Self-study activity:
Watch the three-minute video clip and fill in the blanks in the transcript with the missing words. The activity is suitable for intermediate students. Before you try the activity, first watch the video through to get the main ideas.
To consolidate both the ideas and vocabulary in the clip, try to explain the difference between stimulus and austerity for a country's economy in your own words.
Growth is a very (1) ... value-laden word right now. Every economy wants and needs growth. But there are many ways to get there. Stimulus can produce growth. Austerity can produce growth. Cutting (2) ... can produce growth. It`s very (1) ... and not every example is the same.
It`s hard to compare. Some people hold austerity out on one side and stimulus out on the other, when in fact, most solutions probably lie somewhere in the middle.
Austerity is a program where a government cuts back on its spending. It either cuts back on benefits or payments to its citizens or payments to its businesses in order to get its (3) ... under control. Governments don`t typically like to impose austerity, because voters don`t like austerity.
Voters, citizens, like getting money. They like getting benefits from their government. They like to have (4) ... ... in at some point. So governments don`t tend to impose austerity until it`s absolutely necessary. But in many cases, it`s to show creditors that a government has discipline. In many cases, it`s to balance the (5) ... because no more money is available. In many cases, it`s about paying down (3) ... because it would take too long to pay that (3) ... down if austerity measures weren`t brought in.
Stimulus is when a government gets involved to (6) ... money or things like money to its citizens or its businesses to stimulate the economy. An economy works because there`s demand. People work. They earn money. With that money, they go and buy things. With the money that they use to buy things companies expand, (7) ... more people. Those people have money. They go out and buy things. That is the (8) ... ... of demand. Well, the way you stimulate that is if people have money. That is stimulus. Austerity is not stimulus.
The United States has done something very interesting over the last several years. Right after the financial crisis in 2008 we came up with stimulus. Sure you remember President Obama’s stimulus bill. Well, that (9) ... hundreds of billions of dollars into the economy, but at the same time in the (10) ... the Federal Reserve was printing money, creating more money. But at the same time states and municipalities which can’t run deficits, were pulling back on spending. So what you have in the United States is this mixture of massive stimulus and austerity. States were (11) ... ... teachers, and nurses, and police officers, and firefighters. At the same time, the government, the federal government was (12) ... money into the system, so it is unclear in the US whether it was stimulus or it was austerity and many people argue now that the federal stimulus programme has long ended in the United States that it is nothing but austerity here.
Key:
1 tricky 2 taxes 3 debt 4 retirement kick 5 budget 6 transfer 7 hire 8 virtuous circle 9 pumped 10 background 11 laying off 12 pumping