Casa ESL · C2 Mastery · Unit 3 of 20 · Step 1
Advanced cause/effect structures
Name
Date
Vocabulary
externality
nounA side effect or consequence of an activity that affects others without being reflected in the cost.
"Pollution is a classic negative externality of industrial production."
elasticity
nounThe degree to which demand or supply responds to changes in price or other factors.
"The price elasticity of demand for luxury goods tends to be high."
stagflation
nounA condition of slow economic growth and relatively high unemployment accompanied by rising prices.
"The 1970s saw an unprecedented period of stagflation in Western economies."
austerity
nounDifficult economic conditions created by government measures to reduce public expenditure.
"The austerity programme provoked widespread social unrest."
fiscal
adjectiveRelating to government revenue, especially taxes and public spending.
"Fiscal policy must be carefully calibrated to avoid exacerbating inequality."
quantitative easing
nounA monetary policy in which a central bank buys government securities to increase the money supply.
"Quantitative easing was deployed on an unprecedented scale following the 2008 crisis."
contagion
nounThe spread of economic crisis from one market or region to others.
"Financial contagion from the Greek debt crisis threatened the entire eurozone."
moral hazard
nounThe risk that a party insulated from risk will behave differently from how they would if fully exposed to the risk.
"Bank bailouts create a moral hazard by rewarding reckless behaviour."
Grammar Focus
Advanced cause/effect structures (Owing to, On account of, Thereby, Whereby)
At C2 level, cause-and-effect relationships are expressed using a wide range of sophisticated connectors. "Owing to" and "on account of" introduce causes (+ noun/gerund). "Thereby" (+ -ing) introduces a result of the action in the main clause. "Whereby" introduces a method or process by which something happens. Other structures include "so much so that," "with the result that," "inasmuch as," and "in virtue of."
Owing to the sharp depreciation of the currency, import costs rose dramatically.
The central bank lowered interest rates, thereby stimulating consumer borrowing.
They introduced a mechanism whereby surplus revenue would be automatically redistributed.
Inflation eroded purchasing power, so much so that household savings were effectively wiped out.
Exercises
Exercise 1
Complete each sentence with the correct cause/effect connector: owing to, thereby, whereby, on account of, so much so that.
1. The government cut public spending, reducing the deficit but increasing unemployment.
2. the collapse of several major banks, the credit market froze entirely.
3. A system was established tax revenues were allocated proportionally to population size.
4. Consumer confidence plummeted, retail spending fell to a ten-year low.
5. persistent trade imbalances, the currency came under sustained pressure.
Exercise 2
Choose the most appropriate connector for each context.
1. The regulator imposed stricter capital requirements, ___ reducing the likelihood of bank failure.
2. ___ the unprecedented scale of quantitative easing, concerns about inflation intensified.
3. They proposed a framework ___ environmental costs would be factored into market prices.
4. The austerity measures proved deeply unpopular, ___ the government lost its parliamentary majority.
5. ___ its failure to anticipate the crisis, the institution faced calls for reform.
Reading
The Paradox of Austerity
The debate over austerity — the deliberate reduction of government spending during economic downturns — illustrates one of the most persistent tensions in economic theory. Proponents argue that fiscal consolidation is necessary to restore market confidence, thereby creating conditions for sustainable recovery. Owing to the accumulation of sovereign debt, governments face constraints that make continued stimulus untenable. Opponents counter that austerity is self-defeating: by cutting expenditure during a recession, governments reduce aggregate demand, whereby economic contraction deepens and tax revenues decline further — a vicious circle that may ultimately increase rather than decrease the debt burden. The empirical evidence remains contested. The experience of Greece following the eurozone crisis is frequently cited: the troika-imposed austerity programme reduced GDP by approximately 25 per cent over five years, so much so that the resulting social crisis — mass unemployment, emigration, and the collapse of public services — arguably inflicted more damage than the original fiscal imbalance. Conversely, proponents point to cases such as Canada in the 1990s, where fiscal consolidation was followed by robust growth. The difficulty lies in isolating the causal mechanisms: on account of the sheer number of variables involved, establishing definitive cause-and-effect relationships in macroeconomics remains extraordinarily challenging.
1. What is the "vicious circle" described by opponents of austerity, and which causal connectors does the passage use to articulate it?
2. Why does the passage suggest that establishing definitive causal relationships in macroeconomics is so difficult?
Speaking
Discuss these questions with a partner or your teacher.
Writing
Write a paragraph (120-150 words) analysing the cause-and-effect chain of a recent economic event. Use at least three different advanced cause/effect structures from this unit.
Example: Owing to the rapid expansion of remote work following the pandemic, commercial property values in major cities declined sharply. Businesses reduced their office footprints, thereby depressing rental income for landlords and eroding the tax base of city centres. A mechanism emerged whereby residential demand in suburban and rural areas surged, driving up housing costs in previously affordable regions, so much so that long-term residents found themselves priced out of their own communities. On account of these cascading effects, policymakers faced the unenviable task of addressing urban economic decline and suburban affordability simultaneously.
Answer Key — For Teacher Use
Exercise 1
1. thereby · 2. Owing to · 3. whereby · 4. so much so that · 5. On account of
Exercise 2
1. thereby · 2. Owing to · 3. whereby · 4. so much so that · 5. On account of
Reading Comprehension
1. Cutting expenditure during a recession reduces aggregate demand, whereby economic contraction deepens and tax revenues decline further, potentially increasing the debt burden. The passage uses "whereby" and "so much so that." · 2. On account of the sheer number of variables involved, it is extraordinarily challenging to isolate specific causal mechanisms in macroeconomic contexts.