UINT 8 FISCAL POLICY

UNIT 3

PREVIEW

Vietnam’s economy: multi-sector economy – kinh tế nhiều thành phần

The public sector is the part of a country's economy which is controlled or supported
financially by the government. – do nhà nước quản lý và cấp vốn
- To keep economic reform on track, 60,000 public-sector jobs must be cut.
Economic renovation: đổi mới kinh tế
Keep sth on track : tiếp tục – economic reform: cải cách kinh tế
Public places: nơi công cộng/ public finance – tài chính công/ public sector: khu vực
(thành phần) kinh tế công
Privatize (v) cổ phần hóa
Private (adj)
Công thức cấu tạo từ mới:
Adj + ize => V
Ví dụ
Adj Verbs Adj Verbs
Private Privatize Urban Urbanize
National Nationalize Industrial Industrialize
International Internationalize Modern modernize
global Globalize

Public sector (in British English) (khu vực (thành phần) kinh tế chung) : the part of an
economy that consists of (include) state-owned institutions, including nationalized
industries and services provided by local authorities – chính quyền địa phương
The private sector (khu vực tư nhân) is the part of a country's economy which consists of
industries and commercial companies (cti thương mại) that are not owned or controlled
by the government.
- ...small firms in the private sector.
- ...the gap between the salaries of public and private sector employees.

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Joint-ventures: a business or business activity that two or more people or companies
work on together
Foreign companies
Balances (n): (số dư) The balance of an amount of money is what remains to be paid for
something or what remains when part of the amount has been spent.
- They were due to pay the balance on delivery. – Họ đã phải thanh toán số tiền còn
lại khi nhận hàng.
A checking account is a personal bank account which you can take money out of at any
time using your cheque book or cash card – such as ATM cards
Check = cheque (n) tờ sec
Write out a check:
Checking account: tài khoản séc, tài khoản vãng lai – loại tài khoản không kỳ hạn - (in
American English) a bank account against which the depositor (người gửi tiền) can draw/
withdraw checks at any time, without presenting a bankbook = passbook (sổ tiết kiệm)
Current account (n) tài khoản vãng lai = checking account: a bank account that you can
take money from at any time and use for making payments, that usually earns little or no
interest:
- She opened a current account with an online bank.
in/into sb's current account
debit cards – a small plastic card that you can use to get cash from cash machines, or
to pay for goods and services. When you use the card, the money is
taken directly from your bank account:
credit cards - a small plastic card that can be used to buy goods or services and then pay for them at
a later time:
- He is considering what to do with around £5,000 he has in his current account.
out of/from sb's current account
- I transfer my mortgage repayments monthly from my current account.
a current account holder/customer
credit: a method of paying for goods or services at a later time, usually paying interest as
well as the original amount
AMT account: ATM stands for Automated Teller Machine
Am ATM card can be used for making payments or drawing money at any time.

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A savings account = time deposit account (tài khoản tiền gửi tiết kiệm – loại tài khoản có
kỳ hạn - is a bank account with a limited number of transactions per month that pays a
higher interest rate than a checking account.
- Balances above a certain amount in a checking account are automatically
transferred into a savings account that pays interest – tiền lãi.
- An emergency fund is money set aside in a savings account to cover several
months' living expenses.
Draw (v) to get money from a bank, account, etc. so that you can use it: rút tiền
- I drew some money out of my account to pay for our trip.
Draw (v) to receive money regularly, especially as an employee or from the government:
nhận (tiền) theo định kỳ
- He's been drawing a pension for ten years. – Ông ấy nhận lương hưu suốt 10 năm.
Withdraw (v) withdrew | withdrawn to take money out of an account:
- This account allows you to withdraw a maximum daily amount of $500.
withdraw cash/funds/savings
- The economic crisis saw people queuing to withdraw their savings.
Khủng hoảng kinh tế chứng kiến người dân xếp hàng để rút tiền gửi tiết kiệm.
Withdraw (v) to stop selling a product or offering a service, usually because of a problem
or fault: ngừng bán sản phẩm hay cung cấp dịch vụ, thường vì lý do sp có lỗi hay có vấn
đề
- The product was withdrawn from the market on safety grounds.
- The brewery said there was no connection between their decision to withdraw one
of their local beers and the dispute with their main competitor.

Withdraw (v) to remove something that you previously agreed to provide:

withdraw funding/support – rút lại việc cung cấp vốn/ nguồn tài trợ
- The opposition threatened to withdraw support for the government's pension
plans.
withdraw an application/bid/offer
- Morgan Stanley withdrew the job offer.- thông báo trúng tuyển

Match the words or phrases from a - j with their definitions from 1 – 10

a. macroeconomic policy f. interest rate

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b. trade policy g. government spending
c. public sector h. government revenue
d. monetary policy i. money supply
e. fiscal policy j. inflation(lạm phát)
1 – I (money supply) 2 – g (government spending) 3 – h (government revenue)
4–a 5–c
1. includes cash, coins and balances held in(giữ trong) checking and savings(séc và tiết
kiệm). money supply
2. includes all government consumption and investment(chi tiêu và đầu tư) but excludes
transfer payments(khoản chuyển giao) : government spending(chi tiêu chính phủ)
3. includes all amounts of money (i.e. taxes and/or fees) received from sources
outside(các nguồn bên ngoài) the government entity. government revenue
4. aimed at the aggregate economy – toàn bộ nền kinh tế , usually to promote the macro
goals of full employment, stability, and growth. (về việc làm đầy đủ, ổn định và tăng trưởng.)
macroeconomic policy
5. The part of the economy concerned with providing basic government services as the
police, military, public roads, and so on. public sector
J - 6. a progressive increase in the general level of prices brought about by an expansion
in demand or the money supply or by autonomous increases in costs. inflation(lạm phát)
b- 7. a government's policy controlling foreign trade. (ngoại thương) = international
trade/ business: trade policy
f - 8. the percentage of a sum of money charged for its use
d - 9. the process by which the monetary authority of a country controls the supply of
money, often targeting a rate of interest for the purpose of promoting economic growth
and stability – quy trình Ngân hang TW của quốc gia quản lý lượng cung tiền, thường là
đề ra khung lãi suất cho mục tiêu thúc đẩy tang trưởng và ổn định kinh tế
e - 10. the use of government expenditure and revenue collection to influence the
economy

Government spending includes: chi công (của chính phủ) bao gồm:
- government consumption = current government spending (chi thường xuyên)
- government investment = capital spending (chi cơ bản)

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Transfer payments (n) – chi phúc lợi xã hội - any payment made by a government for a
purpose other than that of purchasing goods or services, as for welfare benefits
- Trust funds (quỹ bảo hiểm xã hội) are generated from payroll taxes
- Federal funds (state funds) are generated from income taxes, tariffs, and excise
taxes, and others
aim at sth/ doing sth: nhằm mục đích = for the purpose of doing sth:

We learn ESP (Egnlish for Specific Purposes) in Finance & Accounting for the purpose
of / aiming at finding positions as professional accountants or auditors in foreign
organizations such as KPMG, Deloit, …
TRANSLATE INTO VIETNAMESE
Discover how the Federal Reserve defines (xác định/ tính) the money supply by exploring
the components of the money stock. In this lesson, we also look at the money supply in
terms of function and liquidity.
Measuring the Amount of Money in Circulation
The money supply is the total quantity of money in the economy at any given time.
Economists measure the money supply because it is directly connected to the activity
taking place all around us in the economy. In addition, the Federal Reserve's Board of
Governors and the Federal Open Market Committee use this information as the basis of
their monetary policy. What we're talking about in this lesson is: how do we measure the
money supply?

While most people think that money supply is one big pile of cash in the economy,
economists look at it very specifically. We can define the money supply in three different
ways - M1, M2 and M3.

M1 is the narrowest definition of money. M1 consists of coins and currency (bank notes)
in circulation, checking accounts and traveler's checks. – séc du lịch

M2 is a more broad definition of money than M1. M2 = M1 + small savings accounts,

money market funds and small time deposits. (tiền gửi có kỳ hạn)

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M3 is even more broad and includes M2 + large time deposits, large money market funds
and repurchase agreements, which are financial instruments generally used by large
businesses and institutions. Since 2006, the Federal Reserve stopped using M3 - so now
we have M1 and M2.

These measures correspond to three definitions of money that the Federal Reserve uses.

Here's a snapshot of the money supply at the end of July 2012. As you can see, M1
consists of around $1 trillion in currency, about $4 billion in traveler's checks and another
$1.26 trillion in demand deposits at banks. These three make up M1, which totaled about
$2.3 trillion. M2 takes M1 and adds several other things to it. When you add savings
accounts, small time deposits and small money market funds, you get a total of about $10
trillion, which economists refer to as M2.

The Money Supply in Terms of Function

A sample snapshot of the money supply for one month
M1 M2 Money Supply Chart

Here's another way to think of these two measures of the money supply.

The money in M1 functions as a medium of exchange. When Bob deposits money into his
checking account, this is part of M1. He can withdraw this money at any time and use it
to buy stuff.

The money in M2 functions as a store of value. When Margie puts $10,000 into her
savings account, for example, she's using the money as a store of value. This money will
earn interest and help protect the purchasing power of her initial deposit.

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 READING 1

Main ideas:
- Tools of fiscal policy
- Stances of fiscal policy
- Expansionary fiscal policy (
- Contractionary fiscal policy
- Factors influencing the decisions on fiscal policy
Answer the following questions based on the reading text.
1. What are 2 main tools of fiscal policy? (government spending (G) & taxation (T))
2. Stances of fiscal policy
- G > T (If the government spends more than it can collect from taxation, fiscal
policy is in deficit.)
- G < T (If the government spends less than it can collect from taxation, fiscal
policy is in surplus.)
- G = T (If the government spends the same amount of money as it collects from
taxation, fiscal policy is balanced/ neutral/ in balance.)
Expansionary fiscal policy
3. What is expansionary fiscal policy
Fiscal policy is expansionary when the government increases its spending and/or reduces
taxation.
4. What will happen if the government reduces taxes?
If the government reduces taxes, households and firms will have more of their incomes to
spend on goods & services or on investments, leading to increasing demand and
production. More production will create more jobs so the unemployment rate will reduce.
Thus, the economy tends to grow.
5. What will happen if the government increases its spending?
When the government increases its spending, for example, on building a new highway,
the construction will creates more jobs and incomes for both individuals and firms. Thus,
the unemployment rate will reduce and the economy tends to grow.

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 6. What are the objectives of expansionary fiscal policy?
The objectives of expansionary fiscal policy are to promote economic growth and to
reduce unemployment rate.
7. What can the government do if it wants to promote economic growth?
if the government wants to promote economic growth, it can run expansionary fiscal
policy, specifically by increasing government spending or reducing taxes or combining
both of them.
Topic question:
What is expansionary fiscal policy? Under what circumstance (When) should the
government run expansionary fiscal policy?

When economic growth rate is low, and/or unemployment rate is high, the government
should run expansionary fiscal policy. For example, (câu trả lời 4 hoặc 5)

Contractionary fiscal policy

8. What is contractionary fiscal policy
Fiscal policy is contractionary when the government decreases its spending and/or
increases taxation.
9. What will happen if the government reduces its spending?
When the government reduces its spending, AD (aggregate demand) will reduce, leading
to reduced pressure on prices, thus inflation tends to reduce.
10. What will happen if the government increases taxation?
When the government increases taxation, firms and individuals will have less of their
incomes, then they reduce their demand, leading to reduced pressure on prices, thus
inflation tends to reduce.
11. What can the government do if it wants to reduce inflation?/ make the economy
shrink? slow down the economy?
If the government wants to slow down the economy, it can run contractionary fiscal
policy, specifically by decreasing government expenditure or increasing taxes or
combining both of them.
Topic question:

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What is contractionary fiscal policy? When should the government run contractionary
fiscal policy?
- When the inflation rate is high, …..

12. What is deficit spending/ deficit budgeting? – Chính sách bội chi là gì?
Deficit spending means spending funds obtained by borrowing or printing instead of
taxation.
(Budget deficit is a situation in which government spending is more than government’s
revenue.)
Spend + sth: chi tiêu
Obtain +sth = get sth: có được cái gì/ đạt được cái gì
13. Is deficit spending harmful or helpful for the economy? And why?

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.

- Perform + function + of doing sth / sth

Tài chính công thực hiện 3 chức năng cơ bản là: phân bổ nguồn lực, phân phối lại thu
nhập và ổn định kinh tế.
- Public finance performs 3 major functions of resource allocation, income
redistribution and economic stabilization.
- Public finance performs 3 major functions of allocating resources, redistributing
incomes (wealth) and stabilizing the economy.
Performance (n) hoạt động
Purchases -
Purchase is the act of buying.
- The best purchase price is the lowest price at which the owner can obtain goods
and services of acceptable quality. – chất lượng hợp lý.

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 - The purchase of a ticket is a contract between the airline or tour operator and the
person named on the ticket. (mệnh đề phân từ 2 bổ nghĩa cho danh từ đi trước
Purchase is something you buy.
- If you find a fault with a purchase when you receive it, you should contact the
seller immediately.
A purchase = an item that you buy.

Khi cá nhân và doanh nghiệp có thu nhập nhiều hơn, họ có xu hướng chi tiêu nhiều hơn,
dẫn tới tăng sản xuất, do đó kinh tế có hướng tang trưởng
When individuals and firms have more incomes, they tend to spend more, (which leads
to) leading to more/ increasing production, thus, the economy tends to grow.

14. What will happen if the government reduces taxes?

Jf the government reduces taxes, households and firms will have more of their incomes to
spend, the increasing purchase of goods and services leads to/ requires more production,
thus the economy tends to grow.

15. What can the government do if it wants to promote economic growth?

if the government wants to promote economic growth, it can decrease taxes or increase
its spending or combine both of them.
16. What can the government do if it wants to reduce inflation?/ make the economy
shrink? slow down the economy?
if the government wants to slow down the economy, it can increase taxes or decrease its
spending or combine both of them.

17. What is deficit spending/ deficit budgeting? – Chính sách bội chi là gì?
Deficit spending means spending funds obtained by borrowing or printing instead of
taxation.
(Budget deficit is a situation in which government spending is more than government’s
revenue.)
When G > T => deficit (When the government spends more than it receives, it runs
deficit.)

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 18. Is deficit spending helpful or harmful for the economy?
Bội chi có thể có lợi hoặc gây hại cho nền kinh tế, tùy thuộc vào từng hoàn cảnh/ điều
kiện kinh tế cụ thể.
Deficit spending can be either helpful or harmful for the economy, (which depends)
depending on specific economic situation/ circumstance.
19. In which situation/ circumstance is deficit spending helpful for the economy? And
why?
Deficit spending is helpful for the economy when unemployment is high or the economic
growth rate is low = the economy doesn’t grow fast enough.

Mục đích của việc thực thi chính sách bội chi:
Objectives of deficit spending are:
- To create more jobs = to increase employment rate = to reduce unemployment
rate.
- To promote economic growth = to develop the economy = to increase the
economic growth rate

In economic crisis
Phân biệt giữa suy thoái kinh tế và khủng hoảng kinh tế
https://www.businessinsider.com/recession-vs-depression#:~:text=A%20recession%20is
%20a%20decline,Insider's%20homepage%20for%20more%20stories.

20. In which situation/ circumstance is deficit spending harmful for the economy? And
why?
When the unemployment is low or inflation is high
21. What are major objectives of fiscal policy and monetary policy?
3 major objectives:
- To reduce unemployment rate.
- To promote economic growth
- To keep inflation under control = To control inflation

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 When the government spends more than it receives, it runs deficit. Governments
finance deficits by borrowing money. Deficit spending (bội chi) – 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 & resources
and this inflates wages and prices.

- Be idle = be unemployed – thất nghiệp

Phân biệt với: Be + made + redundant – bị mất việc

A, otherwise + B: có vấn đề A, nếu k có vấn đề A thì vấn đề B xảy ra

Expand (v) =
The economy expands = the economy grows/ develops/

Deficit spending
+ helpful in times of high unemployment/ low economic growth rate
Purposes of creating more jobs and increasing levels of economic activity =>
promote economic growth.
+ harmful in times of low unemployment and high inflation
Because deficit spending cause inflation to rise.

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.

the economy will expand when the money is being pumped into it

when taxation is reduced or public spending is increased

= when the government reduces taxes and increases spending (expenditures)

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Be concerned with
Fiscal policy can be either expansionary or contractionary. It is expansionary or
loose when taxation is reduced or public spending is increased with the aim of
stimulating total spending in the economy, known as aggregate demand (tổng cầu).
Expansionary policy might occur, when a government feels its economy is not growing
fast enough or unemployment is too high.
Expand (v)
Expansion (n)

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.

The government makes changes to the public spending or taxation.

Be likely + to do sth:
Make judgments about = make regarding = consider : xem xét

To determine (= make decisions on) 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.

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 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.
Decisions on fiscal policy are inevitably influenced by political considerations,
such as beliefs about the size of the role that governments should play in the economy, or
the likely public reaction to a particular course of action. Few governments will find it
easy to raise taxes or to decrease funding for programs that have strong support from the
public, such as social security or defense. Fiscal policy decisions can be influenced by
other outside factors as well. In today’s global economy, a government also needs to
consider the fiscal policies of other countries, which may tempt companies to relocate by
offering them generous tax programs (chương trình ưu đã về thuế) or other government –
controlled benefits. Some countries may find their fiscal policy decisions constrained
(ràng buộc) by the requirements of the International Monetary Fund (IMF), which often
grants aid packages subject to conditions relating to fiscal policy.

Locate (v) đặt cái gì ở đâu

Multinational corporations can locate their subsidiaries in other countries
Tempt sbd to do sth: xui khiến ai đó
Play + role + in + sth/ doing sth: đóng vai tro

Governments play an important role in regulating their economies.

Companies = multinational corporations: tập đoàn đa quốc gia – subsidiaries: công ty con
FDI: foreign direct government
aid packages – gói viện trợ
COMPREHENSION
COMPREHENSION QUESTIONS
QUESTIONS
1. What is an expansionary fiscal policy?- Chính sách tài chính nới lỏng là gì?

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 A fiscal policy is expansionary when taxation is reduced, and/or public spending is
increased/ When the government reduces taxation (specifically tax rates), and/or
increases government spending.
2. Under what circumstances should the fiscal policy be expansionary?/ should the
government run expansionary F.P?
The G should run E. F. P when economic growth rate is still low, and/or the
unemployment rate is high.
…. in times of low economic growth, and/ or in times of high unemployment.

3. Why should The G run E. F. P when economic growth rate is still low, and/or the
unemployment rate is high. (Viết câu trả lời dưới dạng đoạn văn)

The fiscal policy should be expansionary when economic growth rate is still low, or the
unemployment rate is high. The Government can increase government spending/ public
spending, or reduce taxation (specifically tax rates), or combines both. For example,
when the Government borrows more money to build a new highway, the construction will
create more jobs, so the unemployment rate is decreased. Moreover/ In addition, the
construction of the highway also bring more incomes for both individuals (workers) and
firms. With more incomes, they tend to purchase more goods and invest more in
equipment. This requires additional production. As a result, the economy tends to grow.

(For example, when the Government reduces tax rates on individual incomes and
corporate incomes, both individuals and firms will have more incomes. Then they tend to
purchase more goods and invest more in equipment. This (an increase in AD) requires
additional production. As a result, the economy tends to grow.)

4. What is contractionary fiscal policy?

Fiscal policy is contractionary when taxation is increased and/or public spending is
reduced ( T↑ ; G↓)
With the aim to restrict total spending in the economy.
It occurs when the economy overheating or inflation is high.
5. Under what circumstances …?
In times of high inflation

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 6. Why ….? Because the C.F.P can decrease spending …..
Viết câu trả lời dưới dạng đoạn văn)

7. What factors should the government consider when making decisions on its fiscal
policy? Why? Viết câu trả lời dưới dạng đoạn văn)
In order to make decisions / When making decisions on its fiscal policy, the Government
should consider a number of factors, consisting of inside factors and outside factors.
Firstly, internal factors include economic factors such as economic growth rate,
unemployment rate and inflation rate. Moreover, the government also needs to consider
non-economic factors as well, for example, politic consideration.
Secondly, external factors may have a great influence of the fiscal policy of a country.
These factors can be fiscal policies of other countries, which may tempt multinational
corporations to relocate their subsidiaries due to that countries’ generous tax programs.
Other factors can be requirements of the International Monetary Fund (IMF), which often
grants aid packages subject to conditions relating to fiscal policy.

+ Inside factors: (economic factors + non-economic factors)

+ Outside factors

8. What is deficit spending? Is it helpful or harmful to the economy? Why?

Viết câu trả lời dưới dạng đoạn văn)

1. In what way (How) do government spending and taxation affect the economy? Give
examples.
2. What is deficit spending? Is it useful or harmful for the economy? Why?
3. What are the government’s major economic policies mentioned above?
4. What are they aimed at?
5. Under what circumstances can fiscal policy be expansionary? Why?
6. Under what circumstances can fiscal policy be contractionary? Why?
7. What factors should be considered in making decisions on the fiscal policy?

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8. Why should the government consider the fiscal policies of other countries?

VOCABULARY
Undertake (v): When you undertake a task or job, you start doing it and accept
responsibility for it. Thực hiện / thực thi
- She undertook the arduous task of monitoring the elections.
Something that is arduous (adj) is difficult and tiring, and involves a lot of effort. – khó
khăn, vất vả
- ...a long, hot and arduous journey.
- The task was more arduous than he had calculated.
- They also undertake research on the effects of radiation.
If you undertake to do something, you promise that you will do it. – hứa làm gì
- He undertook to edit the text himself.
expand (v): If something expands or is expanded, it becomes larger. – mở rộng
- The money supply expanded by 14.6 per cent in the year to September.
If something such as a business, organization, or service expands, or if you expand it, it
becomes bigger and includes more people, goods, or activities.
- The popular ceramics industry expanded towards the middle of the 19th century.
- The interest rate's coming down. I'll be able to expand or stay in business.
- I owned a bookshop and desired to expand the business.
Expansion (n) is the process of becoming greater in size, number, or amount. – sự mở
rộng
- ...the rapid expansion of private health insurance.
- ...a new period of economic expansion.
- The company has abandoned plans for further expansion.
Expansionary (adj) economic policies are intended to expand the economy of a country.
- They demanded a more expansionary economy to combat rising unemployment.
If people in authority combat (v) something, they try to stop it happening. – ngăn chặn
- Congress has criticized new government measures to combat crime.
result in sth: to cause a particular situation to happen: gây ra

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 - The fire resulted in damage to their property.
Inflation (n) a general, continuous increase in prices:
- high/low inflation
- the rate of inflation
- The control of inflation is a key component of the government's economic policy.
- Unemployment, inflation and greater inequality are often the downside of a
market economy.
- Managing the economy is a complex equation of controlling inflation and
reducing unemployment.
Inflate (v) to increase the value or price of something, or to become more valuable or
expensive:
- People who bought homes years ago have seen the values inflate and property
taxes rise with the inflation.
Be concerned with: to be about a particular thing or person:
- Today's lesson is concerned with punctuation.
Be concerned with: involved or involving:
- Her job is only concerned with costs and fees.
Contractionary (adj) involving or constituting economic contraction
- when countries followed absurdly contractionary macroeconomic policies
- In this fragile environment, fiscal policy turned sharply contractionary.
When something such as an economy or market contracts, it becomes smaller.
- The manufacturing economy contracted in October for the sixth consecutive
month.
To constrain someone or something means to limit their development or force them to
behave in a particular way. Hạn chế, ràng buộc
- Many working parents are too often constrained by inflexible working hours.
- The company is constrained to offer salaries that can only attract mediocre staff.
- The capacity of those roads will constrain the amount of car travel.
If you describe something as mediocre, you mean that it is of average quality but you
think it should be better.
- His school record was mediocre. – Học lực trung bình
VOCABULARY EXERCIES

19
2. Complete the following text using the words or phrases from the box.
actions expansionary declines solvency revenues
benefits correction spending contractionary fiscal deficits

The global crisis that had its roots in the 2007 meltdown in the U.S. mortgage market is a
good case study in fiscal policy. The crisis hurt economies around the globe, with
financial sector difficulties and flagging confidence hitting private consumption,
investment, and international trade (all of which affect output, GDP). Governments
responded by trying to boost activity through two channels: automatic stabilizers and
fiscal stimulus—that is, new discretionary (1) …… ……… or tax cuts. Stabilizers go
into effect (phát huy hiệu quả) as tax (2) …… ……. and expenditure levels change and
do not depend on specific (3) … ……… by the government. They (stabilizers) operate in
relation to the business cycle. For instance, as output slows or falls, the amount of taxes
collected (4) … ……. because corporate profits and taxpayers’ incomes fall, particularly
under progressive (lũy tiến) tax structures where higher-income earners fall into higher-
tax-rate brackets. Unemployment (5) …… …… and other social spending (other welfare
payments) are also designed to rise during a downturn. These cyclical changes make
fiscal policy automatically (6) …… ……. during downturns and (7) …… …….. during
upturns.

Fiscal deficits and public debt ratios (the ratio of debt to GDP) have expanded sharply in
many countries because of the effects of the crisis on GDP and tax revenues as well as
the cost of the fiscal response to the crisis. Support and guarantees to financial and
industrial sectors have added to concerns about the financial health of governments.
Many countries can afford to run moderate (8) … …….. for extended periods, with
domestic and international financial markets and international and bilateral partners (đối
tác song phương) convinced of their ability to meet present and future obligations.
Deficits that grow too large and linger too long may, however, undermine that
confidence. Aware of these risks in the present crisis, the IMF in late 2008 and early 2009
called on governments to establish a four-pronged fiscal policy strategy to help ensure (9)
… ………: stimulus should not have permanent effects on deficits; medium-term
frameworks should include commitment to fiscal (10) … ……. once conditions improve;
structural reforms should be identified and implemented to enhance growth; and
countries facing medium- and long-term demographic pressures should firmly commit to
clear strategies for health care and pension reform. Even as the worse effects of the crisis
recede, fiscal challenges remain significant, particularly in advanced economies in
Europe and North America and this strategy remains as valid as ever.

20
(Written by:
- Mark Horton - Division Chief in the IMF’s Middle East and Central Asia Department,
and - Asmaa El-Ganainy - Economist in the IMF’s Fiscal Affairs Department.)

Crisis (n)
[journalism]
Urgent action is needed to prevent the market going into financial meltdown.
Meltdown (n) The meltdown of a company, organization, or system is its sudden and
complete failure. – sự tan rã/ sự suy thoái/ sự sụp đổ
Crisis (n)
Downturn (n)
Linger (v): to take a long time to leave or disappear:
- After the play had finished, we lingered for a while in the bar hoping to catch sight
of the actors.
- The smell from the fire still lingered days later.
Mortgage (n) khoản vay có thế chấp
flagging
stimulus
discretionary (n) decided by officials and not fixed by rules: tùy ý/ tùy chỉnh/ tự quyết
theo ý mình
- a discretionary grant
- Judges have great discretionary powers.
solve (v)
solvency

automatic stabilizers: yếu tố (cơ chế) tự ổn định của thị trường

fiscal stimulus: động lực thúc đẩy của chính sách tài chính

stable (adj) – stabilize (v) – stabilization – stabilizer (n)

stability (n) tính ổn đinh

A stabilizer is a device – phương tiện, mechanism – cơ chế, or chemical (hóa chất) that
makes something stable.

If something stabilizes, or is stabilized, it becomes stable.

 Although her illness is serious, her condition is beginning to stabilize. [VERB]
 Officials hope the move will stabilize exchange rates.

21
Stabilization (n) the condition of being fixed and not changing, or the act of making
something like this:
 South Africa was starting to see the stabilization of the AIDS epidemic.
 The stabilization of the currency overnight was a remarkable achievement.
Stimulate (v) to encourage something to grow, develop, or become active:
 The government plans to cut taxes in order to stimulate the economy.

Stimulus (n) something that causes growth or activity:

 Foreign investment has been a stimulus to the industry.
 The book will provide a stimulus to research in this very important area.
 Interest rates could fall soon and be a stimulus to the U.S. economy.
Case study (n) a detailed account giving information about the development of a person,
group, or thing, especially in order to show general principles:
- This is an interesting psychiatric case study of a child with extreme behavioural
difficulties.
If you undermine something such as a feeling or a system, you make it less strong or less
secure than it was before, often by a gradual process or by repeated efforts. Làm suy yếu
- Offering advice on each and every problem will undermine her feeling of being
adult.
- Western intelligence agencies are accused of trying to undermine the government
A two-pronged or three-pronged attack, plan, or approach has two or three parts.
- ...a two-pronged attack on the recession.
- The bank has a three-pronged strategy for recovery.

LANGUAGE
LANGUAGEFOCUS
FOCUS
Study the following sentences from the reading text:
- Households and businesses have less of their income to spend, they purchase
fewer goods.
- When the government spends more than it receives, it runs deficit
- The additional government spending creates more competition for scarce workers
and resources and this inflates wages and prices.
Comparing nouns

22
We can compare quantities and amounts by using more, less, fewer, (not) as much as,
(not) as many as, etc. The correct word depends on whether the noun in question is
countable or uncountable.
 COUNTABLE
The board decided that the company needed more/fewer retail outlets.
Our Paris office doesn’t employ as many people as our Munich office.
The R&D Department has the most/fewest people working for it.
 UNCOUNTABLE
I spent more/less time on the project than I had expected.
We didn’t make as much money on the deal as we had hoped.
Of all our surveys, this produced the most/least information.
PRACTICE
Exercise 1: Complete the sentences with more, less, much, many or fewer.
1. Eurotunnel may never make a profit because the tunnel cost substantially …………….
money to build than they had expected.
2. Because of ATMs, banks don’t have as …………… branches as they used to.
3. They made 2,000 staff redundant, so now they employ …………… people than they
did last year.
4. Now that I’m in management, I don’t spend as ………….. time at home.
Exercise 2: Answer the questions comparing the present with five years ago. Use more
than, less than, fewer than, not as much as, not as many as in your answers. You can
use these phrases without a noun if the context is clear.
1. Do you do a lot of work at the weekends?
I don’t do as much work as I used to, or I don’t do as much as I used to.
2. Do you have a lot of free time?
…………………………………………………………………………………………
3. Do you go to a lot of parties?
…………………………………………………………………………………………
4. Do you listen to a lot of music?
…………………………………………………………………………………………
5. Do you get a lot of sleep?
…………………………………………………………………………………………
6. Do you buy a lot of books?
…………………………………………………………………………………………

WRITING
23
IELTS Writing task 1
The 3 pie charts below show the total school spending in in all three years (1981,
1991 and 2001) in the UK.
Summarize the information by selecting and reporting and reporting the main
features, and make comparisons where relevant.

READING 2
Read the following text and translate into Vietnamese
Fiscal policy is a tool the federal government uses to keep unemployment and inflation as
low as possible. Inflation means that prices of the things you want to buy keep rising. The

24
government uses fiscal policy to influence spending, which, in turn, influences prices.
How does fiscal policy work?
Government spending can be classified into 2 types:
- Capital spending (government investments) on infrastructure
- Current spending (government consumption) for public goods and services.
If government spending increases, for example, the government invest in building new
highways, or any public buildings, the demand of construction materials will increase
without a corresponding increase in supply in short term, leading to an increase in prices
of construction materials.
The government projects create more jobs and incomes for both companies and
individuals, with more incomes they tend to spend more, so that aggregate demand will
increase without a corresponding increase in aggregate supply in short term, thus, prices
of goods and services will increase in general.
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
….
………………………………………………………………………………………………
…………………………………………………………………………………………
You already know that supply and demand affect prices. When prices go up, people
must spend more to get what they want or need. Workers need increased wages to buy
what they want. If they get wage increases, it drives up prices because producers add
their increased wage costs to their selling prices in order to protect their profits. This
leads to a wage-price spiral. Higher wages lead to higher prices, causing inflation.
Add + sth1 + to + sth2
Production costs – chi phí sản xuất, giá thành sản xuất
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
….
………………………………………………………………………………………………
…………………………………………………………………………………………

25
There are four different areas of spending. Consumption is the spending done by all the
people in the economy. It does not include anything that a business purchases and resells
to another business or individual. When you buy a loaf of bread at the store, the amount
you spend is part of our nation's consumption for the year. That amount gets added to the
GDP. When a miller buys wheat from a farmer, a baker buys flour from a miller, or a
store buys bread from a baker, these purchases are not part of consumption and do not get
added to the GDP.
End consumer (n) a person who buys and uses a product or service: người tiêu dùng cuối
cùng
- We have kept our prices the same, so our increased production costs have not
been passed on to the end consumer.
- Customer surveys allow us to learn more about the end consumer.
ultimate consumer (customer) – người tiêu dùng cuối cùng

…………………………………………………………………………………………
………………………………………………………………………………………………
Investment is what businesses produce but do not sell to people. Investment includes the
value of buildings, machinery, and things on store shelves at the end of the year that have
not been sold. Buildings and machinery are capital resources. They can be used over and
over to make more products. Things on store shelves that have not been sold are the
business's inventory.
……………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
…….
………………………………………………………………………………………………
…………………………………………………………………………………………
Government spending is the money that all governments-federal, state, and local-spend
to pay employees and to buy things for their own use like paper clips, fire engines, and
military weapons.
…………………………………………………………………………………………
………………………………………………………………………………………………
……….
………………………………………………………………………………………………
…………………………………………………………………………………………

26
A net export is the difference between the dollar amounts of imported and exported
goods. Almost every year since 1983, the United States has bought more goods from
businesses in foreign countries than it has sold to foreign countries. When imports are
bigger than exports, the GDP is reduced. No country likes to import more than it exports
for very long. The balance of trade is referred to as a trade surplus when more goods are
exported than imported or as a trade deficit or trade gap when there are more imports than
exports.

…………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
……….
………………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………………
One thing that affects the balance of trade is the exchange rates of the monies involved. If
the dollar is strong, the U.S. can buy more goods abroad for its money. If the dollar is
weak against other currencies, fewer goods can be bought for the same amount of money.

…………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
……….
…………………………………………………………………………………………
The federal government uses fiscal policy-the way it taxes citizens and businesses and the
way it spends money-to influence consumption, investment, and net exports. For
example, the more money people have, the more they will be able to spend. So the
government can influence consumption by changing the amount of money people have to
spend. If people have more money, the government cannot force people to spend it, but
they will usually spend at least part of it.
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
.
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………

27
………………………………………………………………………………………………
.
………………………………………………………………………………………………

28
 UNIT
UNIT 9: 4 MONETARY POLICY

PREVIEW
PREVIEW

1. Match up the words below into pairs that mean the same
Boost = stimulate (v) thúc đẩy, kích thích
Expenses = costs (n) chi phí
Output = production (n) sản lượng
Output of an economy = GDP – Gross Domestic Product = national income
Surplus = excess (n) thặng dư, khoản vượt trội
Companies = firms
Variable = flexible (adj)
- Returns (profits) are variable (adj) but can rise to as much as 9%.
- Right now, there are too many variables (n) for us to make a decision.
Raise = increase (v): làm tăng
Reduce = lower (v) làm giảm = contract (v)
Error = mistake (n) lỗi
Spending = expenditure (n) chi tiêu

- The government plans to cut taxes in order to stimulate the economy.

stimulate growth/investment/trade
- Liberalization should stimulate growth.
stimulate
demand/sales/interest We hope the discounts will help stimulate sales.

2. Match up the words below into pairs of opposites

Boom (v + n) sự bùng nổ (sự tăng đột ngột)– depression (n) – suy thoái (giảm)
buoyant (adj) thành công/ tăng trưởng – sluggish (adj) trì chệ, chậm chạp
buoyant economy/market/industry
- Carpet sales remained strong as a result of the buoyant housing market.
consuming (n) việc tiêu dùng – saving (n) việc tiết kiệm
29
Contraction – growth
cut – increase
deflate – stimulate
Demand – supply
flexible – rigid

Contract (n) hợp đồng a labor contract: hợp đồng lao động
To contract = to reduce to contract the money supply

Deflate (v): to cause deflation of (an economy, the money supply, etc)

When an economy deflates or is deflated, prices fall and there is a reduction in wages and
government spending, and low levels of growth:

- The chancellor will have to keep rates high and deflate the economy to keep the lid
on prices and finance the trade deficit.
- The fear is that economies fueled by aid dollars will deflate after international
agencies leave.

Deflation (n) – giảm phát - is a reduction in economic activity that leads to lower levels
of industrial output, employment, investment, trade, profits, and prices.

- Deflation is beginning to take hold in the clothing industry.

a deflationary budget/policy

A stronger dollar will add to deflationary pressures in America.

Buoyant A buoyant economy is a successful one in which there is a lot of trade and
economic activity.

- We have a buoyant economy and unemployment is considerably lower than the

regional average.
- High interest rates do not point to a buoyant market this year.
- Analysts expect the share price to remain buoyant

30
You can describe something as sluggish if it moves, works, or reacts much slower than
you would like or is normal. Trì chệ, kém phát triển

- The economy remains sluggish.

- Circulation is much more sluggish in the feet than in the hands.
- Fierce competition and sluggish demand have resulted in very poor sales.
- a sluggish market/economy/performance

READING 1

relating to or consisting of money:

- The monetary unit – đơn vị tiền tệ - of the UK is the pound.
- Monetary damages/fine/compensation: The lawsuit seeks monetary
damages for alleged negligence.
- This was not done purely for monetary gain.

Monetary policy refers to actions taken by a government to control the

amount of money in an economy and how easily available it is, for
example by changing the interest rate:

- Change sth = make changes to sth –

Monetary policy is a central bank's actions and communications
(responsibility of the central bank) that manage (control) the money
supply. That (money supply) includes credit, cash (coins and bank notes
in circulation), checks (checking accounts & traveler’s checks), and
money market mutual funds. The most important of these forms of
money is credit (time deposits). It includes loans, bonds, and mortgages.

– time deposits = credit.

Credit worthiness (n) – hạn mức tín dụng
Credit rating

31
 - My savings account is now worth 100 billion VND.
Security – tài sản thế chấp
Cash and checks of M1 function (v) – thực hiện chức năng - as means of
payment:
Individuals / firms (Investors – who have idle money) want to save their
money in banks (called time deposits – tiền gửi có kỳ hạn)
Banks act as financial intermediaries who receive time deposits, and
then they lend these deposits to individuals and firms (borrowers) in
forms of loans or mortgages; or to buy government bonds.
Interest rates: borrowing (interest) rates (bid rates) + lending (interest)
rates (offer rates)
Banks can make profits on the differences between offer rates and bid
rates.

M1 is the narrowest definition of money. M1 consists of coins and currency in

circulation, checking accounts and traveler's checks. – séc du lịch
M2 is a more broad definition of money than M1. M2 = M1 + savings accounts, money
market funds, time deposits. (tiền gửi có kỳ hạn)
E - money
Transfer payments
Monetary policy increases liquidity (cash & checking accounts) to create economic
growth. It reduces liquidity to prevent inflation. Central banks use interest rates – lãi xuất,
bank reserve requirements – dự trữ bắt buộc, and the amount of government bonds that
banks must hold. All these tools – công cụ affect how much banks can lend. The volume
of loans affects the money supply.

Answer for short questions

1. Monetary Policy is one of the major macroeconomic policies which controls/
manages the money supply and is supervised by the Central bank.

32
 2. Fiscal policy is one of the major macroeconomic policies which control the
government spending and revenues and is supervised by the Ministry of Finance.
3. Three major objectives of monetary policy are to manage inflation, to reduce
unemployment, to promote moderate long-term interest rates.
4. Three major objectives of fiscal policy are to promote economic growth, to
increase employment, or to control inflation.
5. Two main tools of fiscal policy are government (public) spending and taxation.
6. Three main tools of monetary policy are reserve requirements, discount rates and
open market operations.
7. Reserve requirement is/ refers to a certain percentage of deposits that the central
bank sets as the minimum amount of reserves as banks must have.
8. Banks necessarily keep a sum of money in reserve to deal with early withdrawals
of depositors.
What must banks have? -
(Reserve requirement is/ refers to a percentage of deposits that the central bank
requires other banks to keep in reserve.) (RR)
9. The discount rate is the rate of interest that the central bank of a country charges
on the loans that it makes to other banks. (DR)
Lãi chiết khấu là cái mà ngân hang TW của quốc gia nào đó chi trả vào khoản cho vay
cho ngân hàng khác
10. Open market operations mean the central bank’s buying and selling government
securities (mostly bonds) on the open market. (OMO)
11. Money supply includes credit, cash (coins and bank notes in circulation), checks
(checking accounts & traveler’s checks), and money market funds.
Credit
12. Deposits => banks (financial intermediaries) => loans, bonds, and mortgages
Supervise (v) to be responsible for the good performance of an activity or job, or for the
correct behavior or safety of a person:
- The Red Cross supervised the distribution of food to refugees.
- She supervises 75 employees in our order department.
Buy sth on credit – mua trả góp/ installment buying – hình thức mua trả góp
Regular repayments -
Deposit – khoản tiền đặt cọc

33
Make loans to sbd: cho ai vay tiền = lend money to sbd
Get/ take a loan from sbd: vay tiền từ ai = borrow money from sbd
Make changes to sth: tạo ra sự thay đổi đối với cái gì
Charge + prices/ interest rates/ fees/ commissions (tiền hoa hồng) for/ on sth (goods &
services)
Charge (v) to ask for a particular amount of money for something, especially a service or
activity: đòi một khoản tiền cụ thể cho cái gì đó, đặc biệt là cho 1 dịch vụ hay hoạt động
charge (sb) sth for sth/ to do sth - tính cho ai phí dich vụ bao nhiêu cho cái gì / để làm gì
- How much will you charge us for shipping and handling? – Ông tính phí bao
nhiêu cho chúng tôi cho dịch vụ vận chuyển hàng hóa bằng tầu biển?
- They charged $200 for insurance. – Họ tính phí bảo hiểm là 200 đô.
charge a price/fee, etc.
- He considered that the price they were charging was fair.
- The bank charges a commission to withdraw money from a foreign ATM.
Commission (n) a payment to someone who sells homes, products, investments, etc.,
which is directly related to the amount they sell, or the practice of receiving these
payments:
make/pay/receive a commission
- The airline agreed to pay travel agents a 3% commission.
- His monthly salary, which is based on commissions, has dropped from about
$7,000 to $1,000.

Chính phủ tạo ra sự thay đổi đối với các công cụ của chính sách tài chính và chính sách
tiền tệ để đạt được mục tiêu kinh tế vĩ mô.
Tùy thuộc vào hoàn cảnh kinh tế của từng thời kỳ, chính phủ có thể quyết định thực thi
chính sách tài chính nới lỏng hay thắt chặt

Under what circumstance should the G run/ use/ apply expansionary fiscal policy?
Reserve is the amount of money banks must have available to cover deposits.

34
Dự trữ là số tiền mà ngân hàng để ở quỹ để thanh toán cho khoản tiền gửi của người gửi
tiền.
- Legal reserve is the amount of money a bank or insurance company must keep to
cover future claims and losses. – để chi trả các khoản tiền rút ra và bồi thường
cho những tổn thất trong tương lai.

To reserve + sth: dự trữ = To keep (sth) in reserve

Depository institution: a bank or other financial organization that takes money from
customers and pays interest on that money while it is kept in the bank:
- The company operated as a federally regulated depository institution.
Federally (adv) + regulated
Three Objectives of Monetary Policy
Central banks have three monetary policy objectives. The most important
objective is to manage inflation. The secondary objective is to reduce unemployment, but
only after controlling inflation. The third objective is to promote moderate long-term
interest rates.
The U.S. Federal Reserve, like many other central banks, has specific targets (chỉ
tiêu đề ra) for these objectives. It wants the core inflation rate to be between 2% and
2.5%. It seeks an unemployment rate below 6.5%. Beyond that, it prefers a natural rate of
unemployment of between 4.7% and 5.8%. The Fed's overall goal is healthy economic
growth – tăng trưởng kinh tế bền vững. That's a 2% to 3% annual increase in the nation's
gross domestic product.

Moderate (adj) not very small or large but between the two:
moderate growth/inflation/increase
- Moderate growth last year was enough to raise a profit.
moderate gains/losses
- Investors saw moderate gains on Wall Street overnight.
- People on low and moderate incomes spend proportionately much more on
housing.
- They split investments between high-yielding bonds and those of more moderate
risk.

35
 A. Quantitative Tools of Monetary Policy (Công cụ định lượng của chính sách
tiền tệ)
Make changes to sth = change sth
- Qualitative (định tính) – quality (n)
- Quantitative (định lượng) – quantity
 Reserve requirement (Dự trữ bắt buộc)
The government is having difficulty finding a safe depository for nuclear waste.
The company operated as a federally regulated depository institution.
When we moved in, we had to deposit
$1,000 with the landlord in case we broke any of his things.
My mother works as an accountant.
Deposit is an amount of money that someone pays into a bank account:
- Using the cash machine I can make a deposit at any time of the day.
have/keep/hold money on deposit
- Rather than hold money on deposit, you should pay off your debts.

Withdrawal means the act of taking money out of an account, or

the amount of money taken:

- The savings account only allows you

to make three withdrawals a year.
- There's a cash withdrawal limit of €500 per day.
- There are large early withdrawal penalties attached to this mortgage.

By law, the Fed (the Federal Reserve System) controls the percentage (tỷ lệ %) of
deposits (tiền gửi) (that) banks keep in reserve (dự trữ) by controlling (nắm giữ) the
reserve requirements (dự trữ bắt buộc) of all US banks.

The reserve requirement is the total amount of funds a bank must have on hand
each night. It is a percentage of the bank's deposits. A nation's central bank sets
the percentage rate.

In the United States, the Federal Reserve Board of Governors controls the
reserve requirement for member banks. The bank can hold the reserve either as
cash in its vault or as a deposit at its local Federal Reserve bank.

36
The reserve requirement applies to commercial banks, savings banks, savings
and loan associations, and credit unions. It also pertains to U.S. branches and
agencies of foreign banks, Edge Act corporations, and agreement corporations.

The RR which applies to credit unions in Vietnam is 0%.

Suppose a bank has $1,000,000 in deposits. Each night, it must hold $100,000 in
reserve. That allows it to lend $900,000. That increases the amount of money in
the economy. The loans help businesses expand, families buy homes, and
students attend school. Having $100,000 on hand makes sure it has enough to
meet withdrawals. Without the reserve requirement, the bank might be tempted
to lend all the money.

Dự trữ bắt buộc trong tiếng Anh là Reserve Requirements.

- Dự trữ bắt buộc là lượng tiền mặt mà các ngân hàng thương mại buộc phải có
trong kho tiền của họ, theo yêu cầu của ngân hàng trung ương hoặc của Cục Dữ
trự Liên Bang (đối với Mỹ).
- Thông thường, các ngân hàng thương mại phải gửi số tiền này vào một tài khoản
đặc biệt ở ngân hàng trung ương. Ngoài ra, cũng cần chú ý rằng ngân hàng trung
ương thường qui định tỉ lệ dự trữ bắt buộc khác nhau cho các khoản tiền gửi có kì
hạn khác nhau.

The percentage of deposits the Fed sets (quy định) as the minimum amount of reserves as
banks must have is called the reserve requirements. The amount banks must keep in
reserve depends on the Fed requirements and partly on how much banks feel they need
for safety (the cash they need to keep on hand – để ở quỹ - at any time to give depositors
who claim some of their deposits in the form of cash – đòi hỏi rút tiền gửi của họ dưới
dạng tiền mặt).
Make a claim to sbd for sth = claim (v)
Claim sth =
Be eligible for sth
Need to do sth/ need sth

Ngoài khoản dự trữ bắt buộc, các ngân hàng cần dự trữ thêm – tiền mặt ở quỹ - để thanh
toán các khoản tiền rút trước kỳ hạn của người gửi tiền.

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Apart from reserve requirements, banks need additional reserves – cash on hand – to
cover/ deal with the depositors’ early withdrawals.

Khái quát chung:

- Với danh từ số it: a(an) + N
- Với danh từ số nhiều/ không đếm được: “zero article” + N

the cash on hand

Withdraw (v) rút tiền: to take money out of an account: withdraw + sth
- This account allows you to withdraw a maximum daily amount of $500.
withdraw cash/funds/savings
- The economic crisis saw people queuing to withdraw their savings.
Withdrawals (n) khoản tiền rút ra
Early withdrawals (n) khoản tiền rút trước kỳ hạn
If you withdraw money from a bank account, you take it out of that account.
- Open a savings account that does not charge ridiculous fees to withdraw money.
[VERB noun]
- They withdrew 100 dollars from a bank account after checking out of their hotel.
(Họ rút 100 đô từ tài khoản ngân hàng sau khi trả phòng khách sạn)

Check-in desk at the airport

Khoản dự trữ thêm ở quỹ cần có để xử lý khoản rút tiền trước kỳ hạn của người gửi tiền.

Cash on hand – tiền mặt ở quỹ / cash at bank – tiền gửi ngân hàng (checking accounts –
tài khoản séc/ tài khoản vãng lai)
Checking accounts = demand deposits (tài khoản không kỳ hạn)
So sánh với: savings accounts (tiền gửi tiết kiệm) = time deposits (tiền gửi có kỳ hạn)

the cash they need to keep on hand = cash on hand

Sth 1 + depend on + Sth2
The amount of money (that) banks must keep in reserve (sth1) depends on the Fed
requirements and partly on how much banks feel they need for safety.

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The amount most banks need for safety is much smaller than what the Fed requires. For
them, it’s the Fed’s reserve requirements that determine the amount they hold as reserves.
Thus, the reserve requirements play a central role in how much money banks have to lend
out.

By changing the reserve requirements, the Fed can increase or decrease the money
supply. If the Fed increases the reserve requirement, it contracts (reduces – decreases) the
money supply; banks have to keep more in reserve so they have less money to lend out.

Draw (v) = withdraw (money) from savings accounts.

Early withdrawal (n) sự rút tiền trước kỳ hạn – withdrawals (n) khoản tiền rút ra.

Dịch sang tiếng Việt và trả lời các câu hỏi sau bài đọc;
và làm bài tập từ vựng.
 Discount rate
A second tool of monetary policy concerns other alternative that banks have if they are
short of reserves. A bank (Banks) can go to its bank (the Fed, the banker’s bank) and take
a loan. The discount rate is the rate of interest the Fed charges for those loans. An
increase in the discount rate makes it more expensive for banks to borrow from the Fed.
A discount rate decrease makes it less expensive for banks to borrow. Therefore changing
the discount rate is the second way the Fed can expand or contract the money supply.

If banks are short of reserves to pay for who make a loan payments to with
…. Để trả cho khách hàng

If banks are short of reserves, they can have the other alternative. What is it?
They can go to the Fed to take a loan/ They can get a loan from the Fed/ They can borrow
money from the Fed.

Make + sth/ it + adj + for sbd + to do sth: làm cho/ giúp cho ai đó làm gì như thế nào.

It + be + adj + for sbd + to do sth

An increase in sth/ a decrease in sth: Việc tăng/ giảm cái gì

An increase in discount rates = A discount rate increase: Việc tăng lãi chiết khấu

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Alternative (n) something that is different from something else, especially from what is
usual, and offering the possibility of choice:
- an alternative to coffee
- There must be an alternative to people sleeping on the streets. – Cần có giải pháp
khác cho những người vô gia cư (người ngủ trên đường phố)
- I'm afraid I have no alternative but to ask you to leave (= that is what I have to
do).

The discount rate is the rate of interest that the central bank of a country charges on the
loans that it makes to other banks. - Lãi chiết khấu
- The Federal Reserve has cut the discount rate five times in 12 months.

Make loans to sbd: cho ai vay tiền

A discount rate is an amount of interest deducted in advance in the purchase, sale, or loan
of negotiable assets.
- There are plenty of good deals in fixed and discount rates that homebuyers should
consider.
Fixed interest rates: lãi suất cố định
Adjusted interest rates: lãi suất điều chỉnh.

If you charge someone an amount of money, you ask them to pay that amount for
something that you have sold to them or done for them.
- Even local nurseries charge £100 a week. [VERB noun]
- The hospitals charge the patients for every aspirin. [VERB noun + for]
- Some banks charge if you access your account to determine your balance. [VERB]
- ...the architect who charged us a fee of seven hundred and fifty pounds.

To charge + sbd + (money) for sth

To charge + money + for sth
To charge + money

If one thing is an alternative to another, the first can be found, used, or done instead of
the second. - Khả năng/ sự lựa chọn khác
- New ways to treat arthritis may provide an alternative to painkillers.

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Arthritis is a medical condition in which the joints in someone's body are swollen and
painful. - Chứng viêm khớp
- I have a touch of arthritis in the wrist.
A painkiller is a drug which reduces or stops physical pain. – thuốc giảm đau

If something alters or if you alter it, it changes.

- They have never altered their programmes by a single day

be short (of/on sth): to not have enough of something: thiếu/ k đủ

- to be short of space/time
- We're short on coffee - I'd better get some more.
- The bill comes to £85, but we're £15 short.
Shortage (n) -a shortage of sth
Expand (v) = increase
Contract v) = reduce/ decrease

 Open market operations

Changes in discount rate and reserve requirement are not used in day-to-day Fed
operations. They are used mainly for major changes. For day-to-day Fed operations, the
Fed used a third tool: open market operations – the Fed’s buying and selling government
securities (the only type of asset the Fed is allowed by law to hold in any appreciate
quantity). These open market operations are the primary tool of monetary policy. When
the Fed sells Treasury bonds, it collects back some of its IOUs, reducing banking system
reserves and decreasing the money supply. Thus, to expand the money supply, the Fed
buys bonds. To contract the money supply, the Fed sells bonds.

Open market operations mean the central bank’s buying and selling government
securities on the open market.
Open market operations (n) the purchase and sale on the open market of government
securities by the central bank (Bank of England) for the purpose of regulating the supply
of money and credit to the economy – Hoạt động thị trường mở
- Central banks control interest rates by their 'open market operations'.
- It has been injecting funds into the banking system through increases in its regular
open market operations with banks.
- The bank said that it would conduct open market operations every business day,
with immediate effect.

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An IOU is a written promise that you will pay back some money that you have borrowed.
IOU is an abbreviation for 'I owe you'. – Vay nợ

B. The central bank’s control over the supply of money

The central bank’s control over the supply of money is the key mechanism of monetary
policy. By making more or less money available, the central bank can shift aggregate
demand. The resulting shifts can alter the rate of output (GDP), the price level, and the
number of available jobs.
Make + sth + adj – làm cho cái gì ntn
shift
economic growth rate = the rate of output (GDP)
inflation = the price level
employment rate = the number of available jobs.

Shift (v): làm thay đổi

Shift (n) sự dịch chuyển

We earlier saw how fiscal policy can help bring about the desired expansion. Were the
government to increase its own spending, aggregate demand would shift to the right. A
tax cut would also stimulate aggregate demand by giving consumers and business more
disposable income to spend.

Câu điều kiện loại 2: If + past simple – would + V (infinitive)

“Were the government to increase its own spending, aggregate demand would shift to the
right.”
= “If the government were to ….

Be + to do sth: có ý định, dự định làm gì

Your disposable income is the amount of income you have left after you have paid
income tax and social security charges (payroll taxes). – thu nhập khả dụng
- Gerald had little disposable income.
- The nation's disposable earnings in 1987 amounted to £586 billion.

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  Expansionary monetary policy
Monetary policy may be used to shift aggregate demand as well. If the central bank
lowers reserve requirements, drops the discount rate, or buy more bonds, it will increase
bank lending capacity. The banks in turn will try to use that expanded capacity and make
more loans. By offering lower interest rates or easier approvals, the banks can encourage
people to borrow and spend more money. In this way, an increase in the money supply
will result in a rightward shift of the aggregate demand curve.

(An increase in the aggregate demand requires additional production of goods and
services, leading to more incomes for both workers and firms. As a result, the economy
tends to grow, and more jobs are created.)

 Restrictive monetary policy (Chính sách tiền tệ thắt chặt)

Monetary policy may be used to cool an overheating economy. Excessive aggregate
demand may put too much pressure on our production capacity. As market participants
bid against each other for increasingly scarce goods, prices will start rising.
The resulting inflation will redistribute real incomes (perhaps unfairly) and may disrupt
investment and consumption plans.

The goal of monetary policy in this situation is to reduce aggregate demand. To do this,
the central bank can reduce the money supply by (1) raising reserve requirements, (2)
increasing the discount rate, or (3) selling bonds in the open market. All of these actions
will reduce bank lending capacity. The competition for this reduced pool of funds will
drive up interest rates. The combination of higher interest rates and lessened loan
availability will curtail investment, consumption, and even government expenditure.

COMPREHENSION
COMPREHENSION QUESTIONS
QUESTIONS
1. What is monetary policy?
2. What does the money supply include?
3. What are objectives of monetary policy?
4. How does the Fed control the percentage of deposits banks keep in reserve?
The Fed controls the percentage of deposits of banks by controlling reserve
requirements of all other banks.

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 5. What is called reserve requirement?
6. What determines the amount banks hold as reserves?
The reserve requirement
7. What is the central role of the reserve requirements?
8. What is the second tool of monetary policy?
9. What is the discount rate?
10. How can the central bank shift aggregate demand?

11. How can the banks encourage people to borrow and spend more money?
12. What are objectives of expansionary monetary policy?
13. What are objectives of restrictive monetary policy?
14. What can the central bank do to reduce aggregate demand?
15. When might the central bank want to reduce the money supply?

7. The reserve requirement plays a central role in determining banks’ lending capacity.

6. The reserve requirement determines the amount banks hold as reserves

10. By increasing or decreasing the money supply/ by changing the money supply/by
making changes to the money supply/ by increasing or decreasing banks’ lending
capacity.

What are the roles/ functions of discount rate?

+) an increase in the discount rate makes it more expensive for banks to borrow from the
central bank, thus banks will have less money to lend, leading a decrease in the money
supply.
+) a decrease in the discount rate makes it less expensive for banks to borrow from
central banks

11. By offering lower interest rates or easier approvals.

15. The central bank might want to reduce the money supply in times of an overheating
economy/ when the economy is overheating / in times of high inflation/ in times of
excessive economic expansion.

12. The objectives of expansionary monetary policy are to reduce unemployment and to
increase the economic growth rate/ to promote economic growth

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What is a restrictive monetary policy?
Monetary policy is restrictive when the central bank increases reserve requirements, or
the discount rates or sells bonds

12. The objectives of expansionary monetary policy are to reduce unemployment, to

promote economic growth.
13. The objective of restrictive monetary policy is to reduce inflation rates or to cool the
overheating economy.
14. What can the central bank do to reduce aggregate demand?
In order to reduce aggregate demand, the central can run restrictive monetary policy by
increasing RR or DR or selling government securities.

Questions
1. What is an expansionary monetary policy?
Monetary policy is expansionary when the Central Bank lowers/ reduces/ decreases
reserve requirements or discount rates or buy more bonds
2. What are objectives of an expansionary monetary policy?
The objectives of an expansionary monetary policy are to promote economic growth, and
to increase employment.
3. What is a restrictive monetary policy?
Monetary policy is restrictive when the central bank increases reserve requirements or
discount rates or sell more bonds.
4. What are objectives of a restrictive monetary policy?
The objective of a restrictive monetary policy is to reduce inflation rate/ control inflation.

Topic questions:
1. Under what circumstance/ When should the monetary policy be expansionary?
And why?
2. Under what circumstance/ When should the monetary policy be restrictive? And
why?
NHỮNG Ý CHÍNH CẦN GHI NHỚ VỀ 2 CHÍNH SÁCH
1. Công cụ của từng chính sách – Tools of each policy
2. Chính sách nới lỏng – Mục tiêu của chính sách nới lỏng – nên thực thi chính sách
nới lỏng khi nào?

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 3. Chính sách thắt chặt – Mục tiêu của chính sách thắt chặt - nên thực thi chính sách
nới lỏng khi nào?

VOCABULARY EXERCISES
VOCABULARY EXERCISES
1. Match up the following words and definitions
1 supply A. a state of balance, for example when supply meets demand
B government or central bank measures concerning the rate
2 demand
of growth of the money supply (the amount of money in
3 market forces circulation)
C government measures concerning taxation, public
4 equilibrium
expenditure, and so on
5 fiscal policy D supply and demand
E the willingness and ability of consumers to purchase goods
6 monetary policy and services
F the willingness and ability to offer goods and services for
sale

2. Complete the text below using these words or phrases.

deflation inflation tools intended
government bonds required discount rate restricting

Monetary Policy
Central banks typically have used monetary policy to either stimulate an economy or to
check its growth. By incentivizing individuals and businesses to borrow and spend,
monetary policy aims to spur economic activity. Conversely, by (1) …………….
spending and incentivizing savings, monetary policy can act as a brake on (2)
……………. and other issues associated with an overheated economy.
The Federal Reserve, also known as the "Fed," frequently has used three different policy
(3)…………….. to influence the economy: opening market operations, changing reserve
requirements for banks, and setting the (4) …………….. Open market operations are
carried out on a daily basis when the Fed buys and sells U.S. (5) …………………… to
either inject money into the economy or pull money out of circulation. By setting the
reserve ratio, or the percentage of deposits that banks are (6) ……………. to keep in

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reserve, the Fed directly influences the amount of money created when banks make loans.
The Fed also can target changes in the discount rate (the interest rate it charges on loans it
makes to financial institutions), which is (7) …………….. to impact short-term interest
rates across the entire economy.
Monetary policy is more of a blunt tool in terms of expanding and contracting the money
supply to influence inflation and growth and it has less impact on the real economy. For
example, the Fed was aggressive during the Great Depression. Its actions prevented (8)
……………….. and economic collapse but did not generate significant economic growth
to reverse the lost output and jobs.
Expansionary monetary policy can have limited effects on growth by increasing asset
prices and lowering the costs of borrowing, making companies more profitable.

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