Casa · C2 Mastery · Lesson 3 of 20 · Step 1

Economic Theory

Advanced cause/effect structures

Use sophisticated cause-and-effect connectors in academic prose
Distinguish between subtle causal relationships
Deploy economic vocabulary at near-native proficiency
Construct complex causal chains in written argument

Words · tap a card to see it used

Grammar

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 · type, then check

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.

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.

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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 · say it out loud, with a partner or alone

1Should governments prioritise reducing debt or stimulating growth during economic downturns? Build a causal argument using at least two of the connectors studied in this unit.

2Can you think of a policy decision — in any country — whose unintended consequences (externalities) proved more significant than its intended effects? Describe the causal chain.

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.

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