Tiếng anh tài chính unit 7: Fiscal Policy

Government spending and taxation directly affect the overall performance of the economy. Forexample, if the government increases spending to build a new highway, construction of the highway willcreate jobs. Jobs create income that people spend on purchases, and the economy tends to grow. Theopposite happens when the government increases taxes. Households and businesses have less of theirincome to spend, they purchase fewer goods, and the economy tends to shrink.

Unit 7: Fiscal

Policy

Group 5:

1 Phạm Hà Linh

2 Nguyễn Thị Hồng Loan

3 Nguyễn Thuý Nga

4 Ngô Thị Hương Quỳnh

5 Cấn Thị Việt Trinh

Unit 7: Fiscal Policy

0

1 Vocabular y 0

2 Reading 0

3 Summar y 0

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budget deficit /'bʌdʒit 'dɛfisit/ Sự thâm hụt, thiếu hụt ngân sách

Government revenue

(n)

/'gʌvənmənt

contractionary (adj) /kən'træk∫nɛri/ Thắt chặt, thu hẹp

International

Monetary Fund (IMF) /,intə'næ∫nəl 'mʌnitəri fʌnd/ Quỹ tiền tệ quốc tế

1 Vocabulary

Government spending and taxation directly affect the overall performance of the economy For example, if the government increases spending to build a new highway, construction of the highway will create jobs Jobs create income that people spend on purchases, and the economy tends to grow The opposite happens when the government increases taxes Households and businesses have less of their income to spend, they purchase fewer goods, and the economy tends to shrink

Question: In what way do government spending and taxation affect the economy? Give examples

Government spending and taxation directly affect the overall performance of the economy For

example, if the government increases spending to build a new highway, construction of the

highway will create jobs Jobs create income that people spend on purchases, and the

economy tends to grow

2 Reading

Government spending and taxation

directly affect the overall performance of

the economy For example, if the

government increases spending to build a

new highway, construction of the highway

will create jobs Jobs create income that

people spend on purchases, and the

economy tends to grow The opposite

happens when the government increases

taxes Households and businesses have

less of their income to spend, they

purchase fewer goods, and the economy

tends to shrink

Chi tiêu chính phủ và thuế ảnh hưởng trực tiếp đến tổng thể hiệu suất của nền kinh tế

Ví dụ, nếu chính phủ tăng chi tiêu để xây dựng một đường cao tốc mới, việc xây dựng đường cao tốc này sẽ tạo ra công ăn việc làm Việc làm tạo ra thu nhập mà người dân dùng để mua sắm, và nhờ đó nền kinh tế có xu hướng tăng trưởng Điều ngược lại xảy ra khi chính phủ tăng thuế Các hộ gia đình và doanh nghiệp có ít thu nhập hơn để chi tiêu, họ mua hàng ít hơn,

và nền kinh tế có xu hướng co lại.

When the government spends more than it receives, it runs deficit Governments finance deficits by borrowing money Deficit spending – that is , spending funds obtained by borrowing or printing instead

of taxation – can be helpful for the economy For example, when unemployment is high, the government can undertake projects that use workers who would otherwise be idle The economy will then expand

because more money is being pumped into it However, deficit spending also can harm the economy When unemployment is low, a deficit may result in rising prices, or inflation The additional government spending creates more competition for scarce workers and resources and this inflates wages and prices

Fiscal policy is a government policy related to taxation and public spending Fiscal policy and monetary policy, which is concerned with money supply, are the two most important components of a government’s overall economic policy, and the government uses them in an attempt to maintain economic growth, high employment and low inflation

Question: what is deficit spending? Is it useful or harmful for the economy? Why?

Deficit spending is a situation in which a company, or especially a government, spends more money

than it collects for a given period of time, usually a quarter or a year

It can be either helpful or harmful for the economy Because:

+ It is useful when unemployment is high, the government can undertake projects that use workers

who would otherwise be idle The economy will then expand because more money is being pumped

into it

+ It is harmful When unemployment is low, a deficit may result in rising prices, or inflation The

additional government spending creates more competition for scarce workers and resources and this

inflates wages and prices

2 Reading

When the government spends more than it receives, it runs deficit Governments finance deficits by

borrowing money Deficit spending – that is , spending funds obtained by borrowing or printing instead of taxation – can be helpful for the economy For example, when unemployment is high, the government can undertake projects that use workers who would otherwise be idle The economy will then expand because more money is being pumped into it However, deficit spending also can harm the economy When

unemployment is low, a deficit may result in rising prices, or inflation The additional government spending creates more competition for scarce workers and resources and this inflates wages and prices

Fiscal policy is a government policy related to taxation and public spending Fiscal policy and monetary policy, which is concerned with money supply, are the two most important components of a government’s overall economic policy, and the government uses them in an attempt to maintain economic growth, high employment and low inflation

Question: what are the government’s major economic policies mentioned above?

There are fiscal policy and monetary policy

Question: what are they aimed at?

They are aimed at maintaining economic growth, high employment and low inflation.

When the government spends more than it receives, it

runs deficit Governments finance deficits by borrowing

money Deficit spending – that is , spending funds

obtained by borrowing or printing instead of taxation –

can be helpful for the economy For example, when

unemployment is high, the government can undertake

projects that use workers who would otherwise be idle

The economy will then expand because more money

is being pumped into it However, deficit spending also

can harm the economy When unemployment is low, a

deficit may result in rising prices, or inflation The

additional government spending creates more

competition for scarce workers and resources and this

inflates wages and prices

Fiscal policy is a government policy related to taxation

and public spending Fiscal policy and monetary

policy, which is concerned with money supply, are the

two most important components of a government’s

overall economic policy, and the government uses

them in an attempt to maintain economic growth, high

employment and low inflation

Khi chính phủ chi nhiều hơn thu, việc này sẽ dẫn đến thâm hụt Chính phủ các nước bù đắp cho thâm hụt bằng cách vay mượn tiền Bội chi - nghĩa là, quỹ chi tiêu thu được bằng cách vay mượn hoặc in tiền thay vì đánh thuế - có thể hữu ích cho nền kinh tế Ví dụ, khi

tỷ lệ thất nghiệp cao, chính phủ có thể thực hiện các

dự án có sử dụng nguồn lao động nhàn rỗi Nền kinh

tế sau đó sẽ mở rộng vì nhiều tiền hơn đang được bơm vào Tuy nhiên, bội chi cũng có thể gây tổn hại cho nền kinh tế Khi tỷ lệ thất nghiệp thấp, thâm hụt có thể dẫn đến giá cả tăng cao, hay xảy ra lạm phát Hậu quả là chi tiêu chính phủ tạo ra nhiều cạnh tranh hơn

do khan hiếm lao động cùng các nguồn lực và điều này cũng thổi phồng lương và giá cả

Chính sách tài khóa là một chính sách liên quan đến thuế và chi tiêu công Chính sách tài khóa và chính sách tiền tệ, liên quan đến cung tiền, là hai thành phần quan trọng nhất trong chính sách kinh tế tổng thể của chính phủ, và chính phủ sử dụng chúng trong một nỗ lực để duy trì tăng trưởng kinh tế, tỷ lệ việc làm cao và lạm phát thấp

2 Reading

Fiscal policy can be either expansionary and contractionary It is expansionary and loose when taxation is

reduced or public spending is increased with the aim of stimulating total spending in the economy, known as

aggregate demand Expansionary policy might occur, when a government feels its economy is not growing fast enough or unemployment is too high By increasing spending or cutting taxes, the government leaves individuals and businesses with more money to purchase goods or invest in new equipment When individuals or firms increase their purchases, they raise demand, which requires additional production, creating jobs,

generating more spending The result is higher employment and a growing economy

On the other hand, fiscal policy is contractionary or tight when taxation is increased or public spending is

reduced in order to restrict demand and slow down the economy A tight fiscal policy is more likely when

inflation is high A contractionary fiscal policy reduces the amount of money in the economy available for

purchasing goods, thus decreasing spending, demand, and ultimately, pressure on prices

Question: under what circumstances can fiscal policy be expansionary? Why?

It is expansionary and loose when taxation is reduced or public spending is increased and when a government feels its economy is not growing fast enough or unemployment is too high Because the government wants to stimulate total spending in the economy

It is contractionary when taxation is increased or public spending is reduced and inflation is high

Because the government wants to restrict demand and slow down the economy

Question: under what circumstances can fiscal policy be contractionary? Why?

Fiscal policy can be either expansionary and

contractionary It is expansionary and loose when

taxation is reduced or public spending is increased with

the aim of stimulating total spending in the economy,

known as aggregate demand Expansionary policy might

occur, when a government feels its economy is not

growing fast enough or unemployment is too high By

increasing spending or cutting taxes, the government

leaves individuals and businesses with more money to

purchase goods or invest in new equipment When

individuals or firms increase their purchases, they raise

demand, which requires additional production, creating

jobs, generating more spending The result is higher

employment and a growing economy

On the other hand, fiscal policy is contractionary or tight

when taxation is increased or public spending is reduced

in order to restrict demand and slow down the economy

A tight fiscal policy is more likely when inflation is high A

contractionary fiscal policy reduces the amount of money

in the economy available for purchasing goods, thus

decreasing spending, demand, and ultimately, pressure

on prices

Chính sách tài khóa có thể nới lỏng hoặc thắt chặt Nó sẽ

mở rộng hoặc nới lỏng khi thuế giảm hoặc chi tiêu công được tăng lên với mục đích kích thích tổng chi tiêu trong nền kinh tế, được gọi là tổng cầu Chính sách nới lỏng có thể xảy ra, khi chính phủ cảm thấy nền kinh tế tăng

trưởng không đủ nhanh hoặc tỷ lệ thất nghiệp quá cao Bằng cách tăng chi tiêu hoặc cắt giảm thuế, chính phủ để các cá nhân và doanh nghiệp có nhiều tiền hơn để mua sắm hoặc đầu tư vào thiết bị mới Khi các cá nhân hoặc doanh nghiệp tăng sức mua, họ sẽ đẩy cầu tăng, đòi hỏi sản xuất bổ sung, tạo việc làm, tạo ra chi tiêu nhiều hơn Kết quả là tỷ lệ việc làm cao hơn và nền kinh tế tăng trưởng

Mặt khác, chính sách tài khóa thu hẹp hoặc thắt chặt khi thuế tăng hoặc chi tiêu công giảm để hạn chế lượng cầu

và làm nền kinh tế chậm lại Một chính sách tài khóa thắt chặt có nhiều khả năng khi lạm phát ở mức cao Chính sách tài khóa thắt chặt làm giảm lượng tiền sẵn có trong nền kinh tế dùng cho việc mua sắm hàng hoá, do đó làm giảm chi tiêu, nhu cầu, và cuối cùng, gây sức ép đến giá cả

2 Reading

To determine its fiscal policy, a government must make judgments about a number of factors,

including the level of economic growth or unemployment likely in the future These factors will affect the amount of revenue raised through taxes and the amount of money required for

government programs Once these determinations are made, the government can decide how to raise revenue and how to allocate it Revenue is generated through a combination of different

taxes – for example income tax, sales tax, or customs duties – and can be allocated to build new

roads, fund government programs, or to pay expenses such as government employees’ salaries.

Another important decision a government must make regarding fiscal policy is whether or not to run

a budget deficit by spending more money than the government raises Deficits can be financed

in two ways – borrowing or printing more money If the government borrows money, it will

decrease the supply of money available in the economy for lending, and the cost of borrowing

money, the interest rate, may rise If the government prints more money, it will increase the

supply of money in the economy, without a corresponding increase in available goods; prices –

and inflation – are likely to rise

Question: what factors should be considered in making decisions on the fiscal policy?

A government must make judgment about :

- the level of economic growth or unemployment likely in the future.

- Whether or not to run a budget deficit by spending more money than the government

raises

To determine its fiscal policy, a government must make

judgments about a number of factors, including the level

of economic growth or unemployment likely in the future

These factors will affect the amount of revenue raised

through taxes and the amount of money required for

government programs Once these determinations are

made, the government can decide how to raise revenue

and how to allocate it Revenue is generated through a

combination of different taxes – for example income tax,

sales tax, or customs duties – and can be allocated to

build new roads, fund government programs, or to pay

expenses such as government employees’ salaries

Another important decision a government must make

regarding fiscal policy is whether or not to run a budget

deficit by spending more money than the government

raises Deficits can be financed in two ways – borrowing

or printing more money If the government borrows

money, it will decrease the supply of money available in

the economy for lending, and the cost of borrowing

money, the interest rate, may rise If the government

prints more money, it will increase the supply of money in

the economy, without a corresponding increase in

available goods; prices – and inflation – are likely to rise

Để xác định chính sách tài khóa của mình, chính phủ phải đưa ra các phán đoán về một số yếu tố, bao gồm cả mức độ tăng trưởng kinh tế hoặc tỷ lệ thất nghiệp có khả năng trong tương lai Những yếu tố này sẽ ảnh hưởng đến nguồn thu thông qua các loại thuế và số tiền cần thiết cho các chương trình của chính phủ Một khi những quyết định này được thực hiện, chính phủ có thể quyết định làm thế nào để tăng nguồn thu và cách thức để phân bổ nó Nguồn thu được tạo ra thông qua sự kết hợp của các loại thuế khác nhau - ví dụ thuế thu nhập, thuế doanh thu, hoặc thuế hải quan - và có thể được phân bổ

để xây dựng đường giao thông mới, tài trợ cho các chương trình của chính phủ, hoặc để thanh toán chi phí như tiền lương cho nhân viên chính phủ

Một quyết định quan trọng khác mà chính phủ phải thực hiện liên quan đến chính sách tài khóa là có hay không

để thâm hụt ngân sách xảy ra do việc chi tiêu nhiều hơn thu Thiếu hụt có thể được tài trợ/bù đắp bằng hai cách - vay hoặc in thêm tiền Nếu chính phủ vay mượn tiền, nó

sẽ làm giảm cung tiền có sẵn để cho vay trong nền kinh

tế, và các chi phí vay tiền, lãi suất, có thể tăng lên Nếu chính phủ in thêm tiền, nó sẽ làm tăng cung tiền trong nền kinh tế, mà không có một sự gia tăng tương ứng trong lượng hàng hóa có sẵn; giá cả - và lạm phát - có thể sẽ tăng lên