Speak up

1. Answer the questions.

1. What actions should government take to keep economy from slump?
2. In what situation should the government cut its spending?
3. Do you agree that the companies rescued by the government can be restored to health? Can you give an example of any company in your country?
4. Do you think that government always benefit from high tax rates? In what situation do the total revenues collected by the government actually decline?

2. Discussion topics.

1. Do you think there is too much or government in your country?
2. Whenever a nation appears to be entering into a period of recession or inflation government is expected to take steps to reverse the trend.
   (In your opinion) what steps might they be?
3. What do you think about the way the government spends taxpayers’ money in your country?
4. Should the government bail-out the failing companies? Give your reasons.
5. “When tax rates are so high that they discourage investment, the wealth and jobs that might have been created are lost.” Explain this statement.

3. Read the paragraph from the text “Keynes revisited” and answer the questions.

This week, with little ceremony, President George W. Bush quietly brought to a close more than a decade of US economic policy orthodoxy. By signalling his support for lower taxes and higher public spending in the next year that could reach as high as $ 130 bn (? 88 bn) — 1.3 percent of gross domestic product — he threw the US administration’s weight behind the proposition that a temporary deficiency in aggregate demand should be met by a shift in government finances from surplus to deficit.

This argument, the simplest distillation of the teachings of John Maynard Keynes, has been out of favour in much of the industrialised world for 10 years or more. But with the world’s three largest economies — the US, Japan and Germany — all in recession or close to it, the conventional wisdom is up for re-assessment.

“In the general response to the terrorist attacks, the governments of the developed world have been showing a commendable degree of co-ordination,” says Fred Bergsten of the Washington-based Institute for International Economics. “Now is the appropriate time for the G7 countries to mount a coordinated fiscal stimulus.”

In the US, the intellectual climate has shifted decisively in favour of just such an activist policy. In the rest of the world, however, a revival of Keynesianism is still viewed with suspicion.

1. In what economic situation are lower taxes and higher public spending preferable?
2. Why is Keynesianism still viewed with suspicion?
3. At a meeting in New York with the nation’s business leaders a distinguished member of the Keynesian club said: “Only under these circumstances should governments deficit-spend: if there’s a national emergency, if there’s a recession or if there’s a war.” Noting that at least two, if not all three, of those conditions were met, he went on: “We’ve got to do what it takes to make sure this economy gets growing so people can find work.” Comment on this statement and give your own point of view.
4. Discuss the government actions in case of national emergency in your country.