Vocabulary notes

XVII. Read the text about inflation and answer the questions after it. To make your understanding clearer some vocabulary notes are given below.

XVI. Before reading the text below take part in a group discussion and share your ideas with partners on the following questions.

XV. Read the international words from the text below. Say what Russian words help to guess their meaning.

XIV. Find some additional information and prepare short reports on the inflation in Russia from the year 2000.

· Inflation rate and its fluctuation;

· Reasons of inflation;

· Methods of regulating inflation.

Favorite, football, club, dollar, electricity, deflation, gas, seasonal, loser, naturally, sign.

1. What are the main reasons of inflation?

2. How does inflation influence people and their life?

bill _n – счет, квитанция

blame _v – ругать

destroy _v – разрушать

entertainment _n – развлечения

food _n – пища

healthy _adj – здоровый

heating _n – отопление

item _n – товар, предмет

When the cost of a favorite product goes up, people often blame inflation. But, is it inflation when the football club increases ticket price by a dollar? Is it inflation if the bill for electricity jumps by 15%? In each case, the answer is no.

A rise in the cost of one or two or even three items is not inflation. Inflation is a rise in the overall level of prices. The cost of living, which is the price of most goods and services, has to be going up, not just the cost of one thing. Likewise, deflation is not just a drop in gas prices. It is a drop in the overall cost of goods and services.

Seasonal supply can affect prices. Peaches are in greater supply in July than in December. For this reason, the price is lower in July and higher in December. Demand can also affect prices. A successful football team can charge more for tickets than a loser team.

To have inflation, almost all the prices have to go up. There is no inflation if half the prices go up and half the prices go down by the same amount. You have inflation if the cost of food is going up and the cost of entertainment is going up and the cost of heating your home is going up.

Naturally, most people do not like inflation. However, small increases in inflation of about 3% or 4% a year do not hurt too much. A little inflation is often a sign of a healthy, growing economy. Deflation, on the other hand, seems good. But in almost every case, deflation comes only where there is no growth and unemployment is high.

While a little inflation may be all right, too much inflation clearly is not. High inflation can destroy the value of your earnings. Runaway or hyperinflation can destroy the economy of a nation.

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