What booms and depressions in free economies
What booms and depressions in free economies
Преобразуйте слова, напечатанные заглавными буквами в конце строк, так, чтобы они грамматически и лексически соответствовали содержанию текста. Заполните пропуски полученными словами. Каждый пропуск соответствует отдельному заданию
Siem Reap is a small town in Cambodia, a country in southeast Asia. It is built around a 10.______________(FAME) cathedral. The town is charming with some fine examples of French colonial architecture. A legend says that a French 11._____________(WRITE) once called the town “a pearl of Cambodia”. Nowadays, this town is quite popular with tourists. They often use it as a starting point for their _________________(EXCITE) travellings. The town is really remarkable. There you will find some __________________(IMPRESS) stone monuments and statues, ancient buildings and picturesque ruins. Note that it’s __________________(USUAL) hot there in the summer. Please ensure that you take __________________(COMFORT) walking shoes, light clothing and plenty of water to drink.
2. I am not interested in his offer.- …(neither am I; either I am; nor am I)
10. Let’s go to the party tonight, …? ( will you; shall us; shall we)
12. She is perfectly willing to listen to reason, …? (is she; isn’t she; does she)
13. There was no national election last month, …? (was there; was it; is there)
14. Who …America? (did discover; does discover; discovered)
15. Why …the navigators…to find new trade routes in the 15th century? (do…tried; has…tried; did…try)
16. What…booms and depressions in free economies? (causes; is caused; does cause)
18. Where…Washington, DC …? ( does…locate; is…located; has been…located)
20. When…the Civil War…? (did…end; had…ended; was…ended)
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тест к ЕНТ. Пособие по английскому языку для учащихся 1011 классов Готовимся к ент
абстрактные сущ.:thanks, riches(богатство), means
собирательные сущ.:memories (воспоминания), memoirs (мемуары), nvirons(окрестности), goods (товар), contents (содержание), proceeds (выручка), wages (заработная плата), sweepings(сор), supplies(припасы),stairs(лестница), eaves(веки, навес), dregs (подонки)
none of the + исчисл.сущ. + сказуемое в мн.числе None of the students have finished the exam.
no + неисчисл.сущ./ сущ. в ед.числе + сказуемое в ед.числе No example is relevant to this case.
3. Draughts … not a complicated game.
a) are b) is c) be
4. Scissors … a small tool with two sharp blades screwed together.
a) am b) are c) is
5. What … his politics? – He supports the Labour party.
a) are c) is b) be
6. All news. holiday.
a) travels b) travel c) are traveling
7. The committee….separated from their families for long periods of time.
a) have b) has c) is d) are
8. Two hundred dollars … a lot of money to lose.
a) have b) has c) is d) are
9. A number of doctors… employed by the hospital.
a) have b) has c) is d) are
10. The young deer… standing near their mother.
a) have b) has c) is d) are
11. Algeria as well as Tunisia and Libya…sent students to the USA.
a) have b) has c) is d) are
12. John but not Mike…gone to play soccer in the park.
a) have b) has c) is d) are
13. All of nurses …very good.
a) have b) has c) is d) are
14. All the medicine…gone.
a) have b) has c) is d) are
15. Neither the jewels nor the money… mine/
a) have b) has c) is d) are
16. Half of the furniture…in the truck.
a) have b) has c) is d) are
17. The family … fighting among themselves constantly.
a) have b) has c) is d) are
18. The criteria for promotion…clearly stated.
a) have b) has c) is d) are
19. The press…requested to show their credentials to the guard.
a) have b) has c) is d) are
20. Not only the money but also the jewels …locked up in the safe.
a) have b) has c) is d) are
Word order. Порядок слов.
I. В английском языке строгий порядок слов.
Подлежащее сказуемое дополнение обстоятельство
My mother teaches English to your daughter.
II. Прилагательное и наречие “enough” меняет свое место в предложении в зависимости от того, к какой части речи оно относится.
Adjective, adverb + enough Are these chips crisp enough? He speaks French well enough.
Enough + noun enough sugar, enough books, enough grown up people.
also: I also II III IV.
still: I still II III IV.
else: somewhere( anything, nobody) else
quite+ прилагательное/ наречие
another- один, неизвестный (прилагательное)
other- много неизвестных (прилагательное)
others- много неизвестных (существительное)
the others- отдельные из перечисленных или как существительное мн.числа (известных)
the other- один, известный или второй или последний из…
* else II III IV? / * else II I III IV?
* more I II III IV?
When else did you see him? Where else were you? Why else have you done it? How more time do you need?
else, more, still:
II I still III IV?
+ I still II III IV?
II I III IV yet? Have you done it yet?
+ I II III IV too?
II I III IV too?
+ I also II III IV?
II I also III IV?
Yet, at all, either:
I II not III IV yet (at all).
They can pass it. So can I.
I am important. So am I.
He likes traveling. So does she.
He can’t pass it. Neither can I.
She is not important. Neither is he.
He doesn’t like traveling. Neither does she.
Question tags. Разделительные вопросы.
I am a student, am I not? = I am a student, aren’t I?
1. найти сказуемое ( если в сказуемом есть вспомогательный глагол, глагол to be или модальный глагол и они стоят в положительной форме, то после запятой следует поставить этот же глагол в отрицательной форме She is American, isn’t she? He can swim, can’t he?)
2.определить время и найти вспомогательный глагол
3.отрицание и местоимение
They are so helpful, aren’t they?
Tracey hasn’t known him before, has she?
You don’t like porridge, do you? отрицание один раз
Shut the window, will you?
Don’t tell anyone, will you?
Let’s go to the cinema, shall we?
Nobody came yesterday, did they? используется they если подлежащее выражено anybody, anyone, everybody, everyone, nobody, no one, somebody, someone.
Something should be done, shouldn’t it? используется it если подлежащее выражено anything, everything, nothing, something.
2. I am not interested in his offer.-…
3. … there a good connection from the airport to the city?
4. … Washington the first cit in history to be built for the purpose of governments?
5. … you know where I can change my flight booking?
6. Is the US legislative branch made up of two … three houses?
7. May the writer criticize…praise the actions of some public officials?
8. Are there billions…millions of stars in the galaxy?
9. Do the citizens take part in national elections directly indirectly?
10. Let’s go to the party tonight, …?
11. Don’t be late, …?
12. We could turn down the road, …?
13. She is perfectly willing to listen to reason,…?
14. There was no national election last month, …?
15. Who … America?
b) does discover
16. Why…the navigators…to find new trade routes in the 15 th century?
17. What…booms and depressions in free economies?
18. What role…G Washington…in the American revolution?
a) had been…played
19. Where …Washington, D. C…?
c) has been… located
20. How many imposing buildings… in Washington, D. C.?
A) speak B) say C) learn D) tell E) eat
7.It’s no use crying over spilt….
A) tea B) milk C) juice D) coffee E) water
8…was not built a day.
A) London B) Moscow C) Astana D) Rome E) Berlin
9. The…cannot change his spots.
A) lion B) leopard C) tiger D) wolf E) hare
10…is a second nature.
A) Force B) Life C) Love D) Custom E) Trouble
A) No news is good news.
B) East or West, home is best.
C) Custom is a second nature.
D) Business before pleasure.
E) Everything is good in its season.
16. «Семь раз отмерь – один раз отрежь»
A) As you make your bed, so you must lie on it.
B) Look before you leap.
C) Every cloud has a silver lining.
D) Once bitten, twice shy.
E) Out of sight – out of mind.
17. «Наперед не заглядывай»
A) Every dog has its day.
B) Don’t cross the bridge before you come to it.
C) Everything is good in its season.
D) No pains, no gains.
E) East or West, home is best.
18. «Обожжешься на молоке, дуешь на воду»
A) Look before you leap.
B) It is no use crying over split milk
C) Once bitten, twice shy.
D) Out of sight – out of mind.
E) Every cloud has a silver lining.
19. «Последняя капля переполняет чашу»
A) Let sleeping dogs lie.
B) It is the last stow that breaks the camel’s back.
C) The last drop makes the cup run over
D) Never say die.
E) Neck or nothing.
20. «О человеке судят не по словам, а по делам»
Лексико-грамматический тест по алфавиту 10 страница
We shall not begin the meeting until everybody … (comes;)
We speak about_____work every evening.Our.
We use _______ numbers with dates. C) ordinal
We use_________ numbers with names of popes.E) ordinal
We went to the theatre last night. We had seats______ the front row.E) in
We will fly to_____Paris in winter.a)—
We wouldn’t have worried ____. (if we had received the telegram for him)
We. sightseeing tomorrow. will go
We. sightseeing tomorrow. will go
We. to Ireland for our holiday last year.(Went)
We. told. a beautiful river not far away(Were/ there was)
We’ll go to Rome …bus (by; )
We’ll take …holiday ( a four-day; )
Were you______the concert yesterday? No, we worked______the library and then we went _______ the park. at/at/to
What …American public schools teach? ( do;)
What clamber is the Upper House in the UK?(The House of Lords)
What do you see the picture?C) in
What do you usually order ___ dessert. For.
What is the largest state in the USA?(Alaska)
What publishing house produces the Oxford English Dictionary?Oxford University Press
What time______a meeting about the terms of delivery?are we calling
What was done …be undone (couldn’t;)
What____to do at the end of the lesson?are you going
What…booms and depressions in free economies? (causes; )
Whatever else the government …to undertake, its duty is to keep order in civil society ( may try)
When an organism is completely encapsulated and preserved, it becomes a fossil __ turning into evidence of things that once lived. (Thereby)
When I arrived at the party Tom had already gone home.(Who had already gone home when I arrived at the party?)
When I went to Rome, I stayed with___ Italian friend of mine.C) an
When Jim came out of the army he … what to do ( was wondering)
When the Civil War ended traffic on the Mississippi river Mark Twain …his job as a river pilot and moved to the West ( left;)
When the lights went ___ and the curtain rose there was a storm ___ applause. Down/of.
When they came and found what …by the soldiers of Pharaoh they became angry (had been done)
When you go abroad …you attentive ( be)
When you go through customs, your luggage may. by a customs officer.(be cheked)
When you heat water it …(boils;)
When you’ve got flu you shouldn’t eat. Much.
When…the Civil War…? (did…end;)
Whenever she goes, she …friends ( makes)
Where __ go yesterday? Did you had to
Where does ___walk finish?.the twenty kilometer
Where is the. bakery? nearest
where/I/ always/ he/ works/known /have.I have always known where he works.
Where_____? Which hairdresser did you go to?did you cut your hair
Where…Washington, DC …? ( is…located;)
Which do you think is ____ : a holiday in the country or a holiday in a summer camp? more interesting
Which suffix isn’t an adjective forming? D )-er
Whichever attraction you decide to visit you …sure of an excellent day out ( can be;)
While …the book I came across a lot of interesting facts (studying; )
Who …America? ( discovered)
Who are party whips?E) They are party leaders who do not receive special salaries for their duties
Who was the 1st president of the USA?(G. Washington)
Who wrote «Canterbury Tales”?B)Geoffrey Chaucer
Whose camera is this? Is it. yours
Why …the navigators…to find new trade routes in the 15 th century? ( did…try)
Why did you go to the optician’s? To have my eyes tested
Will you call_____time?Another.
William the Conqueror is famous for_____ England..conquering
William the Conqueror______the Tower оf London in the 11 th century. built
Wise kings generally …wise councillors. ( have)
with/ bored/ new/ soon/ toys/ became/ the/ Sue.Sue became bored soon with the new toys
Would you like. coffee?Some.
Would you like_____rice. some
Yesterday I bought_____jacket and____shirt. _____jacket was cheap but_____ shirt was expensive. a / a / the / the
Yesterday our teacher asked us, «Do you read much?”Yesterday our teacher asked us if we read much
You …take care of your parents ( ought to;)
You are going on a long journey. …care on the motorway. ( take)
You can buy stamps at …post office. (any; )
You can see a man at the bookstall. He is buying a magazine for wife.His.
You look very tired. You need ____holiday.D) a
You will find the news …the bottom of the newspaper (at; )
You______have come so early.needn’t
You’d better take a coat_____it gets cold.A) in case
your breakfast (1), who(2), prepares (3), in the morning (4)(2/3/1/4)
Your homework is exercise ____114. Do it in written form, please.C)-
В двух шагах (близкo)B) at two step
Вошел еще один человек, потом ещеB) Came one more man then one
Двадцатого июля 1969 Аполлон 11 достиг своей исторической цели.(On July 20, 1969, Apollo 11 achieved his historical goal)
Двухмесячная зарплата Two month’s salary
ДезертирыА ) dropouts
Доналдьу толькo десять, но он временами рассуждает как двацатилетний.A) Donald is only ten but sometimes he talks as though he were twenty
Ехать автобусом 134.E) to take the bus 134.
Команда корабля A) the ship’s crew
Нa cтpaнице 305A) on page three hundred and five
НeзабудкиB) forget-me-nots
Он сказал, что они переехали в деревню за два года до этого.A) He said they had moved to the country two years before.
Они разрешают посещать больных один раз в неделю They allow patients a one time’s visit a week
Поверхность земли.B) the earth’s surface
ПосредникиA) go-betweens
Сегодня двести восемнадцатый день года.D) Today is the two hundred eighteenth day of the year
Успех компании.the company ’ s success
Чтение по алфавиту
«it is now open to the public» in sentence 3 of paragraph 1 means.visitors can come to see it
_______.died in 1658. Oliver Cromwell
________were called ‘Round heads’.Cromwell’s followers
_______Armada was approaching the English coast B) Spanish
_______took part in rebuilding the city.Christopher Wren
_______was interested in clothes and dancing. Katherine
_____of the city was destroyed by the fire.The greater part
A couple who spent many days at sea was from.Miami
A few years later the_____hit some underwater rocks in the Pass and was lost.Penguin
A fishing boat saw them and saved, but thcs:could not stand up
A handsome young man or «principal boy” in pantomime is always played byD) a woman
A man enters the Ritesville town art gallery______through a window
A person who works a lot isHard-working.
A set of twelve” means. A) dozen
A statue was erected to _______memory on the beach of Wellington.a dolphin’s
According lo the text it can be said that Ivan Aivazovsky depicted_____landscapes. Ukrainian
According to paragraph 1 the Hugo family lived in the____village.ancient
According to paragraph 1 the Hugo family.was the landlord of the village
According to paragraph 4, which of the following statements about the rulers of the Holy Roman Empire is true?They wanted their priests to travel throughout Europe.
According to the author swans can do harm to the.The starling.According to the students, how would 1978 be different from 1958?A) Machines would be run by solar power
According to the author, adult dogs are not difficult to take care of than puppies because _____. A) adult dogs have been well trained
According to the paragraph 1, you can.enjoy your time walking around the Camberwell Court
According to the text people:C)Were suspicious of paper money
According to the text Black Bait became an outlaw becauseA) he had expensive tastes
According to the text by the Mediterranean records?C) they all come for the sun
According to the text gold and silver wereuseful as a kind of money?B) they were easier to carry around
According to the text of forecasting should be accurate inD) economic
According to the text what can be implied about the author’s music schools?The learners of this schools feel lucky to study there.
According to the text why is money important?In order to live.
According to the text, the introduction of steel.caused the biggest revolution in bridge design
According to the text, what can be implied about Katie?Her parents encourage her in her love to jazz music.
According to the text. People don’t travel:B) to work
According to the text. What do countries fight for?to hold the Olympics not only for honour but for money
According to the text. What privileges did birstclass passengers have in big ships?A) first class passengers had private rooms and ate in elegant rooms
According to the text. What services does «Let Millie Do It” provide?A) meet relatives at the airport, water plants, pay bills
After leaving the airbus how would a person travel A) he could drive a car equipped with radar
After memorizing managers should__________C) repeat the words correctly
After the First World War it became popular to travel to Europe by__________ C) boat
Aivazovskv lived in Russia for______.some time
Aivazovsky presented the picture gallery to Theodosia
Akira Hashida is a _______________.A) junior sales manager
Akira Hashida says that he_____E) likes the courses
All statements are not true, except.________Jack met passing ships to show them safe channel through the Pass.
All statements are not true, except______.a life-saver dolphin could not read or write, had no training and worked for nothing.
All statements are not true, except_________.a statue was erected to Jack’s memory on the beach of Wellington.
All statements are true, except_______.Jack left the French Pass after he was shot forever.
America.66
Among the buildings destroyed by the fire was.______the old church of St. Paul
An exhibition means.laying open to public view
Ancient Greeks measured wealth in. A) tools and cattle
Are «quality” papers more popular than «tabloids”?D) Less popular.
Armstrong spent the whole life trying:D) to protect his invention
As Harry jumps into the van, Janey sees_____in his shoe. a piece of glass
As used in paragraph 2, the best synonym for «behave” is_____. E) instructed as adult dogs
As used in paragraph 4, the best synonym for «relax” is _____. C) rest
At first, what was Mr. Brown looking for in the dark?B) Matches
Author wants people to think about _____ when they are looking to get a dog for a pet C) Getting an adult dog
Bill and Simone Butler spent_____ days in u life-raft in the seas of Central
Bill and Simone survived because_______they had food and a special machine to make salt water into drinking water
Birdseye sold his patents for a total of:E) 22 million dollars
Bubba asked, ‘Where did you learn to play like that?’ after______.some minutes
By the end of his life Birdseye had:D) 100 patents
Charles Dickens became a reporter in Parliament_____.after he had taught himself shorthand.
Charles Dickens became famous.______by the time he got married
Charles Dickens gave a lot of time to._____political changes he struggled for
Charles Dickens had——brothers and sisters.seven
Charles Dickens taught himself shorthand because he_____.wanted to find a good job
Charles Dickens was born in.____1812
Charles Dickens_____his first job.hated
Charles Dickens’s father_____worked in an office
Charles Dickens’s first famous book was called._____The Pickwick Papers
Charles I explained his reason for closing Parliament:_________I don’t need it’
Charles II offered to pay the army, but he didn’t want to _______forgive his father’s killers
Choose a lexically similar word to «up-to-date» in line 2:modern
Choose the correct answer:Why have computers replaced paperwork?they are fast, flexible and do not make mistakes
Choose the correct variant: They felt on the stage as if.______they were as a part of the past events
Choose the right answer:What colour was the woman’s hair?A) Black.
Choose the right answer:What did a tall officer want to know of the woman in the next compartment?C) Whether she was a Negress.
Choose the right answer:What did Balashyan’s neighbour get interested in?His nationality.
Choose the right answer:What language did a young officer address to Balashian?C) French.
Choose the right answer:Where was a young woman sitting?D) At the window in the next compartment.
Choose the right answer:Where was Balashyan going?A) To Baltimore.
Christopher Wren was._______the famous architect of that day
Complete the sentence:The young woman was going to Baltimore to. B) See her husband.
Complete the sentence:This story arises the problem of. C) Racism.
Complete the sentences Jefferson studied to beA) A lawyer.
Could the men fall asleep after breaking the window?B) They slept until morning.
Cranmer was _____ Henry’s adviser
Describe the writer’s attitude by the end of the day.E) She was sad to see the children leaving.
Desiccating» in line 8 means.Drying.
Dickens wrote about these_____times for his family later, in many of his stories.unhappy
Do most of today’s American couples marry in religious or civil ceremonies?Religious ceremony.
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6. Cork, the second largest city in Ireland, is the site of many industries, ____ automobile manufacturing and Whiskey distilling.
A some of them which are B which some are
C some of which are D of which some are
7. I want _____ at the airport.
A you meeting me B you to meet me
C that you meet me D you meet me
8. The cost of living in our country has _____ again.
C in case D unless
10. While she _____ for the nurse, her flatmate Lesley called on her cell phone.
A was waiting B has been waiting
C waited D had waited
11. She was very fair, so she had to ___ her skin against the sun.
C preserve D purify
12. Six officers were ____ when the prisoners tried to escape.
A broken B damaged
C harmed D wounded
13. I wonder ____ mind watching this bag for me for a moment.
A would you B you would
C if would you D whether you would
14. I regret _____ you that you haven’t passed.
A informing C inform
B have informed D to inform
15. Congratulations _____ the exam!
A for passing B to pass
C on passing D passing
16. Isabel _____ me to go shopping with her.
C persuaded D demanded
17. He was short of time, but ______ to finish the exam.
A succeeded B overcame
C achieved D managed
18. ______ he’s got a Portuguese name, he is in fact Swiss.
A Although B In spite of
19. What ______ booms and depressions in free economics?
A causes B does cause
C is caused D cause
20. If I’d known you were coming, I ______ you a meal.
A would cook B was cooking
C had cooked D would have cooked
Задание 2. Прочитайте приведенный ниже текст. Преобразуйте слова, напечатанные в скобках под номерами 21-30 так, чтобы они грамматически соответствовали содержанию текста.
Heat from the sun is held in the Earth’s atmosphere by natural greenhouses gases. These keep the planet warm and without them the average temperature would be much lower. However, more and more heat (21) ______ (keep) in the atmosphere because of man-made greenhouses gases, particularly carbon dioxide, which is produced by (22) ______ (burn) oil, gas and coal. This global warming (23) _______ (already/cause) changes in the weather all over the world.
Since 1970s, average global temperatures (24) ______ (rise) by about 0.6 C and many scientists believe that more extreme weather conditions have been caused by climate change in recent years. For example, New Orleans (25) _____ (hit) by a huge hurricane in 2005, and in the summer of 2003, 15,000 people (26) _____ (die) as a result of the heat wave.
Experts believe that more and more places are going to be affected by climate change in the future. And as the ice caps at the North and South Poles melt and sea levels rise (27) ______ (far), many towns and villages near the coast (28) ______ (flood).
A lot has been written about what (29) ______ (govern) and businesses should do to slow down global warming. However, there is a lot what we can do to save energy at home. Many useful tips can be found on public (30) ______ (inform) websites.
Задание 3. Прочитайте текст и выберите правильный вариант A, B, C или D из предложенных после текста вопросов 31-37. Правильный вариант занесите в бланк ответов.
Hurricanes and Tornadoes
Two of the most dangerous storms which afflict America are hurricanes and tornadoes. They are very much feared by anyone who may live in the path of their destruction and cause millions of dollars worth of damage to life and property every year.
Hurricanes which usually develop between July and October are similar to cyclones and originate over the waters in the Caribbean Sea. They move upwards hitting the mainland of America somewhere in the Gulf of Mexico or the Atlantic Ocean. Once they hit the land they carry tremendous power with driving rain and wind. These winds can attain speeds of over 75 mph and cover an area of over 500 miles in diameter. At the centre of the storm there is an ‘eye’ with relatively fair weather and warm, dry air aloft. The diameter of the ‘eye’ is usually about 32 kilometers.
Every year homes are destroyed by their fury and often lives are lost. Most people who live near the coast are forced to evacuate their homes and to move to safer areas until the storm passes. Floods are caused along the coast by both heavy rain and a storm tide that is considerably above normal water level. The high winds, coastal flooding and torrential rain associated with a hurricane cause enormous damage.
People living in a wake of a storm are given ample warning to protect their homes. Flashlights or candles are prepared in case of electric power failures and plenty of fresh water should be saved as precautions against the pollution of water supplies by flooding.
If one should travel inland across the Great Plains and the prairie of America, one will most likely not encounter a hurricane, but there is another kind of storm in the Midwest which is equally feared. It is called tornado. Tornadoes are violent low-pressured storms with an intense updraft near the centre which is capable of lifting heavy objects from the ground. A tornado, thereafter, is a dark, funnel-shaped cloud containing violently rotating air. It can pick up trees and cars right into the air and even uplift heavier objects such as homes and railway cars. Like a vacuum cleaner across a rug, it sucks up into the air anything which may lie in its path. These storms occur most often during the summer months and are noticeable by their strong wind and lack of rain. The sky turns black as dust is sucked up into the air. Tornadoes travel normally at around 60 kilometers per hour and the winds can reach 800 kilometers per hour in the most violent storms. Tornadoes are most frequent in the United States east of the Rocky mountains especially in the central plains area of the Mississippi basin where about 150 occur each year. Tornadoes may also strike the southern states in winter and have even been known to develop in the northeast.
Both hurricanes and tornadoes cause millions of dollars worth of damage each year. Today they can be predicted more easily than in the past, but they cannot be stopped or ignored. When they come, they must be endured with the hope that one survives their fury and wrath.
31. Where do hurricanes usually develop?
A Usually in the Gulf of Mexico
B Over the mainland near the water
C In the Caribbean Sea.
D In the Atlantic Ocean off Bermuda.
32. Where can one encounter tornadoes in America?
A Across the Great Plains
B Near the Gulf of Mexico
C Along the southern coast
D Near coastal areas.
33. What is the major difference between a hurricane and a tornado?
A Hurricanes cover a larger area
B A tornado has more wind and speed
C A tornado is not accompanied by rain
D Hurricanes can cause greater damage.
34. Which is not true about tornadoes?
A They can be found not only in the Midwest but also in the Northeast
B The sky turns black as the dust is forced into the air.
C They cause millions of dollars worth of damage.
D They occur only during the summer.
35. Which of the following is true about tornadoes and hurricanes?
A They can be predicted today with greater accuracy
B Tornadoes are more dangerous than hurricanes
C They do not travel at great speeds
D They are easier to control today than in the past.
36. Which of the following was not mentioned in the text?
A The tremendous power of these storms
B The number of people killed each year by these storms
C The time of the year when they are most likely to strike
D The speeds at which they travel.
37. The word ‘attain’ which is in bold and underlined in the second paragraph could best be replaced by
A succeed
B designate
C reach
D start.
23. has already caused
28. are going to be flooded
1. Wenn Sie viele Fragen haben, wenden Sie sich ___ das Auskunftsbüro.
2. Sie hat sich wieder ein ___ Kostüm gekauft.
3. Nachdem die Studenten alle Prüfungen ___, fuhren sie ins Gebirge..
A abgelegt haben B ablegen
C ablegten D abgelegt hatten
4. Sie hat mir ihre Kamera gegeben, ___ ich selbst welche Fotos machen kann.
5. ___ vorsichtig, wenn du die Straße übergehst!.
6. Sie konnten ___ des Lärms nicht schlafen.
A die Banken hier auch samstags offen sind
B die Banken sind hier auch samstags offen
C hier sind die Banken auch samstags offen
D sind die Banken hier auch samstags offen
8. Spaziergänge im Wald, Kerzenlicht und romantische Musik gefallen mir am besten. Und was ___ du?
9. Thomas, Ramon, seid ihr mit ___ Hausaufgaben fertig?
A seinen B unseren
10. Haben Sie ___ Kaffee für mich?
A eine heiße B einem heißen
C einen heißen D ein heißer
11. Er ___ so lange, bis er starb.
A rauchte B raucht
C rauchtet D geraucht
12. In welchem Satz kann man das Verb „wissen“ nicht gebrauchen?
A Wissen Sie, wo Herr Seipel ist?
B Soviel ich weiß, hat er heute frei.
C Oskar weiß immer alles.
D Ich weiß diesen Menschen sehr gut.
13. Die ___ Spiele finden alle vier Jahre statt.
A Olympische B Olympisches
C Olympischen D Olympischer
14. Das Gemälde, ___ wir in der Bildergalerie gesehen haben, ist weltberühmt.
15. ___ er uns besuchte, gab es immer viel Freude.
16. Bald müssen wir alle von hier Abschied ___.
17. Was ist das Gegenteil von „stark“?
A schwach B leicht
A sehr traurig B sehr schade
C sehr leid D sehr leider
19. ___ beschäftigst du dich denn am liebsten in deiner Freizeit?
20. Morgen kommt eine andere Gruppe Studenten aus Krasnojarsk. Die 1. Gruppe ___ heute Nachmittag nach Potsdam gefahren.
Задание 2. Прочитайте приведенный ниже текст. Преобразуйте слова, напечатанные в скобках под номерами 21-30 так, чтобы они грамматически соответствовали содержанию текста.
Der junge Schiller (21) ___ (wollen) zunächst Pfarrer werden. Dieser Plan wurde vom (22) ___ (Württemberg) Herzog Karl Eugen aber verhindert. Der Herzog (23) ___ (befehlen), dass Schiller an seiner neuen Eliteschule, der herzoglichen Militärakademie, studieren sollte. Bald entdeckte der junge Mann aber seine Leidenschaft für die Literatur. Heimlich (24) ___ (schreiben) er sein erstes Stück „Die Räuber“. Nach der (25) ___ (erst aufführen) im Mannheimer Nationaltheater wurde Schiller zu einem neuen, gefeierten Autor. Um der Zensur des Herzogs Karl Eugen zu entgehen, flüchtete Schiller in die Stadt Mannheim und (26) ___ (arbeiten) dort als Theaterautor. Trotz seiner zunehmenden Bekanntheit hatte er es schwer, als freier Schriftsteller zu leben. Er brauchte immer wieder finanzielle (27) ___ (helfen) von Freunden und Geldgebern.
Neben dem Schriftsteller gab es den Familienvater Schiller, der das familiäre Leben idealisierte, aber auch zugleich das Leben genoss. Als junger Mann schrieb er die Ode „An die Freude“, die vom deutschen Komponisten Ludwig van Beethoven vertont wurde und heute die Hymne der Europäischen Union ist. (28) ___ (Spät) war Schiller oft krank und (29) ___ (müssen) wochenlang im Bett bleiben. Selbst diese (30) ___ (krank) hielten ihn nicht von der literarischen Arbeit ab. Er war ein sehr produktiver Autor.
Задание 3. Прочитайте текст и выберите правильный вариант A, B, C или D из предложенных после текста вопросов. Правильный вариант занесите в бланк ответов.
Verletzungen heilen (= gesund werden, besser werden) langsamer, wenn Leute Konflikte haben. Zu diesem Ergebnis sind Janice Kiecolt-Glaser und Ronald Glaser – beide Wissenschaftler an der Ohio State University in den USA – gekommen.
Dass Streit und Eheprobleme das Immunsystem beim Menschen verschlechtern (= schlechter werden) und den Heilungsprozess von Wunden (= offene Stelle in der Haut) verlängern, haben die Glasers mit einer für die Testpersonen relativ schmerzhaften Untersuchung gezeigt:
Zweimal haben die Wissenschaftler 42 Ehepaare in ein Krankenhaus eingeladen und sie dort absichtlich (= man will es tun) an der Haut verletzt. Das hat den Leuten richtig weh getan. Dann haben sich die beiden Wissenschaftler mit den Paaren – die meisten von ihnen waren circa 13 Jahre verheiratet – unterhalten. Dabei war das Gespräch beim ersten Besuch frei von Problemen, lustig und entspannt. Beim zweiten Besuch bekamen die Ehepaare die gleichen Verletzungen wieder. Aber jetzt haben die Glasers mit den Ehepaaren Eheprobleme und Schwierigkeiten in der Beziehung angesprochen. Dieses Gespräch endete meist mit einem unschönen Streit zwischen den Eheleuten.
Interessant für das Wissenschaftler-Paar Glaser war die Frage, wie sich die Wunden bei den Testpersonen entwickelten: Nach dem ersten, problemfreien Gespräch sind die Hautverletzungen der 42 Ehepaare schon nach einem Tag verheilt, nach dem zweiten, problemreichen Gespräch erst nach zwei Tagen. Die Untersuchung zeigt also, dass der Körper bei Stress – und den hat man bei einem Streit ja meistens – für die Heilung mehr Zeit braucht. Mit anderen Worten: Weil das Immunsystem in Stresssituationen schlechter funktioniert, dauert der Heilungsprozess länger.
Das Experiment aus den USA bestätigt, dass es einen Zusammenhang (= eine logische Verbindung zwischen zwei Dingen) zwischen der Psyche und dem Immunsystem gibt. Untersuchungen dazu gibt es seit den 1970er Jahren. Früher hat man darüber gelacht, heute nimmt man diese Erkenntnis ernst. Es ist gut denkbar, so vermutet Janice Kiecolt-Glaser, dass Ehepaare mit ernsten Eheproblemen und viel Streit öfter und länger krank sind als glückliche Ehepaare.
31. Die Wissenschaftler haben die Ehepaare … eingeladen.
A in eine Universität
B in ein Krankenhaus
C in eine Bibliothek
D in ein Labor
32. Kleine Wunden heilen schneller,
A weil ein Streit das Immunsystem beeinflusst.
B wenn Paare wenig streiten.
C weil ein Streit nicht nur die Psyche, sondern auch den Körper beeinflusst.
D wenn Leute Konflikte haben.
33. Die Wissenschaftler waren nicht nett zu ihren Testpersonen.
A Denn sie mussten sie verletzen.
B Trotzdem haben die Ehepaare 13 Jahre lang beim Test mitgemacht.
C Deshalb sind nur 42 Ehepaare gekommen.
D Deshalb waren einige Ehepaare 13 Jahre verheiratet.
34. Der erste Besuch war für die Ehepaare schöner als der zweite Besuch,
A denn die Wissenschaftler waren beim ersten Mal freundlicher.
B denn beim zweiten Besuch hatten die Ehepaare oft Streit.
C aber trotzdem sind nach 13 Jahren alle wieder gekommen.
D weil die Wissenschaftler Streit hatten.
35. Beim zweiten Besuch sprachen die Wissenschaftler bestimmte Probleme an.
A Eheprobleme und Schwierigkeiten in der Beziehung
B Umweltprobleme
C Geldprobleme
D Gesundheitsprobleme
36. Die Wunden sind nach dem zweiten Besuch schlechter geheilt,
A weil sie größer und schmerzhafter waren.
B weil die Wissenschaftler Eheprobleme hatten.
C weil die Ehepaare am Ende oft gestritten haben.
D weil das Experiment zu Ende war.
37. Seit den 1970er Jahren gibt es Untersuchungen zum Zusammenhang zwischen Psyche und Immunsystem.
A Trotzdem lachen viele Leute darüber.
B Aber erst jetzt wird dieses Thema ernst genommen.
C Deshalb streiten heute immer mehr Ehepaare.
D Deshalb gibt es heute keine glücklichen Ehepaare.
Boom Bust
Saturday, January 1, 1983
William L. Anderson
In the course of discussion about the pros and cons of free enterprise, the subject inevitably seems to turn to the business cycle. Capitalism’s critics—and there are many—waste no time in decrying the alleged “instability” of the free economy, a system that they claim allows a few to garner great fortunes while leaving the masses to lurch from semi-poverty in good times to squalor in depressions.
Notes a business columnist of a major U.S. newspaper:
Unbridled supply-and-demand ideas led to great wealth, but also great poverty, in the late 1800s and early 1900s. There were also periods of great economic boom and bust, of which the Great Depression is the best example. The Western nations grew tired of waiting for supply and demand to work everything out, and along came Mr. Keynes and his ideas for them to grasp. [1]
At this writing, the United States is suffering from its eighth recession since World War II, an economic phenomenon that is again leading persons to question the qualities of capitalism. Politicians, believing the nation can be taxed into prosperity, claim it is once again time for the government to “take over” the reins of the economy. As an influential U.S. economist has written:
We need an increased degree of government selection of priorities, channeling of funds in the direction of those priorities and a recognition of a need for some kind of planning by the federal government. Even some members of the corporate community now say that free markets, such as they are in the United States, are not doing the job. [2]
Economists, journalists, intellectuals and politicians seem to agree that the free economy is indeed the source of boom and bust, of recession and depression. If the economy is left without the guiding hand of state direction, they believe, the forces of supply and demand will eventually self-destruct, leaving a wreckage of vanished fortunes and massive unemployment. And should the economy go into recession, they say, the central government should immediately launch programs of transfer payments, public works and business bailouts to stem the tide of the slump.
Liberals are not the only persons to advocate such centralized measures for dealing with economic downturns. Conservative economists all too often accept the business cycle as an inevitable price of capitalism’s success and look to the state as a source for minimizing the trauma caused by recession. The public understanding seems to be that the business cycle, in a capitalistic economy, is simply a fact of life that cannot be any more avoided than winter in New Hampshire. Discussion of the business cycle, then, centers not on preventing it, but, rather, as Keynes suggested, on using government monetary and fiscal policy to allow for a smooth transition from one end of the cycle to the other.
The Great Depression
When the causes of business cycles are discussed, the subject is usually what caused the Great Depression from 1929 to 1941 (although diehard believers in Franklin D. Roosevelt insist the depression ended in 1933 with FDR’s ascension to the Presidency). Yet, the Great Depression had similar characteristics to the so-called panics or crises that had occurred in the United States and abroad in the previous century: a period of boom—accompanied by inflation—then a sudden and violent bust with prices and wages dropping quickly and banks and other businesses going belly-up.
Because the boom-and-bust periods in American history have had such similar features, it would seem best to study the general causes of those economic phenomena rather than to concentrate on only the Great Depression. However, since it took far longer for the U.S. economy to work its way out of the slump in the 1930s than it had in previous bad times, this essay will also look at what set the Great Depression apart from its predecessors, along with examining the business cycle since World War II.
In examining the stated causes of the business cycle, one finds two explanations that stand out. The first is the traditional one—which includes socialist and Marxist variations—and the second is the Austrian Malinvestment Theory. There is also a third explanation, one that deals with the so-called “instability” of capitalism, that will also be examined.
American history textbooks are rife with explanations of 19th-Century recessions that center on “overexpansion” of the railroads or troubles on the farm. The idea, of course, is that a recession begins within a certain sector of the economy and snowballs into other areas, pulling them down as well.
While the above explanation of the business cycle may seem viable to publishers of history books, it, in reality, is wracked by fallacies, the first being the informal fallacy of converse accident or hasty generalization. The author assumes that because one particular industry goes bust, all the other industries will topple as well, a sort of business domino theory. However, the demise of one industry may only be signaling the rise of another. For example, to use the coats again, should there be a lessening of demand for a certain brand of coats, the change in consumer taste may be only because another brand of coats is less expensive or more attractive. Or, perhaps, the entire coat industry in an area has lost its market because the surrounding temperatures have permanently risen 30 degrees, which might mean a subsequent boom in the sun dress and bathing suit industries.
The Fallacy of Composition
The traditional explanations to the business cycle are more endemic in economic circles, with socialist and Marxist theories, it seems, being drawn from this area of thought. These arguments center around the idea that downturns in the business cycle result from a shortage of money. In pre-capitalist times, as Henry Hazlitt writes, “Whenever business was bad, the average merchant had two explanations at hand: the evil was caused by a scarcity of money’ and by general overproduction.” [5]
This argument has since been refined by socialist and liberal critics of the marketplace, and, indeed, has become the standard fare when explanations for the business cycle are sought. In examining this argument, it is necessary to study not only the ideas of theorists in pre-capitalist times (and the disastrous results of their “solutions”), but also the socialist and Marxist notions and why they are fallacious.
Economic historians are all too aware of the problems of the French economy during the early years of the French Revolution. In 1789, business was slow. Merchants and politicians in the National Assembly demanded that the government solve the nation’s fiscal problems (which were due to a top-heavy government debt). In seeking a solution that fit with the economic thought of the times, the French Government floated massive amounts of paper money to give its citizens “purchasing power.” What resulted from this action, of course, was a wild hyperinflation that destroyed the French economy, helped bring about the famous “Reign of Terror” and ultimately led to the dictatorship of Napoleon. The French leaders in 1789—as well as most government officials since then—assumed the fallacy that money is wealth, a notion that was exploded by Adam Smith in The Wealth of Nations when he pointed out that wealth comes not from money but rather from the increase of desirable goods and services. [6]
The Labor Theory
Socialists, beginning with Karl Rodbertus and Karl Marx in the mid-Nineteenth Century, have built many of their anti-capitalist arguments upon the fallacy of money being wealth. For example, in his famous Overproduction and Crisis, Rodbertus declared that production was solely for profit and that all production was simply a result of the efforts of labor or the workers.
This standard socialist doctrine, when joined with his beliefs on diminishing wage share, [7] led him to a theory of crises. All wealth being a product of labor, the laborer with his declining wage share was unable to buy back the products he produced. Markets would be flooded with goods which would bring falling prices and unemployment and, finally, precipitate an economic crisis. To relieve the situation, Rodbertus proposed that the state take over. [8]
This general crisis that Rodbertus predicted was the same sort of crisis Marx predicted for the advanced capitalistic West; he emphatically believed that, as production of goods and services increased, the profits of the “capitalists” would increase, wages would fall and the laborer would be unable to purchase those products that he had created with his own labor. Such would be the crisis that would ultimately lead to the workers revolting against their “masters” and leading the western world to communism.
The influence of Rodbertus and Marx is still felt strongly today, especially when leading writers and intellectuals explain their pet causes for the Great Depression. Declares Michael Harrington, who heads the Democratic Socialist Organizing Committee:
The Great Depression discredited Say’s Law (which, in short, declares that supply creates its own demand). During much of the 1930s, there was a glut of consumer goods because workers lacked the purchasing power [i.e., money] to buy back what they produced. That was why government began to play a role in the economy on behalf of middle-and-low income people during the period of Franklin Delano Roosevelt’s New Deal.” [9]
Says Time magazine:
Economists debate to this day about what caused the Great Depression. A prevailing view, persuasively argued by John Kenneth Galbraith, is that the technological increases in productivity throughout the 1920s (up 43% per factory man-hour) were not matched by increases in wages and thus in the public’s capacity to consume (factory pay rose less than 20%). The collapse of the overinflated stock market therefore started a downward spiral in both demand and ability to pay. Conservative economists like Milton Friedman, on the other hand, blame the Federal Reserve System for failing to expand the money supply sufficiently in the wake of the stock market crash. [10]
Friedman vs. Galbraith
Although Milton Friedman and John Kenneth Galbraith lead schools of economic opinion that vastly differ with each other, one cannot help but note at least some similarity between the two men’s reasons for the coming of the Great Depression. Galbraith believes—as do most modern historians and intellectuals—that Ricardo and especially Rodbertus were correct: production growth outstripped wages, which meant the laborers’ wealth diminished while the capitalists’ or owners’ profits increased. Or, to put it in more familiar terms, the rich got richer and the poor got poorer. To rephrase Harrington, the workers were drained of purchasing power, which was siphoned off by their bosses.
While Friedman certainly is no advocate of the above theories, his explanation of the Great Depression ultimately implies that the Federal Reserve System did not inflate enough (i.e., put “purchasing power” into the economy) from 1929 to 1933. So, viewing the causes of the Great Depression from the angle of the major schools of economic history, it can be said that the economic downturn happened because the printing presses of the federal government did not turn fast enough to enable people to hold enough “money” in their hands to “buy back” enough of the products that they had created.
Of course, Galbraith and Harrington—unlike Friedman—have argued that in addition to inflating, it is the duty of government also to heavily tax those in upper income brackets and give the revenues to those in lower brackets to insure that people “on the bottom” would have enough “purchasing power” to consume, thus avoiding “a glut of consumer goods.”
Implied in the traditional and socialist interpretations of the business cycle, of course, are the notions of overproduction and underconsumption, fallacies that have remained with us to the present time. [11] But whatever the line of interpretation, be it lack of “purchasing power,” overproduction or underconsumption, the theories still abound with fallacies and false assumptions of the economic system.
“Money Is Wealth”
The first fallacy, as I have already stated, is that money is wealth. When Galbraith and Harrington dolefully observe the rate of production outstripping the growth of money wages, they have immediately jumped to the conclusion that buying power has diminished. Nothing could be farther from the truth. Such a view suggests that wealth causes poverty, or, in other words, a society becomes poorer as it produces more wealth.
The socialist viewpoint fails to recognize that wealth is a variable of production of goods and services, not of production of money. Any government on the earth can quickly crank out a vast increase in the supply of its designated means of exchange (provided that means is paper money or base-metal coins, not valuable commodities) and many governments, including our own, have done just that. But the sad lesson is, though few politicians and intellectuals have realized it, that inflation does not bring increased wealth, but rather chaos and, in the end, more poverty.
Burdening the Poor
Another important criticism of the socialist notion that the increase in production “makes the rich richer and the poor poorer” is that history has shown this view to be utterly false. Even one historian whose text is laced with anti-free market rhetoric concedes that standards of living for ordinary workers rose during the 19th Century, the time when Rodbertus was claiming that the opposite was true. [12]
In order for the socialist argument to be true, the lot of the average person today would have to be far worse than the lot of the average worker before the Industrial Revolution When most people spent about 90 per cent of their income on food. Even the claims of Galbraith and Harrington of the deterioration of purchasing power during the 1920s are based on the false assumption that the lot of the average person worsened during that decade.
Yet, as historians admit, the lot of the common worker rose dramatically during the 1920s. When President Herbert Hoover in his innauguration speech of 1929 trumpeted to the world that the “eradication of poverty” in the United States was in sight, few persons saw fit to disagree with him. In fact, the other pre-1929 depressions in the United States usually followed periods of increases in the standard of living for most people. There is simply no historical evidence that shows that Americans have become gradually poorer since the beginning of the Industrial Revolution. The socialist claim that capitalism enriches the few at the expense of the many simply has no logical base.
There is, however, some truth to the idea of overproduction and underconsumption in times of recession. After all, many businesses in the late 1920s did expand greatly, only to find no markets for their goods. There was an abundance of farm products in the early years of the Great Depression that, for some reason, could not be sold. As one political cartoonist noted in a sketch, there was “too much oil, too much wheat and too much poverty.”
It does no good, however, to only state the conditions. One must investigate the causes of such a calamity. There was a reason why wheat in America’s heartland was in abundance but families went hungry. There was a reason that factory inventories were choked with goods that no one seemed able to buy. To simply claim that farmers grew too much wheat or factories produced too many widgets and those actions brought about the Great Depression or any other depression is to commit the fallacy of false cause. Most economic historians, however, have done just that. They have seen the results of the problem and have concluded the results were in reality the cause.
Periods of Boom and Bust Preceded by Inflation
If we are to solve the riddle of the business cycle, it is necessary to first look for common characteristics of the periods of boom and bust. And, as pointed out earlier in this paper, inflation seems to have been present in most of the boom periods. For example, in the years after Andrew Jackson killed the Bank of the United States and before he issued his famous Specie Circular in 1836, irresponsible state-chartered banks created vast amounts of paper money, much of which went to speculation on public lands, finding its way ultimately into the Federal treasury. As the supply of partially-backed money increased, Jackson became alarmed and ordered that public lands be paid for in silver and gold rather than paper. As noteholders rushed to convert their paper into specie, many banks, unable to meet any sort of reserve requirement, went under. In 1837, a panic began which brought hardships to many Americans and guaranteed President Martin Van Buren only one term of office.
In the violent but short-lived Panic of 1893, one finds the roots in the Sherman Silver Purchase Act of 1890 which required the U.S. Treasury to purchase overvalued silver with gold certificates, thus creating a run on the treasury’s gold reserves. The resulting monetary crisis forced President Grover Cleveland to call a special session of Congress in 1893 to repeal the Sherman Act, thus halting the silver inflation. A deep recession began that year, an event that led to Coxey’s Army (which wanted the federal government to print money to pay for public works programs, a plan Cleveland wisely refused) and the 1896 free-silver
Presidential candidate William Jennings Bryan.
During depression periods, businesses held goods they could not sell, farmers had crops, that despite low prices, no one could seem to afford. People lost their jobs; wage earners could not support their families; businesses could not expand despite the availability of cheap materials and cheap labor.
At this point one might ask: Was there any correlation between the monetary problems in the boom-bust periods and the business down-turns? Were these phenomena related or was their simultaneous appearance just coincidence?
There are other questions to be answered as well. The overexpansion of one business or even a few businesses has an easy explanation: investors and entrepreneurs do misinterpret the market at times. For example, when the World’s Fair recently was held in nearby Knoxville, many entrepreneurs invested in campsites, mobile homes and quickly-built motels, hoping to cash in on the expected horde of tourists. However, the flow of fair visitors, though heavy, did not fall into the preconceived patterns of some investors, which means, in the vernacular, they took a bath. There were other investors, however, who accurately read the coming markets and, indeed, did strike their fortunes.
But to take the specific, that is, the probability that some investors will misread the market, and place it in the general, or that most investors will misread the market at the same time—under normal business conditions—is to commit fallacies of converse accident and composition. What is true for one person may not be true for everyone; to assume otherwise is fallacious, but that is precisely what most economic historians have done.
Why the Cluster of Errors?
Yet, as one can tell by the unsold bumper crops, the glut of goods and the dashed plans of expansion that have characterized the down-side of the business cycle, those who look upon overproduction or underconsumption as the prime causes seem to be right. But, we must ask, why the cluster of errors? Why did so many investors and producers commit the same general errors at the same time, especially during the late 1920s? Few economists have sought to answer that question. Liberal historians blame the disastrous stock market speculation and subsequent crash on the Coolidge-Mellon tax cuts, which slashed the top rates from 63 per cent to 24 per cent, claiming that the rich had too much money with which to speculate (which implies, of course, that government officials spend other peoples’ money more wisely than the people spend their own funds).
But tax cuts or low tax rates had never been responsible for faulty speculation or malinvestment before 1929, which makes it difficult to believe that investors, from the very wealthy to lower-class savers, had suddenly in concert thrown much of their hard-earned money into a bottomless pit. All of which leads back to the original question: Why the cluster of errors?
The answer can be given in one word: inflation. But to understand why inflation has been responsible for misleading large numbers of investors and producers at the same time, one must first comprehend the role of saving and spending in the economy.
Concerning the Role of Saving and Investment
As classical economists since Adam Smith have pointed out, the creation of wealth originates with capita], which is a product of entrepreneurial perception and action financed by savings. The basis for the productive economy—despite what politicians, journalists and liberal economists tell us—is not spending but rather saving. Consumer spending acting in concert with a free, unhampered price system serves as a guide or a rudder to the economic process. Consumers, by voting with their dollars, decide which investors are to be winners and which will lose. Spending does not create wealth; it only decides what, in the final analysis, will be considered to be wealth and what will not.
It seems logical, then, that the greater a community’s or nation’s pool of savings, the more opportunities to create wealth exist. But what happens when government, by injecting credit into the market via the purchase of government debt and a blip on a computer, expands the available pool of money beyond what has been saved by individuals? Free market economist Hans F. Sennholz clearly spells out the results:
The creation of credit by monetary authorities causes interest rates in the loan market to fall below the natural rate of interest. This natural rate, or unhampered market rate, reflects the people’s choices as to spending and saving, and is responsible for the relative proportions • of production for the present and the future, that is, consumers’ goods and producers’ goods. A rising rate of saving, for instance, causes producers’ goods industries to expand as more economic resources become available for expansion and modernization. If, without such new savings, monetary authorities arbitrarily expand credit, interest rates tend to fall, which then misleads business men to invest more funds in the capital goods industries (italics mine). Thus misled by artificially lower interest rates, they embark upon countless expansion projects that are unsupported by genuine savings. They engage in business activity that causes maladjustments and distortions. [13]
In other words, inflation misleads investors who mistake fiat rates of interest as being real or genuine rates. However, as numerous adherents to the “New Economics” have held, why can’t the Federal monetary authorities continue their creation of new credit indefinitely, thus giving the economy a permanent boost?
The answer lies in the nature of inflation itself. Inflation is, as aptly said by Friedrich von Hayek, a “tiger by the tail.” Continued doses of inflation to stimulate an economy soon take on a life of their own. As the amounts of fiat money are injected into the economic mainstream, prices rise—despite efforts of government officials to control them with price controls—profit margins diminish, lending authorities are forced to raise real levels of interest, thus forcing a slowdown of business activity, and the market processes continually become more and more distorted. And, as the inflation continues to drive prices beyond the reach of more and more citizens, a public outcry grows from a frightened people who demand an immediate end to the calamity.
The Rate of Saving Declines
During the inflationary’ period, another sinister development besides rising prices and business slowdowns occurs: the diminishing of savings rates. While inflation rages, the continuing debasing of the currency causes savings to lose their value, thus changing the engine of the economy from savings and investment to accumulation of debt. And once authorities stop the inflation, the reversal of debt-accumulation trends brings severe contractions to the economy. Without an adequate savings pool to keep interest rates at former low levels, debtors who prospered during inflation now face financial hardships.
As for the producers’ goods industries that expanded during the inflation, Sennholz writes:
The credit expansion misleads businessmen into costly errors of expansion and modernization for which there is no consumer demand. The fiscal deficits that are to stimulate economic recovery and full employment bolster some industries while depressing others. [14]
The end result, which occurs no matter if governments halt the inflation or not, is recession and unemployment. Victims of inflation may have more money in their hands, but their real purchasing power, because the troubled economy is producing less, has shrunk. That phenomenon is clearly seen at this present time with many European nations, including Ireland and England, along with our neighbor Canada, suffering from both high inflation and high unemployment. The United States, on the other hand, having brought its recent double digit inflation rates to near five per cent, now is paying for its previous fiscal foolishness with unemployment.
A Depressed Housing Industry
A clear example of the course of inflation can be seen in our nation’s housing construction industry. In the 1970s, while the federal government subsidized the industry with below-market interest rates, housing boomed, along with the related industries such as carpet-making, lumber and large home appliances. However, once inflation had finally driven the low rates far beyond the reach of the average buyer, along with pushing construction costs to record levels, the industry, along with companion producers, slipped into depression. And without a large savings pool to help finance new construction (government spending presently takes nearly 80 per cent of savings), the outlook for the housing industry, at least in the near future, is bleak.
As mentioned earlier, however, home building lobbyists have convinced the Congress to push through an ill-advised inflationary bail-out bill. But such action—which could only aggravate inflation—is to seek a cure by taking in another dose of the disease.
But, with business bankruptcies increasing and unemployment rates reaching near 10 per cent, what should government do to alleviate the problem? The answer, which may seem heartless to liberal historians, economists and intellectuals (not to mention the millions of persons out of work) is to do nothing that would add to the burden of government. As we have shown, government is the cause of boom and bust, the inflationary boom coming first when the original doses of credit spur ill-advised economic expansion, and the bust coming when the forces of sup ply and demand take their natural course. Politicians cannot repeal the law of supply and demand. Therefore, it is best for government officials to admit their inflationary mistakes and then step back as the economy goes through the painful but-usually-brief period of readjusting itself in line with market prices and wages and real consumer demand.
In fact, before the Great Depression, the policy of the federal government, once its ill-advised actions had led to boom and bust, was laissez-faire. The depressions, though often turbulent, were mercifully brief.
However, when the stock market crashed in the fall of 1929, following nearly a decade of an inflationary boom engineered by the Federal Reserve System, the federal government, first under the leadership of Herbert Hoover and then Franklin Delano Roosevelt, intervened at almost every level. The Hoover administration, for example, doubled the income tax rate, pushed tariff rates to ruinous levels, attempted to cartel both industries and the agricultural sector and sought to keep both prices and wages far above market levels. Any one of those actions following the stock market crash would have seriously impaired a business recovery; together they acted in concert to bring the economy to its knees, and, in the process, throw nearly a quarter of the American work force off the job. [15]
Nor can it be said that the Roosevelt Administration acted with any more soundness. During the FDR years, the federal government assaulted property rights, inflated, stymied agricultural production, raised taxes and took ever-increasing bites from the nation’s production of wealth. By acting in concert with labor union leaders in attempting to unionize much of the U.S. labor force, the government helped drive wage rates above market levels, thus touching off the ruinous depression of 1937-38. It is clear that the “humanitarian” attempts by both the Hoover and Roosevelt administrations to slow the forces of supply and demand as the nation lurched into depression in the long run only served to increase the human suffering so starkly depicted in the grim, austere photographs that record the anxious years of the 1930s.
The governments of the so-called capitalist West have learned little since the disasters of the 1920s, ‘30s and ‘40s. Politicians still see inflation as the best weapon to fight unemployment even while the record shows their actions to be foolish. The business cycle is still seen by many as the natural result of “unbridled” laissez-faire.
But there is much we can learn by examining the business cycles. By carefully studying historical economic developments, we can easily see that inflation is not the cure but rather the culprit. Inflation may, in its early days, give people an illusion of wealth; when it has run its course, however, it has borne not riches but rather poverty.
How does a nation avoid the roller-coaster of the business cycle? The words of Ludwig von Mises seem to be wise counsel:
If the policies of nonintervention prevailed—free trade, freely fluctuating wage rates, no form of social insurance, etc.—there would be no acute unemployment. Private charity would suffice to prevent the absolute destitution of the very restricted hard core of unemployables. [16]
1. Gene Tharpe, “Fitting Economics to Economic Reality,” The Atlanta Constitution (March 18, 1982), 5-A.
2. Robert Lekachman, “Reverse Most of Reagan’s Policies,” U.S. News & Worm Report (April 5, 1982), p. 38.
3. Marvin Miller, The American Dream: Shadow and Substance (Covina, California, 1976), pp. 278-279.
4. Lawrence W. Reed, “Seven Fallacies of Economics,” Freeman (April, 1981), p. 212.
5. Henry Hazlitt, The Failure of the “New Economics” (Princeton, New Jersey, 1959), p. 33.
6. Reed, pp. 212-213..
7. Rodbertus accepted Ricardo’s “Iron Law of Wages” that claimed that laborers would always make no more than subsistence wages because any real increase in pay would only serve to make the laborers’ families larger. Ricardo’s so-called “Iron Law” has historically been shown to be made of paper.
8. John Fred Bell, A History of Economic Thought (New York, 1953), p. 373.
9. Michael Harrington, “And the Poor Get Poorer,” Today’s Education (September-October, 1981), p. 31.
10. Time, February 1, 1982, p. 22.
11. For an excellent critique of long-held causes of the business cycle, read America’s Great Depression by Murray N. Rothbard.
12. John A. Garraty, The American Nation (New York, 1971), p. 608.
13. Hans F. Sennholz, Age of Inflation (Belmont, Massachusetts, 1979), p. 130.
15. Rothbard spells out in detail the effects of Hoover’s interventionism in America’s Great Depression.
16. Paraphrased from the William E. Rappard contribution “On Reading von Mises,” in Mary Sennholz, ed., On Freedom and Free Enterprise (Princeton, N.J.: Van Nostrand, 1956), pp. 18 19.
When there is relative stagnation in business, and unemployment, it is usually because an unbalanced and unworkable relationship has developed between prices at which goods can be sold and their costs of production. The main difficulty, usually, is that wage-rates are too high in relation to prices. This could be cured by a readjustment of specific wage-rates, by more flexible wages and prices, by permitting competition to work. The first effect of a new injection of bank credit or paper money into the system is, indeed, an apparent increase of that “purchasing power” which is so much wanted. It enables “surplus” goods to be sold at their existing prices. It enables prices of other goods to be raised to levels at which existing wage-rates can be paid and a full complement of workers hired. So it tends to restore that “full employment” so cherished, at any cost, by the modern reformer. This goal is achieved under inflation by raising prices enough to validate the existing level of wages. But what is forgotten is that the adjustment could have been made not only just as well, but much better, by a realignment of the particular wages that had got out of line.
—from Henry Hazlitt’s Introduction
to Andrew D. White’s Fiat Money Inflation in France