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|convex to the origin.|
Read the following text and answer the comprehension questions below :
Consumer behaviour must also be consistent and transitive. In other words, if in a particular period a consumer chooses one basket in preferece to another, he/she will have the same preferece in another period. Furthermore, if the consumer prefers basket A to basket B and also prefers basket B to basket C, then the consumer must prefer basket A to basket C.
Indifference curve analysis can be used to explain who individuals ( or groups of individuals – regions, countries etc.) exchange commodities. Under certain circumstances such an exchange will lead to greater welfare for one individual without there being any reduction in the welfare of other individuals. In other words, exchange allows individuals to obtain a Pareto optimal distribution of commodities.
The theoretical device used to demonstrate the benefits of such exchange in the Edgeworth Box : which is drawn for two individuals and two commodities. Opposing corners of the Box are the origins of each individual's indifference map : essentially an infinite number of convex utility indifference curves. By opposing the two indifference maps in the Box, it can be shown that a set of positions exists ( the contract curve) on which each utility curve is therefore Pareto optimal because any move off the contract curve may improve the utility of one individual but will alse diminish the utility of the other.
When the original endowment of commodities between the two individuals is such that the distribution of the commodities. This would allow one individual to improve his/her total utility, without diminishing the utility of the other. Alternatively the exchange could raise the utility of both.
Course 4 : Macroeconomics
Complete the paragraph using : invested growth demand involuntary challenged
« Keynes challenged the classical conclusions about saving and growth. He argued that more thrift and saving lead to more rapid economic growth only if full employment is assumed. This means assuming the classical claim that demand is always enough for any supply of goods and that all saving is automatically invested. This assumption, however, is not true according to Keynes. During each depression it is painfully obvious to everyone that there is not full employment and that millions of workers are involuntary unemployed. In each recession or depression, most saving is not being invested ( except in the statistical sense of investment in un planned and unwanted inventory pileup (=entassement)).
Howard J. Sherman & Gary R. Evans, Macroeconomics 1984.
Define thrift and assumption :
Thrift : comportement d'économe
Assumption : is usually a simplification of the world, hypothsis.
An Hypothesis is an idea to be tasted in statistics the aim is suallyy to refute null hypothsis.
The market model of pure competition is based on the assumption of perfect knowledge by agents of market conditions.
The model tests hypothesis that spending on consumer durables is very price elastic.
Complete the following definitions :
7/ Fricional unemployment is caused by people taking time out of work between jobs or lookong of work.
8/ Voluntary unemployment is caused by excessively high wages.
9/ Structural unemployment refers to a mismatch of job vacancies with the supply of labour available, as the skills, sectoral and geographical requirements of the economy change.
10/ Keynesian unemployment is due to a lack of aggregate demand in the economy.
Complete the paragraph using the words
deficient volume propensity rate real
« The propensity to consume and the volume of new investment determine the rate of employment and the volume of employment is uniquely related to a given level of real wages-not the other way round ».
Provide synonyms for expansion and recession :
the monetarist critique
Fisher's equation : MV =PT
Put the verbs in brackets in the right tense :
The monetarist critique of Keynesian economics developed strongly during the 1970s, as inflation rose worldwide.
Its main ideas centered on the view that inflation a monetary phenomenon, resulting from the excessive growth in the money supply. To bring down inflation, the monetary authorities should control the monetary aggregates.
Technically this turn out to be harder said than done, especiallyu as financial deregulation leads to fluctuations in the aggregates and in the velocity of circulation.
More generally speaking, however the primacy of monetary policy in macroeconomic policy has now widely accepted, while fiscal policy is no longer used to “fine tune” growth.
Markets do not necessarily produce a stable, full-employment equilibrium. Unemployment and the under-utilization of productive capital may lost for long periods of time as investment is discouraged given poor business conditions and insufficient demand. Agents may then save and there is a preference for liquidity. Under these conditions monetary policy ad the use of interest rates become ineffective. A permissive monetary policy does not stimulate activity- the liquidity trap.
Government should then intervene, in particular in using public spending for infrastructural and other governments. Such spending has a significant multiplier effect ( about Z) so that even extra pound or dollar in spending produces about two extra pounds or dollars is national income.
Significantly Keynes did not envisage governments actually controlling productive capacity or planing the economy. Keynes did not challenge private property no markets all together.
Course 5: Money and Financial Markets
Functions of money:
output medium agents exchange buyer services
A medium of exchange: The use of money overcomes the need for “wants” to coincide.
Money allows agents to exchange the goods and services they produce in order to
obtain goods and services they want, without having to find a buyer in the market
willing to take exactly the output they produce.
unit assign aggregate value account
A unit of account: To facilitate the exchange of different types of goods and
services, money is used to assign them a certain value , expressed in a common way. It
can therefore be used to calculate aggregate values of goods and services.
divisible marketable store cash immediately
A store of value: Money, in its commodity, cash or equivalent form, can be used
to store value. It is much more divisible than goods, and because it is exchangeable for every
type of marketable product, it can be used to acquire real goods and services immediately .
Functions of money : fonctions de la monnaie
gold : or
gold-standard : étalon or
argent : silver
cash : argent liquide
notes and coins : billets de banque et pièces
coinage : la fabrication de l’argent
legal tender : monnaie ayant cours légal
cheque : cheque (US: check)
cartes de crédit : credit cards
currency : monnaie, devise
foreign currency : devise étrangère
currency risk : risque de change
(the) single currency : (la) monnaie unique
The France stopped being legal tender in 2002.
Some developing countries, led by Brazil are accusing the US of conducting a currency war due to its policy quantative easing.
What is Money?
cheques banknotes transactions credit money supply cash
The answer to this question seems straightforward enough. Most people would agree that
coins and banknotes are money, though they would not necessarily accept them from other
countries. What about cheques ? While these are widely used, they are not always
accepted as payment. That said, bank money (ie. deposits against which you can write a
cheque) is much more important in the total money supply than cash . What
about I.O.U.s (I owe you), credit cards and gold? Their acceptability varies greatly,
depending on the transactions nvolved.
Find synonyms for the following words and expressions in the text below: ‘sharp upturn’
liberalised valuable safeguard share
Keynes in criticism of the gold standard called the precious metal a “barbarous relic”. But
even now people in many parts of the world seek to keep some proportion of their assets in
gold. Apart from its physical attractiveness and the fact that gold is not corrosive, it is often
seen as a hedge against inflation. Nevertheless, as the worldwide surge of inflation during the
1970s was brought under control, and international capital markets have been largely
deregulated, gold has lost much of its shine as a store of wealth. For today’s large-scale
investors it is of little more than marginal interest.
M0 : is the stock of notes and coins in circulation
M1: M0 + the value of bank current accounts
M2: M1 + some deposit or interest-bearing bank accounts
M3: M2 + remaining, mostly very large, deposit accounts
central bank : banque centrale
monetary policy : politique monétaire
short term interest rates : taux d’intérêt à court terme
The management of the short term interest rates at which central banks lend to national
banking systems has today become the main instrument of monetary policy and to a large
extent the key lever of macroeconomic policy. Responsibility for setting interest rates is
generally in the hands of the central banks themselves, which are independent from direct
political control. Such independence shields them from short-run political pressures which
could lead to an excessively permissive monetary policy, and hence compromise the control
Are the following sentences true or false?
1) Central banks target the money supply to control inflation. False
2) They also act to manage long term interest rates. True
3) Central banks accept politicians’ advice in shaping monetary policy. False
Money and the stockmarkets
Read the following paragraphs. Are the statements true or false?
The stock market allows investors to deal in securities (titres) second hand, that is to say that shares
and bonds are traded, long after they were initially sold into the market. Trading in this
secondary market does not therefore directly alter the capital available to a company for
investment. However, companies cannot ignore the value of their stocks in the market, as the
share price indicates investor confidence in the market in general and in the company in
particular. If the share price of a company falls too much, relative to the market, the company
may become a target for acquisition. When such acquisitions by other companies are
successful, they usually lead to restructuring, which threatens both the jobs of managers and
workers. This is especially the case for hostile takeover bids. Also, many senior executives
are themselves shareholders or have stock-options to buy shares in the company. When the
stock price falls, their own personal wealth falls too.
1) Funds invested in stock markets are available for investment in plant and equipment. False
2) Companies do not have to worry about their share price. False
3) A takeover by another company presents an opportunity for a company’s management. False
4) Senior executives’ wealth is often related to a company’s stock market performance. True
In contrast, a rising share price gives companies greater room for manoeuvre in issuing extra
stock – bonds or shares – and also in engaging in M&A activity. This explains why it was
easier for Internet companies to float their shares on the bull markets (marché orientée à la hausse) in technology stocks
during the late 1990s, using IPOs, Initial Public Offerings. It also explains why there was
such an M&A boom in TMT companies at that time, as companies could use their own shares
to buy or merge with other companies. The arrival of the bear market considerably slowed
5) Falling share prices have no impact on stock market flotations. False
6) The bull market allowed start-up TMT companies to go public, using IPOs. True
7) A strong share price hinders a firm from using its stocks to acquire others. False
8) The collapse of the TMT boom had no consequences for M&A activity. False
stock market : la bourse
stocks, securities : actions
shares : titres
bonds : obligations
stocks rise/are rising :les actions montent
stocks dip, dipped : les actions baissent, ont baissé légèrement
stocks plunged : les actions ont plongé
session : séance
at mid-session : à la mi-séance
to rally : rallier
a market rally : une reprise (des marches)
a bull market : marché orienté à la hausse
a bear market : marché en baisse
to report a profit / loss : déclarer des bénéfices/ pertes
mergers and acquisitions (M&A) : fusions et acquisitions
to acquire : acquérir
to merge :fusionner
IPO -Initial Public Offering PAPE – : offre public d’achat (OPA)
profit warning : avertissement sur les résultats
a bond issue :une émission d’obligations
bond yields : les taux d’obligations
stock index (indices) : indice(s) des actions
a stock broker : courtier
an investment fund : un fonds d’investissement
pension fund : un fonds de pension
institutional investors : investisseurs institutionnels
a loan : un prêt
fixed-rate loan : un prêt à taux fixe
variable rate loan : un prêt à t. variable
mortgage loan : une hypothèque
option(s) : options
futures market : marché à terme
Complete the following sentences:
over-valued bank rise bear acquire loss safer shares
1) A fall in interest rates will usually lead stock prices to rise.
2) A firm seeking to acquire another company, normally offer its shareholders a
premium above the market price.
3) The 1980s saw a significant switch from corporate finance out of bank loans and into the sale of securities.
4) Securities offer investors shares assets because they are more liquid.
5) To finance mergers, companies frequently exchange safer .
6) If present share prices are still over-valued, the bear market may return.
7) As company profits fall, share prices remain over value.
8) A quarterly loss saferby a company is likely to lead to a fall in its share price.
Course 6: Foreign Trade
Put the following words in the correct order.
1. revenue / Tariffs / but / the / of / consumers. / also / increase / raise / costs / producers / to
Tariffs raise the revenue of producers but also increase costs to consumers.
2. may / also / down / Protectionism / slow / progress./ technological
Protectionism may also slow down technological progress.
3. a country. / may / for / Consequently, / lead / losses / welfare / to / protectionism /overall
Consequently, protectionism may lead to overall welfare losses to a country.
4. help / barriers / industries. / may / trade /also / But, / infant
But trade barriers may also help infant industries.
5. also / strategic / They / used / industries. / may / to / protect / be
They also may be used to protect strategic industries
6. ith / restructuring / Furthermore, / help / can / industrial / they / capacity.
Furthermore they can help retructuring industrial capacity.
7. At / countries. / markets / same / generate / opening / competition / the / can / time, / developing / much / domestic / for / too /
At the same time, opening domesting market can generate too much competition for developing countries.
8. Local / and / are / producers / develop. / compete / unable / so / industries / cannot / to
Local producers are unable to compete and so industries cannot develop.
9. producing / forced / back / raw / materials / then / countries / are / on / Developing.
Developping countries are forced back on producing rawx materials.
foreign market – export market : marché étranger – marché d’exportation
domestic market – home market : marché national
exports (eg: Car exports are slowing.) : les exportations
to export (eg: The company wants to raise exports.) : exporter
exportation – the activity : l’exportation
imports : les importations
to import : importe
importation – the activity : l’importation
foreign trade : commerce extérieur
barter trade : commerce de troc
protection : protection
protectionism : protectionisme
import ban : interdiction des importations
reduce establish preferential status Monetary discrimination regime
At the end of World War II, the Bretton Woods conference in 1944 set up the International Bank for
Reconstruction and Development (IBRD – or World Bank) and the International Monetary Fund (IMF). It was planned to establish an International Trade Organisation (ITO), to ensure that the trade regime of the post-war world would be open, but this was not done. Instead, the GATT was created to organise multinational negotiations to reduce barriers in the trade of manufactured goods. These negotiations were organised in “rounds” stretching over a number of years. A key concept underlying this system was that of non discrimination, in other words countries could not specifically discriminate against other GATT members, apart from within recognised derogations to the GATT system, such as the Generalised System of Preferences (GSP) which gives preferential treatment to developing countries. All countries therefore had to accord MFN status to each other.
True or False?
1/ The ITO was created? False
2/ The GATT’s aim was not to open up trade generally. True ( agriculture, textile)
3/ Negotiations took place continuously. False
4/ The GATT offered countries a menu of options in dealing with each other? False
tariff(s) : tarif(s)
tariff barrier : barrière tarifaire
customs duties : droits de douane
duty-free : exempté des droits de douane
Non-Tariff Barriers – NTBs : barrières non-tarifaires
regulations : réglementations
public procurement : achats publics
quota(s) : quota(s)
GATT – General Agreement on Tariffs and Trade
WTO – World Trade Organisation
MFN – Most-Favoured Nation (status)
Multilateral trade negotiations
trade round : cycle de négociations
regional trade bloc(s)
industrialised process packed covered shipped bilateral protected
Key sectors of economic activity were not covered by the GATT, until the Uruguay Round which began in 1986. These included agriculture, textiles and services. Agriculture has been strongly protected, and still continues to be so, especially by the industrialised countries. Textiles were handled under the Multi-Fibre Agreement (MFA), which was in fact a mere collection of bilateral arrangements between the industrialised and developing nations: it expired on 1st January 2005. Lastly, services were largely excluded from negotiation. These activities, which are often difficult to trade because they cannot be packed and shipped . Service were also protected by NTBs, such as national licensing requirements, etc. The Uruguay Round brought most of these activities into the GATT process , notably under the GATS.
Since the Uruguay Round, multilateral negotiations have not moved forward. The Doha Round began at the end of 2001, but came to a stand-still in 2008, with disagreements between the industrialised and developing countries.
True or False?
1. The GATT’s mission was to examine all issues related to trade. False
2. The Uruguay Round introduced textiles into the GATT process. True
3. Textiles are traded freely between industrialised and developing countries. True
4. Services have always been open to international trade. False
regional trade liberalisation : liberalisation regionale des échanges
Free-Trade Association : Association de libre échange
Customs union : union douanière
Single Market : marché unique
Economic and Monetary Union : Union économique et monétaire
free movement in goods and services :la libre circulation des biens et des services
GATS – General Agreement on Trade in Services
trade policy : politique commerciale
The finacial crisis :
Financial capitalism since 1980
government deficits : bond sales
privitisation : sharestraded
over the counter trading ( OTC)
new investors : pension funds, insurance companies, hedge funds ( fond spéculatif).
New corporate governace structures with profitability standards ( 15% returns).
Course 8: Environmental Economics and Global Warming
Text adapted from “What is the Economics of Climate Change”, by Nicholas Stern, World Economics,
Vol 7, No 2, April-June 2006.
Fill in the blanks using the following words.
sources generation change evidence transport
“Climate change is a serious and urgent issue. There is now an overwhelming body of scientific evidence that human activity is causing global warming, with the main sources of greenhouse gases, in order of global importance, being electricity generation , land-use changes (particularly deforestation), agriculture and transport (see Figure 1); the fastest growing sources are transport and electricity.”
cost rights emission horizons agent failures perfect regulation
“Climate change, like other environmental problems, involves an externality: the emission of greenhouse gases damages others at no cost to the agent responsible for the emissions. The standard theory of externalities, under certainty, perfect competition, and with a single government, points to one of: taxation of the emitter equivalent to marginal social cost (Pigou); the allocation of property regulation with trading (Coase); and direct rights. But here we have many jurisdictions, weak representation of those most affected (future generations), long-term horizons , a global scale, major uncertainties, and important interactions with other market failures. Thus, whilst the standard theory can provide useful initial insights, we have a much deeper and more complex economic policy problem. We have a problem of intertemporal international collective action with major uncertainty and linked market failures.”
Taken from the Stern Review, “Executive Summary”, 30 October 2006
shortages hunger flooding
“Climate change will affect the basic elements of life for people around the world – access to water, food production, health, and the environment. Hundreds of millions of people could suffer shortages , water flooding and coastal hunger as the world warms.
damage reducing risks
“Using the results from formal economic models, the Review estimates that if we don’t act, the overall costs and damage of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of risks could rise to 20% of GDP or more. In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – can be limited to around 1% of global GDP each year.”
Text adapted from “Global push to cut greenhouse emissions”, by Chris Giles, The Financial Times,
October 26 2006
Use the following prepositions to complete the text:
at of to with before in for
Efforts to deal with climate change accelerated at the end of October 2006, as Morgan Stanley, the investment bank, announced a $3bn plan to invest in the carbon trading market. This has occurred as many US states are becoming more open to international action, and just days before the UK government publises a major report about global warming, which is likely to propose a huge expansion of the global market in trading permits for carbon dioxide emissions. The report will also propose extending existing mechanisms for western companies to benefit from promoting cleaner energy in poor countries.
within for on in in from
A bigger market could offer substantial business opportunities. One recent calculation suggests that
global expenditure on curbing the effects of climate change could be worth about $1,000bn (£529bn) in five years of action being agreed.
The outlook for achieving an international consensus following the findings of the Stern review
appeared to strengthen as Citigroup, the world’s largest bank by market value, said in a research note that carbon trading was almost certainly going to become the most important weapon in combating global warming, including in the US. Certain US states have recently taken steps to establish carbon markets. Seven states within the north-east have agreed a regional move to cap emissions from2009, while California has set emissions limits.
Use the vocabulary discussed in class to complete the following sentences:
1) Scientific evidence is increasingly conclusive that the emission of ______________ into the
atmosphere is leading to global warming.
2) The most significant gas contributing to this phenomenon is ______________.
3) It is released into the atmosphere mainly through the burning of fossil ______________.
4) The Kyoto Protocol commits industrialised countries to reducing emissions. One way to achieve this
is to use less energy by making economic growth more ______________.
5) Other methods for limiting the build-up of GHGs is to expand so-called carbon ______________.
6) This could be done by changing agricultural land-use and promoting ______________ schemes to
increase the number of trees absorbing CO2.
7) To limit the cost of controlling emissions, the Kyoto Protocol provides the possibility of trading
8) Alternatively, industrialised countries may help finance developing countries improve their emission performance through a ______________.
9) Proper verification procedures are essential to ensure that annual ______________ are correctly
Cours en +++ :
International Monetary System ( IMS) :
Frech G20 : presidency end with the Cannes Summit November 2011.
Talk of IMS original system of Bretton woods 1944. Fixed exchange rate against the USD- and a dollar link to a gold .
The IMF balance of payments support and encourage currecy stability.
This system broke in 1971 US a bandons gold link.
Exchange rates start to float.
Since then global financial markets have been deregulated.
So today an IMS does not really exist.
IMS's rate has expended to structural adjustement a crisis support.
currecy instability – with exchange rate movements' evershooting)
Global imbalnces – deficits especially in the US – surplus in ASI, OPEC, Germany.
To deal with problems discussions in the G20 are looking to control currecy movements, imbalances and perhaps reduce speculation.
No question of returning to a fixed rate system.
But, French authorities have tried to encourage them of a multi po lar IMS not dominated by USD ( 60% worlds reserves).
Some coordination on currency movements-especially to limit the current « currecy war » in which the USD is falling against emerginig market currencies.
Mutual surveillance and coordination on imbalance limits of 4% or 5 % of GDP.
Reform of the WB and IMF to make them more resatative of the world and the rise of emerging countries.
Course 9 Growth and Development Make a spidergram using the following words relating to growth or development
«Phase de définition ou pré-étude» du projet et permet, après validation par le Comité de Pilotage, de lancer le projet