Self-study task reading Read the given text and define the underlined words. Then answer the following questions

SELF-STUDY 3

TASK 3.1 Reading
Read the given text and define the underlined words. Then answer the following questions.

• 
  What drives the world economy?
  
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  What is 'consumer spending' ?
  

GDP growth for different countries
Gross domestic product (GDP) measures the size of a country's economy. It represents the total value of all goods and services produced over a specific time period. Growth in GDP is one of the primary indicators used to gauge (= measure) the health of a country's economy. Usually, GDP is expressed as a comparison to the previous quarter or year.
Government trade policy
The two poles of government policy are liberalization and protectionism.
' 'Liberalization' is associated with free markets, open borders, deregulation and the free movement of capital around the world.
'Protectionism' is associated with government intervention, subsidies, quotas and tariffs, and restrictions on the movement of capital.
Consumer confidence
If consumers are confident about tomorrow, they will spend more. The main factors affecting consumer confidence are the level of unemployment - if people's jobs are at risk, or they don't have a job, they will spend less - and house prices - if people's houses are worth more than they paid for them, they feel rich and will spend more freely.
Interest rates
Interest rates are set by Central Banks. When interest rates are low, consumers and businesses can borrow money cheaply and there is a stimulus to the economy. But the cheap credit also causes inflation and too much liquidity in the system. This liquidity leads to bubbles in stock markets, housing markets, etc. When the Central Bank sees the need to control inflation and cool growth a little, it raises interest rates.
Exchange rates
Currencies fluctuate against each other: the euro against the dollar, the yen against the yuan. This is due to many complex factors such as the underlying strength of the economy, interest rate differentials and speculation. Having a strong currency makes imports cheap for domestic consumers, but hurts exporters (whose products become more expensive overseas).