Inflation is a critical economic issue that central banks must address to maintain financial stability. In recent years, questions about central bank policies and their effectiveness in combating inflation have become increasingly prevalent in IELTS Writing Task 2 exams. Based on analysis of past exam trends, it’s highly likely that this topic will continue to feature prominently in future tests. Let’s explore a relevant question that has appeared in recent IELTS exams:
Some people believe that central banks should prioritize keeping inflation low, while others argue they should focus on promoting economic growth and job creation. Discuss both views and give your opinion.
Analysis of the Question
This question requires candidates to:
- Discuss the view that central banks should prioritize low inflation
- Discuss the alternative view that economic growth and job creation should be the focus
- Provide their own opinion on which approach is preferable
It’s important to address all parts of the question and provide a balanced discussion before stating a clear personal stance.
Sample Essay 1 (Band 8-9)
Central banks play a crucial role in managing national economies, and there is ongoing debate about whether their primary focus should be controlling inflation or stimulating growth and employment. While both objectives are important, I believe that maintaining low inflation should be the top priority for central banks.
Those who advocate for prioritizing low inflation argue that price stability is fundamental to a healthy economy. When inflation is kept in check, it provides a stable environment for businesses and consumers to make long-term financial decisions. Low inflation protects the purchasing power of savings and pensions, ensuring that people’s hard-earned money retains its value over time. Furthermore, it helps maintain the competitiveness of a country’s exports in the global market. The effects of inflation on interest rates can be significant, potentially leading to economic instability if left unchecked.
On the other hand, proponents of focusing on economic growth and job creation argue that these factors have a more immediate and tangible impact on people’s lives. They contend that high employment rates lead to increased consumer spending, which in turn drives economic expansion. By prioritizing growth, central banks can help reduce poverty and improve living standards. Additionally, a strong job market can provide opportunities for skill development and career advancement, contributing to long-term economic prosperity.
However, I believe that maintaining low inflation should take precedence for several reasons. Firstly, uncontrolled inflation can quickly erode economic gains and lead to financial crises, as seen in historical examples like the hyperinflation in Zimbabwe or Venezuela. Secondly, low inflation creates a stable foundation upon which sustainable growth can be built. When prices are predictable, businesses can plan investments with greater confidence, ultimately leading to job creation and economic expansion.
Moreover, central banks have more direct tools to influence inflation, such as adjusting interest rates and managing the money supply. In contrast, promoting growth and employment often requires coordination with fiscal policies and broader economic reforms that are beyond the scope of central banks alone. The role of financial markets in managing inflation is also crucial, and central banks are best positioned to influence these markets effectively.
In conclusion, while both low inflation and economic growth are important objectives, I believe central banks should prioritize keeping inflation low. This approach provides the stability necessary for long-term economic health and sustainable growth. By focusing on price stability, central banks can create an environment conducive to investment, job creation, and overall prosperity.
Sample Essay 2 (Band 6-7)
The role of central banks in managing the economy is a topic of debate. Some people think they should focus on keeping inflation low, while others believe promoting economic growth and creating jobs is more important. In my opinion, both goals are important, but controlling inflation should be the main priority.
Those who support keeping inflation low say it’s important for a stable economy. When prices don’t rise too fast, people can plan their finances better. It also helps businesses make decisions about investments. Low inflation protects the value of money, which is good for savers and people with fixed incomes. The impact of inflation on mortgage rates can be significant, affecting many homeowners and potential buyers.
On the other hand, people who think economic growth and job creation should be the focus argue that these directly affect people’s lives. More jobs mean more people have income, which can boost the economy. When the economy grows, it can lead to better living standards and reduce poverty. They believe that some inflation is okay if it means more people have jobs.
I think keeping inflation low should be the main goal of central banks. High inflation can cause many problems, like reducing the value of savings and making it hard for businesses to plan. When inflation is under control, it creates a good environment for steady economic growth. This can lead to more jobs in the long run.
Central banks have tools to control inflation, like changing interest rates. But they can’t directly create jobs or make the economy grow. Other parts of the government need to help with that. It’s important to manage inflation expectations to maintain economic stability.
In conclusion, while both low inflation and economic growth are important, I believe central banks should focus more on keeping inflation low. This helps create a stable economy where growth and job creation can happen naturally over time.
Sample Essay 3 (Band 5-6)
Central banks have an important job in the economy. Some people think they should keep inflation low, but others say they should help the economy grow and make more jobs. I will talk about both ideas and give my opinion.
Keeping inflation low is good because it means prices don’t go up too fast. This helps people save money and plan for the future. When inflation is low, businesses can also make better plans. It’s good for people who have fixed incomes, like pensioners.
But some people think making the economy grow and creating jobs is more important. When more people have jobs, they can spend money and help the economy. This can make life better for many people. Growing the economy can help reduce poverty too.
I think both things are important, but keeping inflation low is more important. If prices go up too fast, it can cause big problems for everyone. Even if there are more jobs, high inflation can make life difficult. Central banks can control inflation better than they can make jobs directly.
When inflation is low, it can help the economy grow in a good way. This can lead to more jobs over time. It’s better to have steady growth than fast growth that might not last. Managing inflation in a service-based economy is especially important in today’s world.
To conclude, I believe central banks should focus more on keeping inflation low. This can help create a good situation for the economy to grow and make jobs in a natural way.
Explanation of Band Scores
Band 8-9 Essay:
- Fully addresses all parts of the task with a well-developed response
- Presents a clear position throughout the essay
- Uses a wide range of vocabulary with very natural and sophisticated control
- Uses a wide range of complex structures with full flexibility and accuracy
- Ideas are coherently organized with clear progression and appropriate paragraphing
Band 6-7 Essay:
- Addresses all parts of the task, though some parts may be more fully covered than others
- Presents a relevant position, though the conclusions may become unclear or repetitive
- Uses an adequate range of vocabulary with some errors in word choice and collocation
- Uses a mix of simple and complex sentence forms with some errors that do not impede communication
- Information and ideas are generally well organized with clear overall progression
Band 5-6 Essay:
- Addresses the task only partially; the format may be inappropriate in places
- Expresses a position but development is not always clear
- Uses limited range of vocabulary; errors in word choice may cause some difficulty for the reader
- Uses only a limited range of structures with some attempts at complex sentences
- Presents information with some organization but there may be a lack of overall progression
Key Vocabulary to Remember
- Inflation (noun) – /ɪnˈfleɪʃən/ – A general increase in prices and fall in the purchasing value of money
- Economic growth (noun phrase) – /ˌiːkəˈnɒmɪk ˈɡrəʊθ/ – An increase in the amount of goods and services produced per head of the population over a period of time
- Monetary policy (noun phrase) – /ˈmʌnɪtəri ˈpɒləsi/ – The actions of a central bank to control the supply of money in an economy
- Interest rates (noun phrase) – /ˈɪntrəst reɪts/ – The proportion of a loan that is charged as interest to the borrower
- Price stability (noun phrase) – /praɪs stəˈbɪlɪti/ – A state in which the general price level in an economy does not change much over time
- Fiscal policy (noun phrase) – /ˈfɪskəl ˈpɒləsi/ – Government spending policies that influence macroeconomic conditions
- Hyperinflation (noun) – /ˌhaɪpərɪnˈfleɪʃən/ – Extremely rapid or out of control inflation
- 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
- Consumer spending (noun phrase) – /kənˈsjuːmə ˈspendɪŋ/ – The amount of money spent by households in an economy
- Sustainable growth (noun phrase) – /səˈsteɪnəbl ˈɡrəʊθ/ – Economic development that meets the needs of the present without compromising future needs
Conclusion
The topic of central bank responses to inflation is a complex but crucial aspect of economic policy that frequently appears in IELTS Writing Task 2. By understanding the different perspectives on inflation control versus economic growth, you can develop well-rounded arguments for your essays. Practice writing your own responses to this and similar questions, focusing on clear structure, relevant examples, and appropriate use of economic terminology. Remember to balance your discussion of both viewpoints before presenting your own opinion. For additional practice, try writing essays on related topics such as the impact of globalization on inflation or the role of technology in shaping monetary policy. Feel free to share your practice essays in the comments section for feedback and discussion with other learners.