The topic of government intervention in stock markets has become increasingly relevant in recent IELTS examinations. Based on analysis of past papers and current economic trends, questions about market regulation and government oversight appear approximately once every 4-5 tests. Understanding how to effectively discuss this complex economic issue is crucial for IELTS candidates.
Let’s examine a recent IELTS Task 2 question that exemplifies this topic:
Some people believe that governments should intervene more actively in stock markets to prevent major market crashes, while others argue that markets should operate freely without government interference. Discuss both views and give your opinion.
Analysis of the Question
This question requires candidates to:
- Discuss arguments for government intervention in stock markets
- Examine perspectives supporting free market operation
- Present and justify their own position
- Provide relevant examples and evidence
Band 8.5 Sample Essay
Many debate whether governments should take a more hands-on approach to preventing stock market crashes or allow markets to function independently. While both perspectives have merit, I believe that balanced government oversight is essential for maintaining market stability while preserving economic dynamism.
Proponents of increased government intervention argue that proper regulation can prevent catastrophic market failures. The impact of market speculation on stocks has historically led to devastating economic consequences when left unchecked, as evidenced by the 2008 financial crisis. Government oversight can help identify and address potential risks before they escalate into full-blown crises. Additionally, regulatory frameworks can protect small investors and maintain public confidence in financial markets.
However, those favoring minimal intervention contend that markets are self-correcting mechanisms that function best with limited government interference. They point out that excessive regulation can stifle innovation and reduce market efficiency. When examining how market disruptions impact stock liquidity, we often see that overregulation can actually increase market volatility by reducing flexibility and natural price discovery.
In my view, the optimal approach lies in implementing targeted regulatory measures while maintaining fundamental market freedoms. Governments should focus on establishing transparent trading rules, preventing fraud, and ensuring adequate disclosure requirements. This balanced approach can help prevent major market crashes while still allowing for healthy market dynamics and innovation. The success of markets like Singapore’s, where should financial markets be more strictly regulated has been carefully balanced with economic growth objectives, demonstrates the effectiveness of this approach.
(Word count: 276)
Band 6.5 Sample Essay
Today, many people have different opinions about government control of stock markets. This essay will discuss both sides and give my opinion.
Some people think governments should control stock markets more. They say this is important because when stock markets crash, many people lose money and jobs. Big crashes like in 2008 showed us what happens when there is not enough control. Also, when governments watch the market, they can stop bad things before they happen.
Other people think markets should be free without government control. They believe markets can fix their own problems and government rules make things worse. Too many rules make it hard for companies to make money and grow. Sometimes government control can make people afraid to invest their money.
I think both sides have good points, but some government control is needed. Markets need basic rules to work well, like rules against cheating and lying. But too many rules can be bad for business. The best way is to have some important rules but still let the market work normally.
(Word count: 154)
Scoring Analysis
Band 8.5 Essay:
- Task Response: Fully addresses all parts of the task with well-developed positions
- Coherence and Cohesion: Logical organization with clear progression
- Lexical Resource: Sophisticated vocabulary with natural and precise usage
- Grammatical Range: Wide range of complex structures used accurately
Band 6.5 Essay:
- Task Response: Addresses main points but with less development
- Coherence and Cohesion: Basic organization but sometimes unclear
- Lexical Resource: Adequate but limited vocabulary range
- Grammatical Range: Mix of simple and complex structures with some errors
Key Vocabulary
- market volatility (n) /ˌvɒləˈtɪləti/ – rapid and unpredictable changes in market values
- regulatory framework (n) /ˈreɡjʊləˌtɔːri ˈfreɪmwɜːk/ – system of rules and guidelines
- oversight (n) /ˈəʊvəsaɪt/ – supervision and monitoring
- price discovery (n) /praɪs dɪˈskʌvəri/ – process of determining asset prices
- market dynamics (n) /ˈmɑːkɪt daɪˈnæmɪks/ – forces affecting market behavior
Conclusion
Practice writing about government’s role in financial markets as this topic continues to appear in IELTS exams. Consider exploring related themes like importance of savings accounts in financial growth and how investment funds contribute to economic stability. Share your practice essays in the comments for feedback and improvement.