synonyms

a persistent rise; hence; may pose few difficulties; which entails enormously high rates; at length; inflation occurs when; little scope to increase its level of activity; firms face increasing costs; owing to trade union mihtancy

III. Fill in the gaps with the words and expressions from the text

1. Inflation varies considerably in its and .

2. Mild inflation may few difficulties for business.

3. Businesses would have experienced great difficulty in and their

production while for people to save would have been removed.

4. Demand-pull inflation occurs when for a nation's goods and services

that nation's ability to these goods and services.

5. An alternative way that we can look at this type of inflation is to say that it occurs when injections withdrawals.

6. An increase in costs for firms, for example, can be caused by an increase in wages trade union mihtancy.

IV. Find in the text English equivalents for the following

повышение (падение) спроса (покупательной способности) и т. д.; ги­перинфляция; запросы опережают возможности экономики предложить товары и услуги; воинственность профсоюзов; уровень прибыли

V. Translate into English using all the active possible

Следует отличать инфляцию спроса от инфляции, обусловленной ростом издержек. Суть инфляции спроса иногда объясняют одной фразой: "Слишком много денег охотятся за слишком малым количеством товаров". Теория инфляции, обусловленной ростом издержек, объясняет рост цен такими факторами, которые приводят к увеличению издержек на единицу продукции.