TOEFL Speaking
economics
Practice questions
- 1.Discuss the impact of inflation on household savings and spending habits.
- 2.How do government subsidies for renewable energy influence the overall economy?
- 3.What are the potential economic consequences of a rapidly aging population?
- 4.Explain the role of international trade in promoting economic growth.
- 5.How does the central bank's interest rate policy affect business investment?
Model answer
Inflation significantly affects household savings and spending habits. As prices rise, the purchasing power of money declines, meaning that people can buy less with the same amount of currency. This often leads to a decrease in savings because individuals need to spend more on essential goods and services, leaving less disposable income for saving. Moreover, uncertainty about future price increases may encourage immediate spending rather than saving, as people anticipate higher costs later. This shift can strain household finances and reduce long-term financial security. Conversely, some households may increase savings if they expect interest rates to rise in response to inflation, but this is less common. Overall, inflation tends to discourage saving and promote consumption, which can have mixed effects on the economy—boosting short-term demand but potentially fueling further inflation.
Target vocabulary
Inflation
A general increase in prices and fall in the purchasing value of money.
Purchasing power
The value of a currency expressed in terms of the amount of goods or services that one unit can buy.
Disposable income
The amount of money that households have available for spending and saving after income taxes have been accounted for.
Interest rate
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.
Subsidy
A sum of money granted by the government to support an industry or business so that the price of a commodity or service may remain low.
Aging population
A demographic trend where the median age of a population rises due to declining fertility rates and rising life expectancy.
International trade
The exchange of goods and services between countries, which can lead to economic growth through specialization and comparative advantage.
Central bank
A national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing monetary policy.