Exercise 2. Visual representation of information

 

We can illustrate our information giving pictorial representation of our point with the help of diagrams. In the previous units we used histograms to show the money spent on certain classes of commodities during 1990, 1991 and 1992 in the state of Noland. Other types of diagrammatic presentation are: graphs, bar charts, pie charts and pictograms. Look how the same information can be presented in the different types of diagrams and then do exercises which follow.

HISTOGRAM

BAR CHART

GRAPH

PIE CHARTS

a. Answer the following questions.

 

1. What is the best-known kind of diagrams?

2. What kind of diagrams is the most effective?

3. What kind of diagrams is the most easily to prepare?

4. Are all kind of diagrams easily understood?

5. What kind of diagrams present and compare quantities visually?

6. What kind of graphs shows the composition of a whole?

7. What is the main difference between pie charts and all other kinds of graphs?

8. What kind(s) of graphs would you choose to show

(1) the dynamism of firm's development;

(2) the volume of production of different goods;

(3) the percentage of the production of different kinds of goods to the whole volume of firm's production;

(4) changes in prices of a certain kind of commodity during definite period;

(5) the total number of vehicles owned in several countries in a given year.

 

 

b. The pictogram is a kind of graph that shows an object as seen by the normal eye.

Here are the examples of pictogram images.

€

H

 

 

Make up pictograms that show money spent on food, clothes, housing and durables in the state of Noland in 1990 and in 1991. Chose the suitable image of the pictogram.

 

 

c. Finish the following table inserting + or -.

 

	graph	histogram	bar chart	pictogram	pie chart
effective
simple to prepare
easy to understand
shows process in dynamism
presents quantities visually
compares quantities visually
displays the composition of a whole

Compare different kinds of diagrams.

 

Exercise 3. Composition. Write about 400 words on Markets. Use the basic material provided in the units.

 

 

Essential Vocabulary

1. net profit чистий прибуток

2. rental сума орендної плати

3. overheads = overhead expenses накладні витрати

4. set aside for виділяти для

5. cable = telegram

6. unimpeded безперешкодний

7. halt припиняти, зупиняти

8. Board of Trade Br.E. міністерство торгівлі Am.E. торговельна палата

9. infringe the rights зазіхати на права

10. get underway розвертатися, розвернутися

11. a return on (invested) capital прибуток на (інвестований) капітал

12. be associated with бути пов’язаним з чимсь, солідаризуватися з чимсь

 

UNIT 14 Money and Banking

All values in the economic system are measured in terms of money. Our goods and services are sold for money, and that money is in turn exchanged for other goods and services. Coins are adequate for small transactions, while paper notes are used for general business. There is additionally a wider sense of the word 'money', covering anything which is used as a means of exchange, whatever form it may take. Originally, a valuable metal (gold, silver or copper) served as a constant store of value, and even today the American dollar is technically 'backed' by the store of gold which the US government maintains. Because gold has been universally regarded as a very valuable metal, national currencies were for many years judged in terms of the so-called 'gold standard'. Nowadays however national currencies are considered to be as strong as the national economies which support them.

Valuable metal has generally been replaced by paper notes. These notes are issued by governments and authorized banks, and are known as 'legal tender'. Other arrangements such as cheques and money orders are not legal tender. They perform the function of substitute money and are known as 'instruments of credit'. Credit is offered only when creditors believe that they have a good chance of obtaining legal tender when they present such instruments at a bank or other authorized institution. If a man's assets are known to be considerable, then his credit will be good. If his assets are in doubt, then it may be difficult for him to obtain large sums of credit or even to pay for goods with a cheque.

The value of money is basically its value as a medium of exchange, or, as economists put it, its 'purchasing power'. This purchasing power is dependent on supply and demand. The demand for money is reckonable as the quantity needed to effect business transactions. An increase in business requires an increase in the amount of money coming into general circulation. But the demand for money is related not only to the quantity of business but also to the rapidity with which the business is done. The supply of money, on the other hand, is the actual amount in notes and coins available for business purposes. If too much money is available, its value decreases, and it does not buy as much as it did, say, five years earlier. This condition is known as 'inflation'.

Banks are closely concerned with the flow of money into and out of the economy. They often co-operate with governments in efforts to stabilize economies and to prevent inflation. They are specialists in the business of providing capital, and in allocating funds on credit. Banks originated as places to which people took their valuables for safe-keeping, but today the great banks of the world have many functions in addition to acting as guardians of valuable private possessions.

Banks normally receive money from their customers in two distinct forms: on current account, and on deposit account. With a current account, a customer can issue personal cheques. No interest is paid by the bank on this type of account. With a deposit account, however, the customer undertakes to leave his money in the bank for a mini­mum specified period of time. Interest is paid on this money.

The bank in turn lends the deposited money to customers who need capital. This activity earns interest for the bank, and this interest is almost always at a higher rate than any interest which the bank pays to its depositors. In this way the bank makes its main profits.

We can say that the primary function of a bank today is to act as an intermediary between depositors who wish to make interest on their savings, and borrowers who wish to obtain capital. The bank is a reservoir of loanable money, with streams of money flowing in and out. For this reason, economists and financiers often talk of money being 'liquid', or of the 'liquidity' of money. Many small sums which might not otherwise be used as capital are rendered useful simply because the bank acts as a reservoir.

The system of banking rests upon a basis of trust. Innumerable acts of trust build up the system of which bankers, depositors and borrowers are part. They all agree to behave in certain predictable ways in relation to each other, and in relation to the rapid fluctuations of credit and debit. Consequently, business can be done and cheques can be written without any legal tender visibly changing hands.

 

Exercise 1. Answer these questions, basing your answers on the text.

 

a. How are all values in the economic system measured?

b. What kind of money is used for general business?

c. What is the wider sense of the word ‘money’?

d. What originally served as a store of value?

e. What backs the US dollar?

f. How are national currencies judged nowadays?

g. Who can issue paper notes?

h. What name is given to arrangements like cheques?

i. When is credit offered?

j. When is a man's credit good?

k. What phrase do economists use for the value of money?

l. How do we reckon the demand for money?

m. What word is used to describe the flow of money round the economic system?

n. What is inflation?

o. In what way do banks co-operate with governments?

p. What was the original function of a bank?

q. In what two ways do banks receive money from their customers?

r. What does the customer agree to do when he opens a deposit account?

s. How does the bank make its main profit?

t. Between whom does the bank act as an intermediary?

u. Why do financiers often talk of the 'liquidity' of money?

v. What does the bank render useful?

w. Whose trust for each other maintains the banking system?

x. What does this trust permit?

 

Exercise 2. Say whether these statements are true or false, and if they are false say why.

 

a. The US dollar is a constant store of value.

b. Instruments of credit are accepted because they can be converted easily into substitute money.

c. The purchasing power of money depends upon supply and demand.

d. The demand for money is related to the rapidity with which business is done.

e. You can earn interest on a current account.

f. Banks lend money to depositors who need capital.

g. The main profits of a bank come from lending money at a fixed rate of interest.

h. Money is described as 'liquid' because it is compared to flowing water.

i. Legal tender must change hands when we do business and we must see it change hands.

Exercise 3. Change these conditional sentences. The form changes but the meaning remains the same.

 

EXAMPLE: A man can obtain money if he issues a personal cheque.

A man can obtain money by issuing a personal cheque.

a. You can improve the factory if you install new machinery.

b. You can learn something about economics if you study the basic textbooks.

c. They could improve conditions if they changed the laws.

d. You can make more money if you provide services which the public really need.

e. A person can obtain some additional money if he deposits his savings with a bank for a certain length of time.

f. Business can be done without banknotes if you use instruments of credit.

Exercise 4. Each of these sections is part of a text on money and banking. Punctuate each section, and then arrange them in their proper order.

 

A today a banks primary function is to act as an intermediary between depositors and borrowers it serves as a reservoir of loanable money B the term money in its widest sense covers anything which serves as a store of value and a means of exchange legal tender is the name for actual notes issued by governments or authorized banks while instruments of credit such as cheques act as a substitute for' legal tender C the whole system however is based on simple acts of trust between all concerned without this trust modern banking would be impossible

D a bank accordingly makes main profits by lending part of its store of deposited money at fixed rates of interest these rates usually exceed the rates offered to depositors E the purchasing power of money is dependent upon supply and demand variations therefore occur in the amount of money actually in circulation such institutions as banks assist in the flow of money throughout the economy F banks have developed greatly from their original position as places of security for valuables today they are service industries which handle large sums of money on current and deposit account

 

 

Exercise 5. Form adjectives from these nouns:

 

a money d benefit g responsibility j majority

b addition e commerce h nature k minority

c base f capital i locality l relation

 

 

Exercise 6. Form verbs from these adjectives:

 

a regular d relative g satisfactory j special

b complex e realistic h selective k influential

c simple f national i specific l indicative

 

 

Exercise 7. Form nouns from these verb-adjective pairs.

 

a imagine: imaginative e invent: inventive i possess: possessive

b collect: collective f originate: original j prevail: prevalent

c inform: informative g prescribe: prescriptive k prevent: preventive

d investigate: investigative h describe: descriptive l vary: various

Supplement

Figure I represents loanable money in the National Bank of Noland during 1979. The circle represents the total volume of Noland dollars (N$) as 100%. A quarter of the total available money (25%) was allocated to development projects in the manufacturing industries.

bank advances allocated to manufacturing projects

 

Fig. I 1979 Total: N$ 3,000 million

Fig. II 1989 Total: N$ 3,500 million

Fig. III 1990 Total: N$ 3,600 million

Figure II indicates the increase in total available assets and also the increase in allocations to manufacturing projects ten years later.

 

a In 19979 the Bank invested 25% of its available assets in manufacturing projects. How much actual money is this?

b In 1979 the Bank invested 30% of the available capital. How much actual money is this?

c By how much actual money has the investment increased when we compare 1979 and 1989?

 

In Figure III we are provided with fuller information about the allocation of loans by the Bank in the following year.

 

d How much actual money was provided for manufacturing projects in 1990?

e How does this compare with the 1989 figure?

f How much was provided in 1190 for projects related to agriculture?

g How much was provided 1n 1990 for commerce?

h What percentage of money was devoted to non-commercial, non-agricultural and non-manufacturing loans?

i How much in actual money is this?

j What simple conclusion can we come to about the general development of capital investment through this bank over the period 1979 - 1990?

Essential Vocabulary

1. in terms of з точки зору; мовою; у перекладі на

2. transaction справа; угода

3. authorized уповноважений

4. legal tender законний платіжний засіб

5. money order поштовий грошовий переказ

6. instrument of credit кредитний інструмент (документ, який слугує підтвердженям кредитування та дає своєму утримувачу право вимагати зазначену суму з зазначеної особи, напр., долгова розписка, вексель, аккредитив, чек, облігація, інше)

7. assets актив assets and liabilities — актив і пасив

8. medium of exchange засіб обігу

9. purchasing power купівельна спроможність

10. allocate funds росподіляти фонди

11. current account поточний рахунок

12. deposit account депозит, депозитний рахунок; ощадний рахунок

13. interest відсотки

14. depositor вкладник

15. borrower одержувач позики, позичальник

16. loanable money позикові/позичкові гроші

17. rest upon = be based

18. trust кредит; довіра

 

 

Revision Units 12-14

Exercise1. In each set of words, one word is odd. What is this word?

 

1. buy purchase get take

2. ancient old classical immemorial

3. gather collect obtain assemble

4. location post position place

5. free unrestricted unoccupied unlimited

6. influence effect affect act upon

7. prevail dominate rule obey

8. competition contrast rivalry emulation

9. perfect ideal clear flawless

10. accept anticipate consent agree

Exercise 2. Which terms in the box are defined in sentences below?

market free market competitive perfect market monopoly legal monopoly commodity market natural monopoly state monopoly

1. A capitalist economic system where prices are allowed to fluctuate solely according to supply and demand.

2. Organized traders' exchange in which standardized, graded products are bought and sold.

3. A market in which rival sellers are trying to gain extra business at one another's expense and thus are forced both to be as efficient as possible and to hold their prices down as much as possible.

4. A company which the government has granted exclusive rights to offer a particular service in a specific region. In return, the company agrees to have its policies and prices regulated.

5. Economic situation in which only a single seller or producer supplies a commodity or a service.

6. An industry where the fixed cost of the capital goods is so high that it is not profitable for a second firm to enter and compete.

7. Economic situation when there is large number of buyers and sellers who are free to enter and exit the market and have complete information on the prices being asked and offered in other parts of the market.

8. A government agency is the sole provider of a particular good or service and competition is prohibited by law.

9. The opportunity to buy and sell goods and services.

Exercise 3. Synonyms

Match each verb in column A with a verb in column B that has similar meanings.

A B

1. gather a. function

2. buy b. be based

3. wish c. consider

4. contact d. come together

5. create e. differentiate

6. distinguish f. scrutinize

7. operate g. get in touch

8. examine h. establish

9. regard i. loan

10. require j. consent

11. receive k. get

12. lend l. want

13. rest upon m. purchase

14. agree n. need

 

Exercise 4. Are you good with money?

 

a. Fill in the gaps with the correct preposition from the box.

for on in with by for

 

How to be good with money.

1. Don’t spend money _____ things you don’t need.

2. Don’t invest _____ risky stocks and shares.

3. Don’t pay _____ everything by credit card.

4. Save money _____ shopping in hypermarkets.

5. Shop around _____ low prices.

6. Be careful _____ your money. Find the lowest prices!

Add at least 3 suggestions of your own.

b. Fill in the table using the words from the box.

 

launder credit card invest stocks and shares earn borrow counterfeit lend change make coin save exchange note currency raise donate token bill spend

 

Forms of money credit card

MONEY

What we can do with money launder

 

c. Complete some of the questions with the words from the table.

 

1. Pay all your credit card b_____ immediately.

2. I_____ over 30% in a pension.

3. Give or l_____ money to friends and family.

4. S_____ over 50% of the money in a bank.

5. Buy s_____ and sh_____ of Microsoft.

6. E_____ dollars for euros.

7. S_____ a lot of money on a Mazzeratty.

8. Buy ancient c_____.

9. S_____ all the money on design clothes and jewellery.

10. D_____ 50% to a charity working in Africa.

11. Travel around the world for three months.

 

You win $1.000.000 in the lottery. How do you plan to spend money? Choose three of the above.

 

 

d. Read the information below to find out if you are good or bad with money.

 

· If you choose 1, 2, 4, 5, 6, 8 you are a person who is very careful with money.

· If you choose 7, 9 and 11 you are probably not good with money and may like to spend too much too quickly! Perhaps you need to be more careful/

· If you choose 3 and 10 you are probably a very generous person.

· Most people probably choose a balance of the above – to spend a little, save a little and give a little. In our opinion, balance is the most sensible option!

 

 

Exercise 5. Crossword: Money Matters.

 

Read the given definitions and fill in the crossword puzzle.

 

Across 4. money paid to workers by the hour or week6. money returned to you after you pay too much7. money paid as charges on the money you borrow9. money paid for professional services Down 1. money paid to workers for a month's or year's work2. money paid to older people who no longer work3. money paid for the place to live5. money paid for a trip by bus, train or plane6. money in coins and bills, not credit cards8. money paid to the government

 

 

Exercise 6. Collocations

 

a) Match each verb on the left with a noun on the right to form common partnerships. Use each word once only.

 

take work

contact place

accept credit

provide a wage

offer activities

corner the capital

restrict money

undertake people

receive the price

issue the market

b) Use some of the word combinations in suitable form to complete the following sentences.

1. Organisations that _____ _____ are merchant banks, investment banks and special institutions.

2. When a company _____ _____ it purchases a security or a commodity in such volume as to achieve control over its price. It’s an illegal practice.

3. Bank Indonesia Governor Burhanuddin Abdullah said that bankers should start _____ long term _____ to the country's shipbuilding and shipping companies as the monetary sector has regained its stability.

4. The Fair Trade Law _____ _____ of enterprises, such as an act by an enterprise that enters into a contract, agreement, or other forms of mutual understanding with other enterprises with whom it competes to jointly determine the prices of goods or services.

5. The Constitutional Convention of 1787 took away from the states the power to _____ _____, thus protecting creditors from inflation caused by paper currency.

 

 

Exercise 7. Change verbs in each sentence to their antonyms from the box in the suitable form to make the sentence logically correct.

adequate buy dislike interested in build up fluctuate lend to combine

1. Acts of trust destroy the system of which bankers, depositors and borrowers are part.

2. The bank borrows the deposited money from customers who need capital.

3. Coins are unsuitable for small transactions.

4. Many governments are pleased when companies try to 'corner the market'.

5. Capital, labour and enterprise separate to make a new business successful.

6. Economists are not concerned with measuring the services which people render to each other.

7. Demanders enter the market in order to sell goods or services.

8. In a free market, prices are stable.

 

Exercise 8. Answer the following questions. The first letters of each answer will make up the name of a financial term.

 

1. What is desire and ability to buy shown by consumers called?

2. Who obtains net profits after paying all expenses arising out of their business activities?

3. What term describes the value of money as measured by the quantity and quality of products and services it can buy?

4. What do we call a market that is freely accessible to all investors or consumers?

5. What do we call quantities of goods and services that sellers are willing to offer at various prices at a given time and place?

6. What is an undesirable situation in economy when there is a decline in the value of money, in relation to the goods and services it will buy?

7. What do we call any agreement between a vendor and a consumer for provision of a good or service?

 

Exercise 9. Phrasal Verbs

A phrasal verb consists of a verb and a preposition or adverb that modifies or changes the meaning; 'give up' is a phrasal verb that means 'stop doing' something, which is very different from 'give'.

Study the phrasal words given below and complete the sentences which follow. Use each phrasal verb once only.

use to put into service or apply for a purpose

use up to consume completely

used to a habitual way of behaving in the past

serve to be in the service

serve as to act as; to take the place of

serve out to deal or distribute

serve up to bring to table

serve with supply

take to get into one's possession

take after to resemble (e.g. a parent) in appearance or characteristics

take apart to separate into component parts

take away to subtract; to carry somewhere else, remove

take back to retract, withdraw; to return to an original position

take for to consider mistakenly

take off to remove, detach

take on to undertake or begin to handle

take out to remove from within; to extract

take over to assume control, management, or responsibility

take up to lift, to raise or collect

 

1. Soup should be _____ __ very hot.

2. After company downsizing, he had to _____ __extra responsibilities.

3. We _____ __ all our money to buy a new cottage.

4. Shop assistant _____ __ the items which I decided not to buy.

5. Dover _____ as a key to Britain.

6. As his father died, Mark _____ __ the family business.

7. This _____ __ be the best market in town.

8. The lift _____ us __.

9. Mrs. Brown _____ ___ her father in her attitude to business.

10. Don't _____ silence __ approval.

11. No application forms have not been _____ __ yet.

12. We have to _____ __ the whole engine to find the failure.

13. I watched as he was _____ the bonds ___ of his attaché case.

14. The customer was _____ ___ all necessary goods.

15. After the meeting, Mr. Brown was _____ __ to the hotel.

Exercise 10. Complete the text using the words from the box in the necessary form.

objective reserves member system information institution price policy operation role