IELTS Reading Test 2 passage 3 - IELTS Simulation Test - Austerity Measures
Austerity Measures IELTS Reading
Austerity measures are actions that a state undertakes in order to pay back its creditors. (Các biện pháp thắt lưng buộc bụng là những hành động mà một quốc gia thực hiện để trả nợ cho các chủ nợ của mình.) These measures typically involve slashing government expenditure and hiking taxes, and most of the time these are imposed on a country when its national deficit is believed to have become unsustainable. (Các biện pháp này thường bao gồm việc cắt giảm chi tiêu của chính phủ và tăng thuế, và hầu hết thời gian, những biện pháp này được áp dụng cho một quốc gia khi thâm hụt quốc gia của quốc gia đó được cho là đã trở nên không bền vững.) In this situation, banks may lose trust in the government's ability or willingness to repay existing debts, and in return can refuse to roll over current loans and demand cripplingly excessive interest rates on new lending. (Trong tình huống này, các ngân hàng có thể mất niềm tin vào khả năng hoặc thiện chí của chính phủ trong việc trả nợ hiện tại, và để đáp lại họ có thể từ chối gia hạn các khoản vay hiện có và yêu cầu mức lãi suất cực cao đối với các khoản vay mới.) Governments frequently then turn to the International Monetary Fund (IMF), an inter-governmental organisation that functions as a lender of last resort. (Các chính phủ sau đó thường chuyển sang Quỹ Tiền tệ Quốc tế (IMF), một tổ chức liên chính phủ hoạt động như một bên cho vay cuối cùng.) In return, the IMF typically demands austerity measures so that the indebted country is able to curtail its budget deficit and fulfil their loan obligations. (Đổi lại, IMF thường yêu cầu các biện pháp thắt lưng buộc bụng để quốc gia mắc nợ có thể cắt giảm thâm hụt ngân sách và hoàn thành các nghĩa vụ vay của mình.)
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A wave of austerity measures across Europe in 2010 has seen cuts and freezes to pensions, welfare and public sector salaries as well as hikes to some taxes and excises. The Greek programme attempts to narrow its budget shortfall from 8.1 percent of GDP in 2010 to 2.6 percent of GDP in 2014 primarily by freezing public sector incomes during that period and reducing public sector allowances by 8 percent. Additionally, VAT-the Greek sales tax-will be elevated to 23 percent, and excises on fuel, tobacco and alcohol are also subject to an increase. The statutory retirement age for women will be raised to 65, matching it with the current retirement age for men. These reforms have been deeply unpopular in Greece, prompting a succession of general strikes that have further dented the economy.
IMF-imposed austerity measures have been indicted for encouraging the deep recession following the Asian financial crisis of 1997. Starting from the early 1990s, international investors from wealthier countries such as Japan and the United States began pouring money into Southeast Asia, looking to make some quick returns, and the soaring economies of Thailand, Philippines, Malaysia and others earned themselves the title "the Asian tigers". When things started to turn sour, however, the foreign investors panicked and retracted their investments en masse, decimating Asian currencies and turning millions of employees out of work. The IMF's role in the recovery was to impose austerity measures that kept interest rates high while driving down wages and labour standards at a time when workers were already suffering. According to one former IMF economist, these interventions on a global scale have caused the deaths of 6 million children every year.
Many economists consequently view austerity measures as a terrible blunder. John Maynard Keynes was the first to propose an alternative method, long before the Asian financial crisis. Governments, he attempted to demonstrate, could conceivably spend their national economy out of debt. Although logically implausible at first blush, this argument is based on the notion that recessions deepen from a persistent cycle of low incomes, low consumer spending and low business growth. A government can theoretically reverse this downward spiral by injecting the economy with much needed (albeit borrowed) capital. This is not equivalent to an indebted consumer spending further into the red, Keynes argued, because while the consumer gains no further income on that expenditure, the government's dollar goes into the economy and then partially boomerangs later on in the form of taxation.
Nobel-prize winning economist Joseph Stiglitz follows up on this approach by noting that households across the world are currently burdened with debt. For businesses to grow, he argues, government and consumer expenditure must kick in first. Austerity measures lower the spending capacity of households, and are therefore considered under-productive. Another recipient of the Nobel Prize, Paul Krugman, points to the recent experiences of countries such as Ireland, Latvia and Estonia. Countries that implement austerity are the “good soldiers” of the crisis, he notes, implementing savage spending cuts. "But their reward has been a slump-and financial markets continue to treat them as a serious default risk”.
In the United Kingdom, Prime Minister David Cameron defended the necessity of austerity measures for his country by denouncing the frivolity of governments that ratchet up spending at a time the economy is contracting. This is in line with the counter-Keynesian viewpoint, known broadly as the neoclassical position. Neoclassical economists argue that business is “inspired" by fiscally conservative governments, and this "confidence" helps re-ignite the economy. A British think-tank economist, Marshall Auerback, questions this line of thinking, wondering if Cameron suggests governments should only "ratchet up spending when the economy is growing." This, Auerback warns, should be avoided because it presents genuine inflationary dangers.
Câu hỏi Austerity Measures IELTS Reading
Questions 27-31
Complete the summary below. Choose NO MORE THAN TWO WORDS from the passage for each answer. Write your answers in boxes 27-31 on your answer sheet. A government can undergo austerity measures by cutting spending and/or raising 27.......................... . If banks do not believe that a government will settle its debts, they may ask for 28.......................... that are too high to pay back. In these cases, the IMF is sometimes prepared to lend money to these governments. One of the conditions of IMF loans is that recipient countries undergo austerity measures to reduce their 29.......................... and repay any debts.
The IMF has attracted criticism for its role in Asia after the 1997 financial crisis. The crisis was caused when international investors pulled their money out of the region at once, causing 30 ...................... to fail and unemployment to rise. The IMF's austerity measures set conditions that lowered incomes and 31 ...................... . These policies have caused great suffering internationally.
Questions 32-35
Choose FOUR letters, A-G.
Write the correct letters in boxes 32-35 on your answer sheet.
Which four items are identified as features of the Greek government's austerity measure programme in 2010?
A. reducing public sector wages between 2010 and 2014
B. cutting allowances for public sector workers
C. raising the sales tax
D. making the compulsory retirement age the same for both genders
E. multiple general strikes
F. making cigarettes more expensive
G. eliminating the budget deficit
Questions 36-40
Look at the following statements (Questions 36-40) and the list of people below.
Match each person with an appropriate statement, A-F.
Write the correct letter, A-F, in boxes 36-40 on your answer sheet.
36 John Maynard Keynes
37 David Cameron
38 Marshall Auerback
39 Joseph Stiglitz
40 Paul Krugman
List of Statements
A. Businesses will grow after the government and consumers spend more.
B. Harsh austerity measures have caused some economies to decline.
C. Government spending can help a country get out of debt.
D. Governments should not raise spending while the economy is expanding.
E. It is wasteful for governments to spend while the economy is getting smaller.
F. Governments that introduce austerity measures are rewarded with economic success.
Đáp án
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Reading Passage 3, Questions 27-40
- taxes
- interest rates
- budget deficit
- Asian currencies/economies
- labour standards
32-35. B C D F (in any order) - C
- E
- D
- A
- B