The topic of central banks and their role in economic recovery is increasingly relevant in IELTS Writing Task 2. Based on recent exam patterns and global economic trends, this theme has a high probability of appearing in future tests. It’s particularly pertinent for test-takers from countries like India, China, and Vietnam, where economic policies are often at the forefront of national discourse. Let’s examine a related question that has appeared in past IELTS exams:
Some people think that central banks should prioritize keeping inflation low, while others believe they should focus on promoting economic growth. Discuss both views and give your own opinion.
Analysis of the Question
This question requires candidates to:
- Discuss the view that central banks should prioritize low inflation
- Discuss the view that central banks should focus on promoting economic growth
- Provide their own opinion on which approach is more beneficial
The task involves comparing and contrasting two economic strategies, demonstrating an understanding of monetary policy, and forming a well-reasoned opinion.
Sample Essay 1 (Band 8-9)
Central banks play a crucial role in shaping a nation’s economic landscape, and their priorities can significantly impact overall economic health. While some argue that these institutions should focus primarily on maintaining low inflation rates, others contend that promoting economic growth should be their main objective. In my opinion, a balanced approach that considers both aspects is essential for sustainable economic development.
Those who advocate for prioritizing low inflation argue that price stability is fundamental to economic well-being. They contend that controlled inflation preserves purchasing power, encourages savings, and fosters a stable business environment. For instance, countries like Germany, with its historical memory of hyperinflation, have consistently emphasized the importance of price stability through their central bank policies. This approach has contributed to Germany’s reputation for economic stability and strong export performance.
Graph showing Germany's stable economy
On the other hand, proponents of growth-focused policies argue that central banks should prioritize stimulating economic expansion. They believe that measures such as lowering interest rates and increasing money supply can boost investment, create jobs, and improve overall living standards. The United States Federal Reserve’s response to the 2008 financial crisis exemplifies this approach, where aggressive monetary easing was implemented to revive the economy. This strategy helped prevent a deeper recession and facilitated a quicker recovery.
In my view, central banks should strive for a nuanced approach that balances both inflation control and economic growth. Excessive focus on either objective can lead to unintended consequences. For example, an overzealous pursuit of low inflation might stifle economic activity, while unchecked growth-oriented policies could lead to asset bubbles and financial instability. The Reserve Bank of India’s recent policies demonstrate this balance, where it has aimed to support growth while keeping inflation within a target band.
Chart illustrating India's economic indicators
In conclusion, while both low inflation and economic growth are vital objectives, I believe central banks should adopt a flexible, context-dependent approach. By carefully weighing the current economic conditions and long-term goals, these institutions can contribute more effectively to overall economic stability and prosperity.
(Word count: 329)
Sample Essay 2 (Band 6-7)
The role of central banks in managing the economy is a topic of much debate. Some people think they should focus on keeping inflation low, while others believe promoting economic growth is more important. Both views have their merits, and I will discuss them before giving my opinion.
Those who support keeping inflation low argue that it’s important for economic stability. When inflation is low, people’s money keeps its value, and businesses can plan better for the future. For example, in countries with low inflation, people are more likely to save money and invest in long-term projects. This can lead to a more stable economy overall.
On the other hand, those who prioritize economic growth believe that central banks should focus on policies that stimulate the economy. They argue that by lowering interest rates and increasing the money supply, central banks can encourage businesses to invest and create more jobs. This view suggests that a growing economy benefits everyone, even if inflation is slightly higher.
Graph showing correlation between inflation and economic growth
In my opinion, central banks should try to balance both objectives. Keeping inflation too low can sometimes slow down economic growth, but letting it get too high can cause problems as well. I think the best approach is to aim for moderate inflation while also supporting economic growth.
For instance, during economic crises, central banks might need to focus more on growth to help the economy recover. But in normal times, they should work to keep inflation under control while still supporting steady economic growth. This balanced approach can help create a stable and prosperous economy in the long run.
In conclusion, while both low inflation and economic growth are important, I believe central banks should aim for a balance between the two, adjusting their policies based on the current economic situation.
(Word count: 298)
Sample Essay 3 (Band 5-6)
Central banks have an important job in the economy. Some people think they should keep inflation low, while others say they should help the economy grow. Both ideas are important, and I will talk about them.
Keeping inflation low is good because it means prices don’t go up too fast. When inflation is low, people’s money is worth more, and they can buy more things. This is good for everyone, especially people who don’t have a lot of money. Also, businesses like low inflation because it helps them plan better.
But other people think central banks should focus on making the economy grow. They say that when the economy grows, more jobs are created, and people can earn more money. This can help improve people’s lives. When central banks make it easier for businesses to borrow money, it can help the economy grow.
I think both ideas are important. If inflation is too high, it can be bad for people. But if the economy doesn’t grow, that can also be a problem. Maybe central banks should try to do both things at the same time.
For example, they could try to keep inflation at a good level, not too high and not too low. At the same time, they could help the economy grow by making it easier for businesses to get loans. This way, they can help both the economy and the people.
In conclusion, I think central banks should try to keep inflation low and help the economy grow. Both are important for a healthy economy.
(Word count: 251)
Explanation of Band Scores
Band 8-9 Essay:
- Task Response: Fully addresses all parts of the task with a well-developed response. Presents a clear position throughout.
- Coherence and Cohesion: Logically organized with clear progression. Uses a range of cohesive devices effectively.
- Lexical Resource: Uses a wide range of vocabulary with very natural and sophisticated control of lexical features.
- Grammatical Range and Accuracy: Uses a wide range of structures with full flexibility and accuracy.
Band 6-7 Essay:
- Task Response: Addresses all parts of the task, though some parts may be more fully covered than others.
- Coherence and Cohesion: Arranges information coherently and there is clear overall progression.
- Lexical Resource: Uses an adequate range of vocabulary for the task. Attempts to use less common vocabulary but with some inaccuracy.
- Grammatical Range and Accuracy: Uses a mix of simple and complex sentence forms. Makes some errors, but they do not impede communication.
Band 5-6 Essay:
- Task Response: Addresses the task only partially. The format may be inappropriate in places.
- Coherence and Cohesion: Presents information with some organization but there may be a lack of overall progression.
- Lexical Resource: Uses a limited range of vocabulary, but this is minimally adequate for the task.
- Grammatical Range and Accuracy: Uses only a limited range of structures. Errors may cause some difficulty for the reader.
Key Vocabulary to Remember
- Central bank (noun) /ˈsentrəl bæŋk/: The primary monetary authority of a country.
- Inflation (noun) /ɪnˈfleɪʃn/: A general increase in prices and fall in the purchasing value of money.
- Economic growth (noun phrase) /ˌiːkəˈnɒmɪk ɡrəʊθ/: An increase in the amount of goods and services produced per head of the population over a period of time.
- Monetary policy (noun phrase) /ˈmʌnɪtri ˈpɒləsi/: The actions of a central bank to influence the availability and cost of money and credit.
- Interest rates (noun phrase) /ˈɪntrəst reɪts/: The proportion of a loan that is charged as interest to the borrower.
- Purchasing power (noun phrase) /ˈpɜːtʃəsɪŋ ˈpaʊə/: The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.
- Stimulus (noun) /ˈstɪmjələs/: Something that encourages activity or development, especially in the economy.
- Financial stability (noun phrase) /faɪˈnænʃl stəˈbɪləti/: The condition in which the financial system can withstand shocks without major disruption.
- Asset bubble (noun phrase) /ˈæset ˈbʌbl/: A situation in which the price of an asset rises to a level much higher than its intrinsic value.
- Hyperinflation (noun) /ˌhaɪpərɪnˈfleɪʃn/: Extremely rapid or out of control inflation.
In conclusion, understanding the role of central banks in economic recovery is crucial for IELTS candidates, as it’s a topic that frequently appears in Writing Task 2. The sample essays provided demonstrate different levels of performance, highlighting the importance of comprehensive task response, coherent structure, varied vocabulary, and accurate grammar. To further improve your skills, try writing your own essay on this topic and share it in the comments section for practice and feedback. Additionally, be prepared for similar questions that may arise in future exams, such as discussing the impact of central bank policies on income inequality or the effectiveness of quantitative easing in stimulating economic growth.
