Austerity Measures

A. Austerity measures are actions that a state undertakes in order to pay back its creditors. These
measures typically involve slashing government expenditure and hiking taxes, and most of the time
these are imposed on a country when its national deficit is believed to have become unsustainable.
In this situation, banks may lose trust in the government's ability or willingness to repay existing
debts, and in return can refuse to roll over current loans and demand cripplingly excessive interest
rates on new lending. Governments frequently then turn to the International Monetary Fund (IMF),
an inter-governmental organization that functions as a lender of last resort. In return, the IMF
typically demands austerity measures so that the indebted country is able to curtail its budget deficit
and fulfill their loan obligations.
B. A wave of austerity measures across Europe in 2010 has seen cuts and freezes to pensions, welfare
and public sector salaries as well as hikes to some taxes and excises. The Greek programmed
attempts to narrow its budget shortfall from 8.1 percent of GDP in 2010 to 2.6 percent of GDP in
2014 primarily by freezing public sector incomes during that period and reducing public sector
allowances by 8 percent. Additionally, VAT the Greek sales tax will be elevated to 23 percent, and
excises on fuel, tobacco and alcohol are also subject to an increase. The statutory retirement age for
women will be raised to 65, matching it with the current retirement age for men. These reforms have
been deeply unpopular in Greece, prompting a succession of general strikes that have further dented
the economy.
C. IMF-imposed austerity measures have been indicted for encouraging the deep recession following
the Asian financial crisis of 1997. Starting from the early 19905, international investors from
wealthier countries such as Japan and the United States began pouring money into Southeast Asia,
looking to make some quick returns, and the soaring economies of Thailand, Philippines, Malaysia
and others earned themselves the title "the Asian tigers". When things started to turn sour, however,
the foreign investors panicked and retracted their investments en masse, decimating Asian currencies
and turning millions of employees out of work. The IMFs role in the recovery was to impose
austerity measures that kept interest rates "high while driving down wages and labor standards at a
time when workers were already suffering. According to one former IMF economist, these
interventions on a global scale have caused the deaths of 6 million children every year.
D. Many economists consequently view austerity measures as a terrible blunder. John Maynard
Keynes was the first to propose an alternative method, long before the Asian financial crisis.
Governments, he attempted to demonstrate, could conceivably spend their national economy out of
debt. Although logically implausible at first blush, this argument is based on the notion that
recessions deepen from a persistent cycle of low incomes, low consumer spending and low business
growth. A government can theoretically reverse this downward spiral by injecting the economy with
much needed (albeit borrowed) capital. This is not equivalent to an indebted consumer spending
further into the red, Keynes argued, because whilethe consumer gains no further income on that
expenditure, the governments dollar goes into the economy and then partially boomerangs later on
in the form of taxation.
E. Nobel-prize winning economist Joseph Stiglltz follows up on this approach by noting that
households across the world are currently burdened with debt. For businesses to grow, he argues,
government and consumer expenditure must kick in first. Austerity measures lower the spending
capacity of households, and are therefore considered under-productive. Another recipient of the
Nobel Prize, Paul Krugman, points to the recent experiences of countries such as Ireland, Latvia and
Estonia. Countries that implement austerity are the "good soldiers" of the crisis, he notes,
implementing savage spending cuts. "But their reward has been a slump-and financial markets
continue to treat them as a serious default risk".
A government can undergo austerity measures by cutting spending and/or raising (1) ................ If
banks do not believe that a government will settle its debts, they may ask for (2) ................ that are
too high to pay back. In these cases, the IMF is sometimes prepared to lend money to these
governments. One of the conditions of IMF loans is that recipient countries undergo austerity
measures to reduce their (3) ................ and repay any debts.
The IMF has attracted criticism for its role in Asia after the 1997 financial crisis. The crisis was
caused when international investors pulled their money out of the region at once, causing (4)
................ to. fail and unemployment to rise. The IMF's austerity measures set conditions that
lowered incomes and (5) ................ . These policies have caused great suffering internationally.
A. Businesses will grow after the government and consumers spend more
B. Harsh austerity measures have caused some economies to decline
C. Government spending can help a country get out of debt
D. Government should not raise spending while the economy is expanding
E. it is wasteful for government to spend while the economy is getting smaller
F. Governments that introduce austerity measures are rewarded with . economic success
A. Businesses will grow after the government and consumers spend more
B. Harsh austerity measures have caused some economies to decline
C. Government spending can help a country get out of debt
D. Government should not raise spending while the economy is expanding
E. it is wasteful for government to spend while the economy is getting smaller
F. Governments that introduce austerity measures are rewarded with . economic success
Cc bin php tht lng buc bng
A. Cc bin php tht cht l nhng hnh ng m mt quc gia cam kt tr n cho cc ch n
ca mnh. Nhng bin php ny thng lin quan n ct gim chi tiu ca chnh ph v cc khon
thu i b, v phn ln thi gian p dng cho mt quc gia khi thm ht quc gia ca h c cho
l tr nn khng bn vng. Trong trng hp ny, cc ngn hng c th mt nim tin vo kh
nng ca chnh ph hoc sn sng tr n hin ti, v i li c th t chi lt cc khon vay hin
ti v i hi li sut qu cao i vi cho vay mi. Cc chnh ph thng xuyn chuyn sang Qu
Tin t Quc t (IMF), mt t chc lin chnh ph c chc nng nh mt ngi cho vay cui cng.
i li, IMF thng yu cu cc bin php tht cht quc gia n nn c th ct gim thm ht
ngn sch v thc hin cc ngha v cho vay.
B. Mt ln sng cc bin php kht khe trn khp chu u trong nm 2010 c nhng ct gim
v ng bng i vi lng hu, phc li v lng ca khu vc cng cng nh tng thu v thu.
Hy vng k hoch Hy Lp thu hp thm ht ngn sch t 8,1 phn trm GDP trong nm 2010 xung
cn 2,6 phn trm GDP trong nm 2014 ch yu bng cch ng bng thu nhp ca khu vc cng
trong thi k v gim tr cp ca khu vc cng 8 phn trm. Thm vo , VAT thu tiu th
ca Hy Lp s tng ln 23%, v thu tiu th c bit i vi nhin liu, thuc l v ru cng tng
ln. Thi k ngh hu theo lut nh ca ph n s c nng ln 65, ph hp vi tui ngh hu hin
ti ca nam gii. Nhng ci cch ny khng c nhiu ngi a chung Hy Lp, dn n mt
lot cc cuc nh cng ph bin lm xo trn hn na nn kinh t.
C. Cc bin php kht khe ca IMF b buc ti khuyn khch cuc suy thoi su sau khng
hong ti chnh chu nm 1997. Bt u t u nm 19905, cc nh u t quc t t cc quc
gia giu c hn nh Nht Bn v Hoa K bt u tin vo ng Nam , To ra mt s li nhun
nhanh, v cc nn kinh t tng trng ca Thi Lan, Philippines, Malaysia v cc quc gia khc
ginh c danh hiu "con h chu ". Tuy nhin, khi mi th bt u tr nn chua cht, cc nh
u t nc ngoi hong ht v rt lui cc khon u t ca mnh, gim cc ng tin chu v
bin hng triu nhn vin ra lm vic. Vai tr ca IMF trong vic phc hi l p dng cc bin php
tht cht nhm gi li sut "cao trong khi lm gim mc lng v tiu chun lao ng trong thi
im ngi lao ng phi chu ng." Theo mt chuyn gia kinh t ca IMF, nhng can thip
ny trn quy m ton cu gy ra ci cht Ca 6 triu tr em mi nm.
D. Nhiu nh kinh t cho thy cc bin php tht lng buc bng l mt sai lm khng khip. John
Maynard Keynes l ngi u tin a ra mt phng php thay th, rt lu trc cuc khng hong
ti chnh chu . Cc chnh ph, ng c gng chng minh, c th tng tng chi tiu nn
kinh t quc gia ca h ra khi n. Mc d khng r rng v mt logic lc u, nhng lp lun ny
da trn khi nim suy thoi kinh t su hn t mt chu k thu nhp thp, chi tiu tiu dng thp v
tng trng kinh doanh thp. Chnh ph v mt l thuyt c th o ngc vng xoy xung bng
cch bm vo nn kinh t vn cn thit (mc d mn). Keynes lp lun rng iu ny khng tng
ng vi chi tiu ca ngi tiu dng chi tiu nhiu hn vo mu , bi v trong khi ngi tiu
dng khng kim thm thu nhp t khon chi tiu , ng la ca chnh ph li ri vo nn kinh
t v sau l mt phn boomerangs di dng thu.
E. Nh kinh t hc Joseph Stiglltz ot gii Nobel theo sau cch tip cn ny bng cch lu rng
cc h gia nh trn ton th gii hin ang gnh nng n nn. i vi cc doanh nghip pht trin,
ng cho rng, chi tiu ca chnh ph v ngi tiu dng phi c ban u. Cc bin php tht cht
lm gim kh nng chi tiu ca cc h gia nh, v do c coi l km hiu qu. Mt ngi nhn
gii Nobel, Paul Krugman, cng ch ra nhng kinh nghim gn y ca cc nc nh Ireland, Latvia
v Estonia. Cc quc gia p dng ch tht lng buc bng l nhng ngi "gii" trong cuc
khng hong, ng ghi nhn, thc hin nhng ct gim chi tiu. "Nhng phn thng ca h l
mt th trng st gim v th trng ti chnh tip tc coi h l mt ri ro v n nghim trng".
Mt chnh ph c th tri qua cc bin php khc kh bng cch ct gim chi tiu v / hoc tng (1)
................ Nu cc ngn hng khng tin rng mt chnh ph s gii quyt cc khon n, h c th
yu cu 2) ................ qu cao tr li. Trong nhng trng hp ny, IMF i khi c chun b
cho vay cc chnh ph ny. Mt trong nhng iu kin ca cc khon cho vay ca IMF l cc
quc gia tip nhn phi thc hin cc bin php khc kh gim (3) ................ v hon tr bt k
khon n no.
IMF thu ht c s ch trch v vai tr ca n chu sau cuc khng hong ti chnh nm
1997. Cuc khng hong xy ra khi cc nh u t quc t rt tin ra khi khu vc cng mt lc,
gy ra (4) ................ n. Tht bi v tht nghip gia tng. Cc bin php kim ch ca IMF t ra
cc iu kin lm gim thu nhp v (5) ................. Nhng chnh sch ny gy ra nhiu au kh
trn bnh din quc t.
A. Cc doanh nghip s pht trin sau khi chnh ph v ngi tiu dng chi tiu nhiu hn
B. Cc bin php khc phc khc nghit khin mt s nn kinh t suy gim
C. Chi tiu ca chnh ph c th gip mt quc gia thot khi n nn
D. Chnh ph khng nn tng chi tiu trong khi nn kinh t ang m rng
E. n l lng ph cho chnh ph chi tiu trong khi nn kinh t ang nhn c nh hn
F. Cc chnh ph gii thiu cc bin php tht lng buc bng c khen thng. Thnh cng kinh
t
A. Cc doanh nghip s pht trin sau khi chnh ph v ngi tiu dng chi tiu nhiu hn
B. Cc bin php khc phc khc nghit khin mt s nn kinh t suy gim
C. Chi tiu ca chnh ph c th gip mt quc gia thot khi n nn
D. Chnh ph khng nn tng chi tiu trong khi nn kinh t ang m rng
E. n l lng ph cho chnh ph chi tiu trong khi nn kinh t ang nhn c nh hn
F. Cc chnh ph gii thiu cc bin php tht lng buc bng c khen thng. Thnh cng kinh
t