The topic of global recession and its effects on financial markets has become increasingly prevalent in IELTS Writing Task 2 examinations. Based on analysis of past IELTS tests, questions related to economic downturns and their impacts appear approximately once every 4-5 months, making it a crucial topic for IELTS candidates to master.
Analysis of Task 2 Question
Some people believe that government intervention in stock markets during global recessions is necessary to prevent economic collapse. Others argue that markets should be allowed to function freely without interference. Discuss both views and give your opinion.
This question requires candidates to:
- Examine both perspectives on government intervention in stock markets
- Present balanced arguments
- Provide a clear personal stance
- Support arguments with relevant examples
Band 9 Sample Essay
During periods of global economic downturn, the debate over whether governments should intervene in stock markets intensifies significantly. While some advocate for active government involvement to prevent market failure, others maintain that free market principles should prevail. This essay will examine both perspectives before presenting my own viewpoint.
Those supporting government intervention argue that it serves as a crucial stabilizing force during economic crises. When how interest rates impact stock market trends, we see that carefully planned government actions can help prevent panic selling and maintain investor confidence. For instance, during the 2008 financial crisis, many governments implemented quantitative easing programs that helped prevent a complete market collapse.
Conversely, free market proponents contend that government interference distorts natural market mechanisms. They argue that how does quantitative easing affect the stock market often creates artificial bubbles and delays necessary market corrections. The Japanese stock market’s stagnation in the 1990s, despite extensive government intervention, serves as a cautionary tale.
In my opinion, while unrestricted government intervention can be problematic, some level of regulatory oversight during severe market downturns is essential. The key lies in striking a balance between maintaining market stability and allowing natural market forces to operate. This approach ensures both immediate crisis management and long-term market health.
Band 7 Sample Essay
In times of economic recession, the role of government in stock markets becomes a contentious issue. This essay will explore arguments for and against government intervention and present my perspective on this matter.
Supporters of government intervention believe it is necessary to protect the economy. During market crashes, impact of economic recessions on consumer banking habits shows that panic can spread quickly, affecting not just investors but ordinary citizens. Government intervention through regulations and stimulus packages can help restore confidence.
On the other hand, critics argue that markets should operate freely. They point out that government interference can lead to inefficient allocation of resources and prevent natural market corrections. This view suggests that market forces will eventually restore balance without external intervention.
I believe that moderate government intervention is necessary during severe market downturns. While excessive intervention can be harmful, completely free markets might lead to devastating economic consequences affecting public welfare.
Key Vocabulary
- Quantitative easing (n) /ˈkwɒntɪtətɪv ˈiːzɪŋ/ – A monetary policy where central banks buy securities
- Market mechanism (n) /ˈmɑːkɪt ˈmekənɪzəm/ – The system of price determination in a free market
- Regulatory oversight (n) /ˌregjʊˈleɪtəri ˈəʊvəsaɪt/ – Supervision by regulatory authorities
- Market correction (n) /ˈmɑːkɪt kəˈrekʃn/ – A decline of 10% or more in stock market prices
- Economic downturn (n) /ˌiːkəˈnɒmɪk ˈdaʊntɜːn/ – A period of reduced economic activity
For practice, try writing your own essay on this topic focusing on how to save money during economic downturns. Share your response in the comments for feedback and discussion with fellow IELTS candidates.