Grammar for students to understand business English. Ч.3

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Grammar for students to understand business English. Ч.3

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Л.Л. Курченко О.В. Ермолова

ENGLISH FOR BUSINESS COMMUNICATION Учебное пособие для экономических специальностей

Часть III Рекомендовано к изданию Научно-методическим советом института

Липецк 2007

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ББК 81.2 Англ.я 73 К 93

Рекомендовано к изданию кафедрой гуманитарно- социальных дисциплин Протокол № от

Составители: Курченко Лидия Леонидовна, старший преподаватель кафедры гуманитарно-социальных дисциплин Липецкого кооперативного института Ермолова Ольга Викторовна, к.п.н., старший преподаватель кафедры гуманитарно-социальных дисциплин Липецкого кооперативного института Рецензент: Кузовлев Владимир Петрович, к.п.н., профессор, начальник отдела АСУП издательства «Просвещение» К 93

Курченко Л.Л., Ермолова О.В., English for business communication. Учебное пособие для экономических специальностей. Часть 3./ Л.Л. Курченко, О.В.Ермолова, - Липецкий кооперативный институт (филиал) БУПК, Липецк 2007 – с.

Учебное пособие содержит тексты, лексические и функциональносмысловые таблицы, лексико-грамматические упражнения для самостоятельной работы студентов с текстами, ситуативные упражнения. Пособие предназначено для студентов экономических специальностей. © Липецкий кооперативный институт, 2007

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CONTENTS Введение Unit 1. Finance and economics I.Starting-up II.Indicators 1 III.Indicators 2 IV.Unemployment V.Inflation VI.Inflation and deflation VII.Gross domestic product VIII.Measuring economic activity IX.Markets and competitors X.Markets XI.Organised markets XII.The economic environment XIII.Microeconomics. Macroeconomics. XIV.The law of demand and supply. XV.Activity Unit 2.Finance I.Starting-up II.Personal finance III.Financial centres IV.Financial institutions V.Cash cycle Vi.Sources of finance VII.Share capital and debt VIII.Success and failure IX.Mergers, takeovers and sell-offs X.Capital, interest and profit XI.Activity Unit 3.Money and banking system I.Starting-up II.Glimpses of history of money III.Banking system IV.Introduction of banking and financial markets V.Money: real and counterfeit

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VI.Different kinds of money VII.Various services of banks VIII.Monetary system and monetary policies IX.Activity Unit 4. Accounting I.Starting-up II.The bottom line III.Accounting IV.Bookkeepers, accountants, auditors and controllers V.Assets, liabilities and the ballance sheet VI.Accounts and ballance sheet VII.Government accounting VIII.Effective government accounting IX.Activity Unit 5.Foreign Trade I.Starting-up II. Foreign Trade III.Types of payments in foreign trade IV.Customs tariffs in Russia V.International business VI.Activity Unit 6.World organisations I.Starting-up II.The world trade organisation III.International monetary fund:objectives and history IV.The world bank V.Activity Literature

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UNIT 1. FINANCE AND ECONOMICS. I. STARTING-UP. 1. Increase your vocabulary a) There is a set of words related to the “economics, produce”. Form all possible words. Translate them into Russian. y ics econom ic al ly ise/ize ist e produc


r iv(e) ion


2. Use these words in the suitable blanks in the sentences below: Put one of the given words in each sentence. production, economize, productivity, economic, produce, economy, product, economical, productive, producer, economics 1. The state of the ______________ is very worrying. 2. Larger tubes of toothpaste are more ________________. 3. We are spending too much money – we must ________________. 4. _______________ is well taught at our institute. 5. The government’s _____________ policy is seriously criticized. 6. A fashion house has _______________ well – styled casual clothes. 7. Small – scale egg ______________. 8. The company has launched a new ______________. 9. _______________ of the new aircraft will start next year. 10. It wasn’t a very ________________ meeting. 11. Our ________________ is only about 40% of Japanese levels. II. INDICATORS 1 1. Study the main indicators of economics A. Finance and economics Finance is: • money provided or lent for a particular purpose.

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• the management of money by countries, organizations or people. • the study of money management. High finance involves large amounts of money used by governments and large companies. A person's or organization's finances are the money they have and how it is managed, etc. The related adjective is financial. Economics is: • the study of how money works and is used. • calculations of whether a particular activity will be profitable. Related adjectives: a profitable activity is economic; an unprofitable one is uneconomic. If something is economical, it is cheap to buy, to use or to do. If not, it is uneconomical. Economic indicators (see В, С and D below) are figures showing how well a country's economy (economic system) is working. B. Inflation and unemployment Inflation is rising prices, and the rate at which they are rising is the inflation rate. The related adjective is inflationary. The unemployed are people without jobs in a particular area, country, etc. The level of unemployment is the number of people without a job. Unemployed people are out of work, and are also referred to as jobless (adj.) or the jobless. C. Trade The balance of payments is the difference between the money coming into a country and that going out. The trade balance is the difference between payments for imports (goods and services from abroad) and payments for exports (products and services sold abroad). When a country exports more than it imports, it has a trade surplus. When the opposite is the case, it has a trade deficit. The amount of this surplus or deficit is the trade gap. D Growth and GDP Economic output is the value of goods and services produced in a country or area. Gross domestic product or GDP is the value of all the goods and services produced in a particular country. The size of an economy is also sometimes measured in terms of gross national product or GNP. This also includes payments from abroad, for example, from investments. Growth is when output in the economy increases. The growth rate is the speed at which a company's economy grows and gets bigger.

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E Deflation Deflate, means to reduce the amount of money being used in a country in order to lower prices to keep them steady. The government were forced to deflate. Deflation is the act or process of deflating or being deflated. III. INDICATORS 2 A. Going up You use a number of verbs to describe amounts or figures going up. = Shares in 4. UNEMPLOYMENT = The 1. BT SHARES number of ADVANCE IN BT increased LEAPS in value. people ACTIVE without work TRADING has gone up quickly. = The value 5. YAHOO! SOARS AS = Shares in 2. TRADE of export Yahoo! have SURPLUS INTERNET over imports increased JUMPS TO EXPLOSION has gone up greatly in RECORD CONTINUES quickly. value. LEVEL = Petrol 3. PETROL 6. VW PROFITS UP AS = Profits in prices are VW have PRICES SET TO CAR SALES going to rise increased SKYROCKET CONTINUE TO by a lot. thanks to SURGE rapidly rising car sales. B. Going down You also use a number of verbs to describe amounts or figures going down. = A defence = Sales in shops 7. 1,000 JOBS 10. company has told SEPTEMBER have fallen a lot AXED AS 1,000 factory DEFENCE RETAIL SALES in September. employees that PLANT PLUMMET they are to lose CLOSES their jobs. = The ECB has = The 8. EUROPEAN 11. GOVERNreduced interest government has CENTRAL MENT rates. reduced income BANK CUTS SLASHES

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tax by a large INCOME TAX amount. TO TEN PER CENT = Megacorp’s = The euro 12. EURO share price has DIVES TO NEW currency has gone down fallen to its than LOWS slightly after they lowest value ever. PROFITS said that profits WARNING would be lower expected

C. Look at these headlines containing words from A and B opposite and say whether the statements about them are true or false. 1. VENDOME JEWELLERY AND 1. Sales have risen by a small WATCH SALES LEAP amount 2. STERLING PLUMMETS AS 2. The British pound has fallen US DOLLAR WEAKENS a lot in value, but the US dollar has fallen less. 3. ELI LILLY SURGES ON HOPES 3. The share price has FOR DRUG APPROVAL increased because one of the company’s new drugs will probably be approved for use. 4. AMB JUMPS 13% ON BID HOPES 4. Shares in AMB have fallen because it may be a takeover target. 5. JAPANESE TRADE 5. The difference between SURPLUS SOARS Japanese imports and exports has increased a lot. 6. PARADISO PRESIDENT AXES 6. The president has asked the FINANCE MINISTER finance minister to stay in his job. 7. POLES AIM TO SLASH 7. The Polish government wants NEXT YEAR’S BUDGET to reduce the difference between

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what it spends and what it receives. 8. Prices in Paradise have risen sharply.


D. Peaks and troughs. If a figure rises to a level and then stops rising, remaining at that level, it levels off and remains steady or stable. If a figure reaches its highest level - a peak - and then goes down, it peaks at that level. If it reaches its lowest level - a trough - and then bottoms out, it falls to that level and then starts rising again. E. Boom and bust. Demand is the amount of goods and services that people want in a particular period. A boom is when there is rising demand, and other indicators are strong. Stagnation is when the economy is growing slowly, or not at all. Stagflation is when slow growth is combined with prices that are increasing fast. Recession is a period when there is negative growth, a period when the economy is producing less. A slump is a very bad recession. A depression is a very bad slump. F. Complete the crossword with expressions from C and D opposite.

1 5




6 7 8

9 10 11

Across 1. The worst possible economic situation. (10) 5. Inflation …….. when it reaches its highest level. (5) 9. When unemployment stays as its highest it ……………. . (6,3) 11. When output starts rising from its lowest level it …………. . (7,3) Down 2. A period when the economy is not healthy. (9) 3. Worse than 2 down, but not as bad as 1 across. (5) 4. During a recession, there is ………. growth. (8) 6. Rising prices without rising growth. (11) 7. A very slow economy. (10) 8. If inflation doesn’t change, it remains ………… .(6) 10. A very positive economic situation. (4)

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IV UNEMPLOYMENT 1. Read and say what the text is about. Consult a dictionary. We say that unemployment exists where people capable and willing to work are unable to find suitable paid employment. But where an economy is adapting to changing conditions, there will always be some persons unemployed as they change jobs or as seasonal work comes to an end. Unemployment may occur for many different reasons. There will always be some people changing jobs. In certain occupations, e.g. unskilled labour in the construction industry, workers are not employed regularly by one employer. When a contract is completed labour is not required. Occasionally workers are discharged when a factory is being reorganized. Unemployed workers usually register at the local employment exchange from which employers can hire them. The unemployed are paid certain benefits. Employment in some industries, e.g. building, fruit picking, is seasonal in character. Seasonal employment can be reduced out of «season» and admit such persons as students and housewives during the busy period. Sometimes there are unemployed workers of a particular occupation in one part of the country but a shortage of the same type of work in other parts. Thus today there is a surplus of unskilled and manual labourers in the north of England, whereas firms in the London area have vacancies unfilled. Two main reasons can be suggested for this type of unemployment — ignorance of opportunities, and immobility of labour. Workers may be in «between jobs». Some of them are looking for better jobs, others are seeking better salaries. Young people search for their first jobs. This is called «frictional unemployment». This type is usually shortterm and regarded as inevitable. Unemployment may also by caused by important changes in the structure of consumer demand and in technology. As a result some workers find that their skills and experience are unwanted by these changes. This type of employment is more long-term and regarded as more serious. It is known as structural unemployment. 2. Read the text again and answer the questions on it. For questions 15 choose the best answer from A, B, C or D. 1) Does seasonal employment cover… a) workers and the unemployment? c) students and housewives?

b) employers? d) manual labourers?

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2) What does “frictional unemployment” mean? a) important changes in technology and consumer demand b) completed labour c) better jobs, first jobs, better salaries d) changing jobs 3) Structural unemployment emplies … a) unfilled vacancies b) adapting to changing conditions c) unwanted skills and experience d) ignorance of opportunities 4) Why does unemployment exist? a) due to changes in economy b) workers are not employed regularly by one employer c) because of immobility in labour d) young people search for their first job 5) Is unemployment also caused by… a) seasonal employment? b) changes in technology? c) unskilled workers? d) certain benefits? 3. Write the words from this text which have the following meanings. 1. the process of gaining knowledge or skill over a period of time through seeing and doing things rather than through studying 2. a person who does hard physical work that is not skilled 3. people who do not have a job but available to work 4. the number of people without a paid job 5. a job or profession 6. a paid position of regular employment 7. the ability to do smth well 4. Match the preposition with the expressions. Some prepositions may be used more than once: by the local employment for changing conditions to one part of the country in “season” out of many different reasons at these changes the London area certain occupations

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the North of England 5. Choose a word (a-g) that suits best a sentence (1-7). 1. Employment may occur for many different … 2. Employment in some industries is … in character. 3. When a contract is completed labour is not … 4. Unemployment workers usually … at the local employment exchange. 5. Young people … for their first job. 6. The … are paid certain benefits. 7. There will always be some people … jobs.

a) needed b) workless c) altering d) look for e) causes f) temporal g) enrolled

6. Look through the list of phrases below. Arrange them into three groups according to parts of speech (participle, adjective, adverb). unemployment usually seasonal discharged occasionally unwanted required capable busy main

unfilled also different local frictional always unskilled today suitable manual

7. Find in the text and translate: - 2 sentences having modal verbs; - 2 sentences having Participle II. V INFLATION 1. Read the text and say what inflation is and what types of inflation there are. 1. Inflation is generally defined as a persistent rise in the general price level with no corresponding rise in output, which leads to a corresponding fall in the purchasing power of money. We shall look briefly at the problems

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that inflation causes for business and consider whether there are any potential benefits for an enterprise from an inflationary period. Inflation varies considerably in its extent and severity. Hence, the consequences for the business community differ according to circumstances. Mild inflation of a few per cent each year may pose few difficulties for business. 2. However, hyperinflation, which entails enormously high rates of inflation, can create almost insurmountable problems for the government, business, consumers and workers. In post-war Hungary, the cost of living was published each day and workers were paid daily so as to avoid the value of their earnings falling. Businesses would have experienced great difficulty in costing and pricing their production while the incentive for people to save would have been removed. Economists argue at length about the causes of, and “cure” for inflation. They would, however, recognize that two general types of inflation exist: demand-pull inflation and cost-push inflation. 3. Demand-pull inflation occurs when demand for nation’s goods and services outstrips that nation’s ability to supply these goods and services. This causes prices to rise generally as a means of limiting demand to the available supply. An alternative way that we can look at this type of inflation is to say that it occurs when injections exceed withdrawals and the economy is already stretched (i.e. little available labour or factory space) and there is little scope to increase further its level of activity. 4. Alternatively, inflation can be of the cost-push variety. This takes place when firms face increasing costs. This could be caused by an increase in wages owing to trade union militancy, the rising costs of imported raw materials and components or companies pushing up prices in order to improve their profit margins. 2. Read the words group. inflation hyperinflation custom firm economy supply

from the text. Which is the odd word out in each price business trade costs bench wages

output rates goods company profit sad

green appearance demand traffic margin services

3. Read the word in bold to complete the second sentence so that it has a similar meaning to the first. a) Mild inflation of a few percent each year may pose few difficulties for business.

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be posed Few difficulties ________________________________ each year for business. b) Economists argue at length about the causes and “cure” for inflation. are said Economists ___________________________________ about the causes and “cure” for inflation. c) Inflation varies considerably in its extent and severity. is changed Inflation ________________________________________ in its extent and severity. d) In post – war Hungary the cost of living was published each day. published Post – war ____________________________________ each day. e) We shall look briefly at the problems that inflation causes for business. are certain We ________________________________________ that the inflation causes for business. f) The consequences for the business community differ according to circumstances. must have The consequences __________________________________ according to circumstances. VI. INFLATION AND DEFLATION 1. Study these notions: 1) deflate – to reduce the amount of money being used in a country in order to lower prices or keep them steady 2) consequence – a result or an effect of sth else; importance 3) stagnate – to stop developing or progressing 4) reduce – to make smth smaller in size, quantity, number, degree, price 5) development – an action or process of developing or being developed 6) growth – the process of growing, development 7) rate – a measurement of how fast or how many times sth happens in relation to sth else

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2. Make up a story. Match the sentences in A with their endings in B. A B 1. An inflationary a) when economic growth decreases or comes to a development halt, but inflation continues to rise. 2. The rising prices 3. The causes of inflation

b) is characterized by rising prices within a certain period of time. c) represents a reduction in the supply of money in comparison with the supply of goods.

4. The consequences of inflation

d) are generally complex and can arise either from the goods or from the monetary side.

5. Inflation becomes stagnation

e) is a consequence of an uneven development in the quantity of goods on offer and the quantity of money available which itself determines the demand and is the inflation rate.

6. If the state does not take measures to combat stagnation,

f) this leads to stagflation.

7. Deflation, the g) are extremely damaging for the economy. opposite development to inflation, VII GROSS DOMESTIC PRODUCT Read the text and make up a graph or chart to compare GDP in the USA and UK. Gross Domestic Product or GDP is the amount of money a country makes from goods and services inside the country for a certain period of time, usually for a year. When GDP is calculated different sectors of economy are analysed.

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In the United Kingdom the following sectors of economy are usually analysed: manufacturing, services (financial, professional and scientific services, leisure and tourism), energy (oil, natural gas, coal) and agriculture. In the United States the following sectors of economy are usually analysed when the GDP is defined: construction and manufacturing, trade and finance, transport, communication and services, agriculture and mining. Speaking, as an example, about one of the recent year’s GDP figures, the following can be quoted: In the UK the services sector accounted for roughly 60 per cent of Gross Domestic Product. Manufacturing sector accounted for a small percentage of Gross Domestic Product. Energy production sector accounted for about 8 per cent of GDP. Agriculture - only for 4 percent of GDP. But the agricultural sector satisfies two-thirds of the country's needs. And only a small fraction of the total population, about 2 percent, are engaged in agriculture. In the USA the construction and manufacturing sector accounted for 40 percent of GDP; trade and finance earned 25 per cent of GDP; transport, communication and services sector earned 20 percent of GDP; agriculture and mining earned 5 percent of GDP. By the way 10 percent of the employed population of the United States is engaged in agriculture.

VIII MEASURING ECONOMIC ACTIVITY 1. Read the text, understand the contents and do exercises on it. 1. There are a large number of statistics produced regularly on the operation of the world's major economies. The UK's economy is no exception in this respect. You will probably have noticed that often the headlines in newspapers or important items on television news programmers relate to economic data and the implications for individuals and businesses. A prime example of this occurs when interest rates are increased: the media responds by highlighting the adverse effects on businesses with debts and householders with mortgages. Data is provided on a wide range of aspects of the economy's operation. Statistics are available to show: the level of unemployment the level of inflation a country's trade balance with the rest of the world production volumes in key industries and the economy as a whole the level of wages

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raw material prices, and so forth. 2. The main statistics illustrating the economy's behaviour relate to the level of activity in the economy. That is, they tell us whether the economy is working at full capacity using all or nearly all, available resources of labour, machinery and other factors of production or whether these resources are being under-utilized. 3. The unemployment figures for the economy give an indicator of the level of activity. As the economy moves towards a recession and a lower level of prosperity it is likely that unemployment figures will rise: An alternative measure of the level of activity is national income statistics, which show' the value of a nation's output during a year. Economists use the term Gross National Product to describe this data. Changes in the level or trends of such key data have great significance for businesses, as we shall see later. 4. There are numerous sources of data on the economy of which we can make use. The government publishes much through the Treasury, Department of Trade and Industry, the Bank of England and the Department of Employment. The Central Statistical Office, which was established during the Second World War, publishes about half of the government's economic data. 5. Much of this is contained in its annual publication, "The Annual Abstract of Statistics". It also publishes the equally valuable "Social Trends" annually. Additionally, private organizations, such as the banks, building societies and universities, publish figures on various aspects of the economy's performance. 6. Economic statistics are presented in many forms, the most common being graphs and tables. Although these statistics can be valuable in assisting managers, they should be treated with some caution when predicting the future trend of the economy and thus .helping the business to take, effective decisions. 2. Match the words to their meanings. 1. statistics 2. data 3. balance 4. wage

a) the amount of something that a person, a machine or an organization produces b) money received over a certain period especially as payment for work or an interest on investments c) the total value of goods and services produced in a country’s economy, not including income from abroad d) facts or information used in deciding or discussing something

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5. indicator

e) the condition that exists when two opposites are equal or in correct proportions 6. income f) a collection of information shown in numbers 7. Gross g) a regular, usually weekly payment made or received for National Product work or services 8. output h) a fixed regular payment usually made every month to employees especially professional or office work 9. salary i) a sign of something; a thing that shows the state or health of something else 3. Decide which noun has a singular or plural form? inflation machinery unemployment government data wages statistics media news business behaviour recession 4. Look at the list of headings A-F and then read the text more slowly. After each paragraph look down the list and choose the heading that fits best. There is one extra heading you don’t need. A Unemployment figures ----1 B Forms of statistics -----2 C Sources of data -----3 D Data -----4 E Level of activity -----5 F Output -----6 G Media 5. Match the following questions (1-5) with their answers (a-e). 1. Why are statistics important for economy? 2. What does the level of activity in the economy show? 3. How are the economic statistics presented? 4. What are the sources of data? 5. Who gives an indicator of the level of activity for the economy? a) The government publishes a lot through the Treasury, Department of Trade and industry, The Bank of England, the Department of Employment, The Central Statistical Office. b) The unemployment figures show the level of economic activity.

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c) Economic statistics include the most common forms as graphs and tables. d) The level of the activity in the economy shows available resources, machinery and other factors of production. e) Data comprises the most important items: the level of unemployment, the level of inflation, a country’s trade balance with the rest of the world, production volumes in key industries and the economy as a whole, the level of wages, raw material prices. 6. Use the word in bold to complete the second sentence so that it has a similar meaning to the first. a) You will probably have noticed that often the headlines in newspapers relate to economic data. are likely You ___________________relate to economic data. b) Data is provided on a wide range of aspects of the economy’s operation. is said Data ______________________of the economy’s operation. c) The Central Statistical Office, which was established during the Second World War, publishes about half of the government’s economic data. published Half of the governments economic data _____________________ during the second world war. d) Economists use the term Gross National Product to describe this data. is used It is __________________________to describe this data. e) Changes in the level of activity in the economy have great significance for business. are certain Changes _____________________________great significance for business. 7. Make questions using the prompts in (a-e). a) measured/ economic/ is/ what/ activity? b) statistics/ what/ main/ illustrate/ the/ do? c) Gross/ economists/ the/ Product/ use/ do/ term/ date/ this/ describe/ national/ to d) are/ the/ sources/ what/ numerous/ data/ of?

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e) forms/ statistics/ what/ are/ economic/ presented?

* 8. Spot the mistakes. Correct each of the sentence. a) There exist a great number of statistics. b) The unemployed is an indicator of the level of activity in the economy. c) Television news relate to economic data. d) That is, they tell to us whether the economy is working at full capacity. e) Economic statistics is presented in many forms.

IX MARKETS AND COMPETITORS Study word combinations connected with the word “market”. Market is the state of trade in a particular type of goods. 1. Companies and markets. You can talk about the people or organizations who buy particular goods or services as the market for them, as in the ‘car market’, ‘the market for financial services’, etc. Buyers and sellers of particular goods or services in a place, or those that might buy them, form a market. If a company: enters penetrates abandons gets out of leaves dominates corners monopolizes drives another company out of

it starts selling there for the first time.

it stops selling there. a market

it is the most important company selling there. it is the only company selling there. it makes the other company leave the market, perhaps because it can no longer compete.

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2. More word combinations with ‘market’. ‘Market’ is often used in these combinations: growth

Market growth Women





Market segments

Market share Tesco



In the late 1990s, Internet use was doubling every 100 days. Market growth was incredible. Women are a particularly interesting target for the Volvo V70. They are an important market segment for Volvo. The Softco software company divides the software market into large companies, small companies, home office users, and leisure users. This is its market segmentation. Among UK supermarkets, Tesco sells more than any of the other chains. It has the highest market share. Tesco is the market leader among UK supermarkets as it sells more than any of the other chains.

3. Competitors and competition. Companies or products in the same market are competitors or rivals. Competitors compete with each other to sell more, be more successful, etc. The most important companies in a particular market are often referred to as key players. Competition describes the activity of trying to sell more and be more successful. When competition is strong, you can say that it is intense, stiff, fierce or tough. If not, it may be described as low-key. The competition refers to all the products, businesses, etc. competing in a particular situation, seen as a group. X MARKETS

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1. Read and say what market is. A market is defined as people with unsatisfied wants and needs who have both the resources and the willingness to buy. There are two major markets in marketing: the consumer market and the industrial market. The consumer market consists of all the individuals or households who want goods and services for personal consumption or use. The industrial market consist of all the individuals and organizations that want goods and services to produce other goods and services or to sell, rent, or supply the goods to other. Cash registers, office desks, public accounting audits, ect. аre examples of industrial goods and services (products). 2. Types of Markets Read the text and make up a chart or table to represent types of markets in the best way. 1. Markets are institutional arrangements that enable buyers and sellers to exchange goods and services. There are two types of markets according to the character of concluded contracts: spot markets (the buying and selling of goods, currency or securities that are available for immediate delivery) and futures markets (the buying and selling of goods, currency or securities for delivery at a future date for a price fixed in advance). 2. There are three types of markets according to their function: commodity markets\exchanges, stock markets\exchanges, foreign exchange markets. Commodity markets\exchanges are the places where raw materials and some manufactured goods are bought and sold for immediate or future delivery. Main terminal markets are situated in London and New York. Terminal markets are the markets dealing mainly with commodities that will be available in the future rather than goods that are available immediately. Most terminal markets are outside the countries that produce the goods. 3. Stock markets\exchanges are the markets where stocks and shares are bought and sold under fixed rules, but at prices controlled by supply and demand. The main idea of stock exchanges is to enable public companies, the state and local authorities to attract capital by way of selling securities to investors. Foreign exchange markets are the markets where foreign currencies are traded.

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4. There is also a market known as securities market. Securities markets, such as New York Stock Exchange, enable businesses and individuals to buy and sell securities such as stocks and bonds. Businesses benefit from securities markets by obtaining the capital they need to begin operations, expand, and buy goods and services. Securities markets also offer businesses a way to earn additional funds with their income by investing in other firms. Investors benefit from the securities market because it gives them a convenient place to buy and sell stocks and bonds. XI ORGANISED MARKETS Read the text and say which answer A, B, C or D fits best each space. Organised markets are usually 1______ in premises where business is transacted 2__________ to a prescribed set of rules. Sometimes only members are 3_____________ to the market. Organized markets or produce exchanges have been 4________________ for cotton, wool, tea, coffee, wheat, rubber, timber, tin, copper and 5________ other commodities. Thus there are 6________ commodity exchanges as Sugar Exchange, Metal Exchange, Wheat Exchange and others. There are two types of organised markets:  sport market  forward or futures market Spot market 7______ in actuals, the actual physical product, for immediate delivery. In forward or futures markets the commodity 8____ be bought or sold for delivery at some time in the future. Forward prices can be 9________ or lower than the spot prices. In a forward or futures market traders take an option 10________ or sell the product in the future. Traders know 11______ prices can change, so they hedge by balancing their buying and selling of actuals and futures to protect themselves against 12_______. Organised markets 13_________ financial markets, which in their turn include the stock exchange, and foreign exchange market or Forex. a 1. being held 2. according



held otherwise

holding at a time

d to hold by

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3. admit 4. exchanged 5. some 6. so 7. deals 8. may 9. higher 10. buying 11. what 12. waste 13. is including

admitting cancelled any such makes ought to more higher to buy that expenditure include

admitted provided the as enriches need high to have bought than loss includes

have admitted established an like provides can highest buy then sum included

4. Securities Market to be Modernized 1) Read the text and say what a new payments system is like? A new payments system at the Interbank Credit Union will be put in force as early as September. Andrei MEDVEDEV, Moscow News The Interbank Credit Union (ICU) is a club of leading creditors, set up to create an effective payments system in the money market, especially state securities. The ICU was founded by nine leading Russian banks: Vozrozhdeniye, Imperial, Inkombank, Menatep,

Mosbizncsbank, MfK, ONEK -SlMbank, Stolichny and Tokobank. The savings bank Sberbank and Rossiisky Credit have declared their readiness to join the ICU. The creation of a new depositoryclearing system is based on the need to improve the securities market. Today, not a single company has been able to assess of the dynamics of their clients investment portfolio, analyze "depo" accounts, grant loans with securities, or process mortgage and trust

operations All of that will be granted by the ICU are not new. The leading international clearing centers such as Euro clear (Brussels) and Cedel (Luxemburg) already provide them. At the end of each day accounting is performed, after which the system announces the sum of final settlements between banks and the Central Bank. On the one hand, it will contribute to a faster movement of money because it eliminates several links in the payments chain. On the other hand, in order for the system

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to function, the balance must be zero each morning and evening. If there is a non-payment, it is impossible to find who is guilty by the clearing process. Hence it is impossible to close the trading day. To avoid this outcome, an ICU guarantee fund has been set up, consisting of constituent, entrance,

and annual fees from participants. The money received by the guarantee fund is used to buy highlyliquid securities. Mikhail Lilyavsky, chairman of the Board of the Interbank Credit Union, believes that the ICU will not only bring the securities market up to a new level, but will also ensure that payments

are made within one day, which has so far only been a dream for Russian bankers. Taking into account the influence of founder-banks on the state securities market, the ICU can very well claim to be a national dealing system. If so, its positive contribution may soon become a reality.

The Payment Scheme in the ICU System

2) Imperial and Menatep became bankrupt. Why? 5. Foreign exchange markets and exchange rates. Read the (§1). Some of the lines are correct and some have a word which should not be there. Tick (v) the lines which are correct and underline the unnecessary word. The first one is done for you. 1. All the foreign exchange transactions resulting from international trade in goods and services, and international demand for, and financial assets are converge on the foreign exchange market where national currencies are exchanged for a one another. Since banks conduct the foreign exchange conversions associated with the said transactions on the behalf of

1.___the___ 2._________ 3._________ 4._________ 5._________ 6._________ 7._________ 8._________ 9._________ 10.________

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domestic and foreign customers, the banks are the main players on at the foreign exchange market. The volume of actual foreign exchange transactions is dominated by those between of the banks themselves, so that greater part of the foreign exchange market is an interbank market. The leading foreign exchange markets are London, New York and Tokyo. The foreign exchange departments of banks to maintain continuous contact with one another and with these foreign exchange markets. Read the §2 and use the words at the end of each line to Form a word that fits in the space in the same line. 2. The price at which one currency is _________for another is called the «exchange rate». This is the ratio (relative price) which ________ how much domestic currency has to be paid for one unit of _________ currency, e.g. the value to a Dutch person of a dollar _________ in guilders is the current exchange rate of the dollar. ________ trade in goods and services and financial transactions are shown on the balance of ______ of the countries in question. Although the balance of payments entries can give an __________ of this, they cannot provide the definitive answer. One reason why this is so is that transactions in which the foreign exchange acquired is replaced by a ________ foreign currency are not ________ on the final balance of payments summary because equal debit and ________ items cancel one another out.

1.Exchangeable 2.Indication 3. Foreigner 4. Expression 5. Nation 6. Pay 7. Indication 8. Provision 9. differ 10. Enterance 11. Creditor

Translate §3 into your language but not word for word. 3. Moreover, the speed of dealing and the large number of operators on the foreign exchange markets make it virtually impossible to keep an accurate record. That is why monetary authorities use occasional surveys of international banks involved in foreign exchange transactions to try to ascertain the total volume of business on international foreign markets. XII THE ECONOMIC ENVIRONMENT

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1. Before reading the text study vocabulary notes below it. Then read the text again and do exercises on it. The economy comprises millions of people and thousands of firms as well as the government and local authorities, all taking decisions about prices and wages, what to buy, sell, produce, export, import and many other matters. All these organizations and the decisions they take play a prominent part in shaping the business environment in which forms exist and operate. The economy is complicated and difficult to control and predict, but it is certainly important to all businesses. You should be aware that there are times when businesses and individuals have plenty of funds to spend and there are times when they have to cut back on their spending. This can have enormous implications for business as a whole. When the economy is enjoying a boom, firms experience high sales and general prosperity. At such times, unemployment is low and many firms will be investing funds to enable them to produce more. They do this because consumers have plenty of money to spend and firms expect high sales. It naturally follows that the state of the economy is a major factor in the success of firms. However, during periods when people have less to spend many firms face hard times as their sales fall. Thus, the economic environment alters as the economy moves into a recession. At that time, total spending declines as income falls and unemployment rises. Consumers will purchase cheaper items and cut expenditure on luxury items such as television and cars. Changes in the state of the economy affect all types of business, though the extent to which they are affected varies. In the recession of the early 1990s the high street banks suffered badly. Profits declined and, in some cases, losses were incurred. This was because fewer people borrowed money from banks, thus denying them the opportunity to earn interest on loans, and a rising proportion of those who did borrow defaulted on repayment. These so-called “bad debts” cut profit margins substantially. Various forecasters reckoned that the National Westminster Bank’s losses in the case of Robert Maxwell’s collapsing business empire amounted to over £ 100 million. No individual firm has the ability to control this aspect of its environment. Rather, it is the outcome of the actions of all the groups who make up society as well as being influenced by the actions of foreigners with whom the nation has dealings. Vocabulary Notes: to comprise – включать в себя, составлять local authorities – местные органы власти

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to take decisions – принимать решения to play a prominent part – играть заметную (значительную) роль to shape the environment – формировать обстановку, среду, окружение to predict - предсказывать to be aware – осознавать, знать to cut back on spending – сокращать расходы enormous implications – большое значение, смысл, влияние general prosperity – всеобщее процветание to enable smb to do smth – делать возможным для кого-то, позволять кому-либо делать consumers - потребители to alter - изменяться a recession - упадок total spending – общие, суммарные расходы to decline - снижаться income - доход unemployment - безработица to purchase - покупать to cut expenditure – сокращать расходы luxury items – предметы роскоши to affect - влиять the extent - степень to some extent – в некоторой степени the high street banks – центральные банки to suffer badly – сильно пострадать profits - прибыль to incur losses – нести убытки, потери to borrow from – занимать, брать взаймы to deny the opportunity – лишать возможности to deny - отрицать to earn interest получать процентный доход loans – ссуды, займы to default on repayment – не выполнять обязательств по выплате (долгов, процентов и т.п.) a debt - долг profit margins – размеры прибыли the outcome of the actions – результат действий to make up society – составлять общество to have dealings – иметь торговые (деловые) связи

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2. Answer the questions. 1) What does the economy comprise? 2) What’s a boom in the economy? What characterizes the state of the economy at that time? 3) What happens when the economy moves into a recession? 4) What is “bad debts”? 5) What happened to some banks in the early 1990s and why? 3. Replace parts in italics by synonyms. а) take decisions, purchase cheaper items, the economy is difficult to predict, cover, suffer, business, influence, lower; б) the economy comprises millions of people; losses were incurred; the nation has dealings; losses amounted to over £ 100 million. 4. Fill in gaps with the words and expressions from the text. 1. The economy is complicated and difficult to ___. 2. When the economy ___, firms experience high sales and ___. 3. The economic environment ___ as the economy moves into ___. 4. Changes in the state of the economy ___ all types of business. 5. During a ___ fewer people borrowed money from banks, thus ___ to earn interest on ___. 6. So-called “bad debts” cut ___ substantially. 7. The economic ___ is ___ of all the groups who make up society as well as ___ of the actions of foreigners with whom the nation ___. 5. Find in the text English equivalents for the following: играть заметную роль; формировать среду; сокращать расходы на… (2 вар.); сократить размеры прибыли; переживать подъём; переживать тяжёлые времена; прийти в упадок; доходы падают (2 вар.); нести убытки; состояние экономики; иметь большое значение для бизнеса в целом; отсюда, естественно, следует; лишать возможности; результат действий; не выполнять обязательств по уплате. 6. Translate §2, 6 into Russian.


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1. Read the text and say what the text is about. First study vocabulary notes below the text. The word macroeconomics means economics in the large. The macroeconomics concerns with such global questions as total production, total employment, the rate of change of overall prices, the rate of economic growth and so on. The questions asked by the macroeconomists are in terms of broad aggregates — what determines the spending of all consumers as opposed to the microeconomic question of how the spending decisions of individual households are made; what determines the capital spending of all firms combined as opposed to the decision to build a new factory by a single firm; what determines total unemployment in the economy as opposed to why there have been layoffs in a specific industry. Macroeconomists measure overall economic activity; analyze the determinants of such activity by the use of macroeconomic theory: forecast future economic activity; and an attempt to formulate policy responses designed to reconcile forecasts with target values of production, employment and prices. An important task of macroeconomics is to develop ways of aggregating the values of the economic activities of individuals and firms into meaningful totals. Macroeconomics is concerned with the attainment and maintenance of full employment, and price stability. Microeconomics means economics in the small. The optimizing behavior of individual units such as households and firms provides the foundation for microeconomics. Microeconomics may investigate individual markets or even the economy as a whole, but their analyses are derived from the aggregation of the behavior of individual units. Microeconomic theory is used in industrial organization, labour economics, international trade, labour cost - benefit analysis and so on. The microeconomists are interested in the determination of individual prices and relative prices (i.e., exchange ratios between goods), whereas the macroeconomist is interested more in the general price level and its change over time. Optimization plays a key role in microeconomics. The consumer is assumed to maximize utility or satisfaction subject to the constraints imposed by income or income earning power. The producer is assumed to maximize profit or minimize cost subject to the technological constraints under which the firm operates.

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Opportunity cost is an important concept in microeconomics. Many courses of action are valued in terms of what is sacrificed so that they might be undertaken. Vocabulary notes: list – список, перечень vertical – вертикальный horizontal – горизонтальный demand curve – кривая спроса to slope down – спускаться downward – направленный вниз shift – движение to fluctuate – биржевой спрос stock demand – биржевой спрос flow demand – текущий спрос aggregate supply – совокупное предложение forthcoming – предстоящий opportunity costs – альтернативные издержки accountant – бухгалтер

explicit – явный implicit – подразумевающийся to calculate – подсчитывать to convert – преобразовывать shape – форма sufficiently – достаточно rightward movement – движение вправо entire – целый to augment – увеличивать volume – обмен to substitute – заменять complement – дополнение inflationary – инфляционный to a fleet – влиять

2. Read the text again and say what questions macroeconomics and microeconomics deal with. Use these words if necessary. … means … … deals with … … is engaged in … … provide … for … … is concerned with … … investigate … … measure … … is used in … … are interested in … … plays a key role … … is an important concept … 3. Some of these words could be used to describe macroeconomics. Decide which words can be used in macroeconomics. Why? · price stability · individual markets · households and firms · individual price · total employment · the rate of economic growth · forecast future economic activity · optimization · opportunity cost · total production 1. Before reading the text study what demand-and-supply is.

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Supply-and-demand – the amount of goods available and the amount wanted by people. The relationship between these is often regarded as controlling economic activity and prices.

XIV THE LAW OF DEMAND AND SUPPLY 2. Now you are going to read the text about the law of demand and the law of supply. After reading answer these questions. Use vocabulary notes below the text. What questions does demand comprise? What questions does supply rest on? Demand is a key concept in both macroeconomics and microeconomics. Demand is primarily, but not exclusively, a function of price. 1_______. With price on the vertical axis and quantity on the horizontal axis, the demand curve slopes downward from left to right, signifying that smaller quantities are bought at higher price and larger quantities are bought at lower prices. The inverse relation between price and quantity is usually called the law of demand. The law rests on two foundations.2_____________. The other foundation is empirical, with innumerable studies of demand in actual markets having demonstrated the existence of downward - sloping demand curves. 3_____________. In macroeconomic theory, aggregate supply is mainly a function of expected sales to consumers, businesses and governments. In microanalysis supply is manly a function of prices and costs of production A more complex view of the supply curve for a commodity is its relation between quantities forthcoming and the possible current prices of that commodity, its expected future prices, the prices of alternative goods and services, the costs of the producer and time. Incorporated in the supply curve of goods and services are opportunity costs. Economists differ from accountants and from the Internal Revenue Service by including both explicit and implicit costs, or opportunity costs. 4____________. In competitive markets the shape or elasticity of supply reflects time in the production process such as the immediate or market period, the short run, and the long run. Elasticity of supply is the relative change in price that induces a relative change in quantity supplied.

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The supply curve in the short run is less inelastic or more elastic than in the immediate period. The long run permits sufficient time for the producer to increase plant and equipment. 5_______________. 3. Complete sentences in (A) using words in (B).

A 1. In macroeconomic theory, aggregate supply – is mainly a function of … sales to consumers, business and government. 2. The law rests on two … 3. The supply curve in the short run is less in - elastic or more elastic than in the immediate … 4. Incorporated in the supply curve of … and services are opportunity costs. 5. Demand is considered as a list of … quantities. 6. The long run permits sufficient time for the producer to … plant and equipment. 7. In microanalysis supply is mainly a function of prices and costs of … 8. Economists differ from accountants and from the Internal Revenue Service by … opportunity costs.

B a. time

b. merchandise c. enlarge d. manufacturing e. bases f. costs g. containing h. anticipated

4. Now read the missing sentences A-E and choose the one which fits best each gap (1-5). There is one extra sentence which you do not need. A. Supply is the fundermental concept in both macro – and microeconomic analysis. B. The longer time, the greater elasticity supply. C. Implicit costs are mainly business costs for wages, rents, interest. D. One of the theory of the consumer the logic of which shows that the consumer responds to lower prices by buying more. E. Macroeconomics is concerned with the attainment and maintenance of full employment and price policy. F. Demand is considered as a list of prices and quantities with one quantity for each possible price. XV ACTIVITY 1. Three basic types of economic systems

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perfective microeconomics feel various elect methods distribute resultant rely on mores tried-and-true slow undertake status quo perpetuate centralize means limitation choice conflict determine priority czar prune authority emphasize profit motive price thesis encourage outcome incentives efficiency imply priority Read and do exercises on the text in writing. Pre-reading. Check the meaning of the following words in your dictionary. To develop some perfection for a study of microeconomics, it helps to begin with a feeling for what an economic system is and how it works. Various countries have elected to use different methods both in organizing resources in the production process and in distributing the resultant goods and services. Three basic types of economic systems stand out. A traditional economic system relies upon custom, habit, social mores, and tried-and-true methods for achieving economic goals; technology is primitive; changes are slow and production is undertaken in the same way as last year and the year before. Tradition and the status quo are perpetuated. A command economic system relies on public ownership and centralized control of the basic means of production; severe limitations are placed upon individual choice when such choices conflict with government-determined economic priorities, economic plans and activities are under the control of an economic commander-in-chief (a king, czar, prime minister or central planning authority). A capitalistic or market economic system emphasizes private ownership, individual economic freedom, competition, the profit motive, and the price system in the achievement of economic goals. Each economic unit decides what choices and policies are best for it, the thesis being that in encouraging the drive for individual economic self-interest the outcome proves also to be in the overall best interests of society because of the strong incentives for efficiency, productivity; and satisfaction of consumers. After reading. Find true and false sentences.

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1.1 а) Various countries have elected to use different methods in organizing recourses in the production process and in distributing goods and services. б) A traditional economic system relies upon public ownership and centralized control of the basic means of production. с) A market economic system is based on custom, habit, social mores, tried-and-trae methods of achieving goals. д) A command economic system implies limitations of individual choice and priorities of government - determined economy. е) A capitalistic economic system relies on different forms of businesses, economic freedom, profit, productivity and satisfaction of consumers.

1.2 Match a line in a with A line in В to make a phrase. A


B a) emphasizes 1. production process and distribution of goods and services. b) are 2. strong incentives for c) have decided efficiency, productivity to use and satisfaction of d) relies upon consumers. e) proves to be 3. under control of an economic commanderin - chief 4. different methods in organizing, production process and in distributing 5. private ownership, individual economic freedom, competition, profit motive, price system.

Match a word in A with its opposite in B.

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A 

efficiency  satisfaction  individual economic freedom  best  different methods of production  private ownership  individual choice

B  worst  the

same way of production  inefficiency  public ownership  severe limitations  dissatisfaction  central planning

1.4 Spot the mistakes. a) three basic types of economic system stands out. b) various countries have decided use different methods. c) economic plans and activities is under the control. d) each economic unit decides what choices and policies is best. 1.5 Put one of the given words in each of the sentences. decide, emphasize, be, elect, perpetuate, undertake a) Various countries _____ to use different methods in organizing, production process, distributing goods; b) Tradition and the status quo________________________; c) A market economy ________________ price system in achieving the economic goals; d) Each economic unit what choices and policies____________ best; e) Slow changes and production_____________ in the same way as last year and the year before. 1.6 For statements A-D choose the best answer from A, B, C or D. A. command economic system seems to have 1. primitive technology 3. strong incentives 2. profit motive 4. achievements B. Severe limitations are placed upon 1. achieving economic goals 2. distributing the goods

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3. conflicts 4. individual choice C. ________ is based on private ownership, individual economic freedom, competition, the profit motive. 1. a command economic system 2. a traditional economic system 3. a market economic system 4. an individual economic system D. A traditional economic system is based on for achieving economic goals. 1. tried-and-true methods 2. primitive methods 3. individual methods 4. command methods 1.7 Say what you have learned about basic types of economic systems. Use the table. Ι. A market economic system

ΙΙ. decides

ΙΙΙ.  the drive for individual economic selfinterest  upon custom, habit, social mores, is tried-and-true methods  what choices and policies are best are  on public ownership and centralized A traditional economic proves control of the basic means of production  primitive technology, slow changes and system emphasizes production  under control of an economic Each economic unit relies commander-in-chief  private ownership, individual economic A command seems to freedom, competition, the profit motive, economic have price system for achieving economic system goals are placed  to be best because of strong incentives Economic for efficiency, productivity and plans encourages satisfaction of consumers

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controlled economic plans

2. Mixed Economics Read the text and do the translation. Translate into your language not word for word. 1. Command and market economies both have significant faults. Partly because of this, an intermediate system has developed, known as mixed economies. A mixed economy means very much what it says as it contains elements of both market and planned economies. At one extreme we have a command economy, which does not allow individuals to make economic decisions, at the other extreme we have a free market, where individuals exercise considerable economic freedom of choice without any government restrictions. Between these two extremes lies a mixed economy. In mixed economies some resources are controlled by the government whilst others are used in response to the demand of consumers. 2. Technically, all the economies of the world are mixed: it is just the balance elements between market and planned elements that alter. Some countries are nearer to command economies, while others are closer to free market economies. So, for example, Hong Kong has some statecontrolled industries, while Cuba has some privately owned and controlled firms. 3. The aim of mixed economies is to avoid the disadvantages of both systems while enjoying the benefits that they both offer. So, in a mixed economy the government and the private sector interact in solving economic problems. The state controls the share of the output through taxation and transfer payments and intervenes to supply essential items such as health, education and defence, while private firms produce cars, furniture, electrical items and similar, less essential products. 4. The UK is a mixed economy: some services are provided by the state (for example, health care and defence) whilst a range of privately owned businesses offer other goods and services. The Conservative government switched many businesses from being state-owned and controlled to being privately owned as part of its privatization programme. This has taken the UK economy further away from the planned system.

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3. Markets and competitors 1) Choose the best word to fill each gap. Put a circle around the letter, A, B or C of the answer you choose. 1. We are well known in America, but now we want to ……………. the European market. A compete B entrance C penetrate 2. The world’s soft drinks market is …………..................... by Pepsi and Coca-Cola. A dominated B segmented C shared 3. We were …………………….. out of business by the large supermarket chains. A left B driven C abandoned 4. We bought out our only competitor so we could ……………… the market in coffee. A corner B front C edge 5. Our most important market ……………………… is men aged from 18 to 30. A place B share C segment 6. Competition is ……………………. In the fast food business. 2) Complete each sentence by writing in the gap the correct form of the verb given in brackets ( ). 1. In the late 1990s, market …………………….. in the field of computers was incredible. (grow) 2. Our company is the market …………………….. in financial software in the UK. (lead) 3. Today our market …………………….. is about 60% and it is still growing. (share) 4. We investigated market ……………………… and found that there are two main types of user for our product – small to medium companies and private individuals. (segment) 5. We can’t relax because we face stiff ………………………. . (compete) 6. Our next target is to become a key ……………………….. in the US market. (play) 3) Find the answer to each clue to complete the crossword. Some letters have been given to help you.

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Across 1. Enter a market 3. Abandon a market 6. To be the only seller Down 2. Competitor 4. Intense 5. Not tough: ___ -key 1






5 6





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4. Major economic problems Read about major problems that facing developing countries. Say how matters stand in Russia. Major problems facing developing countries are as follows;  Low-productivity agriculture In low-income countries, 70 per cent or more of the labour force works on the land. Tractors and other types of mechanical farm equipment are very scarce. The output per worker in agriculture is extremely low compared with that in Europe and North America.  Poor natural resources Many developing countries have very poor supplies of natural resources. Many of them have soil lacking in fertility, large desert areas and climates which are not favourable to high productivity because they are too dry or too hot. Some developing countries though have been fortunate enough to possess valuable mineral deposits such as oil.  A shortage of capital Most developing countries lack electricity supplies, water supplies, transport and farming equipment, good roads and railways, port facilities and other capital goods. They have very little modern technology.  Large-scale unemployment In developing countries, the rapid growth of population has been accompanied by a large-scale movement of people from the rural areas to the towns and cities. This has created serious unemployment problems, especially among the younger age groups. Underemployment is also a serious problem, For example, ten people may be employed in a job for which only six are needed. Population growth In the great majority of developing countries, the rate of population growth is very much higher than it is in developed countries. This means that it is difficult for them to achieve increases in GNP per head. The graphs below show why population growth rates are high in developing countries and low in developed countries.

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Developing countries


Deaths 1960 I960 1970 1980 1990 2000

Births Deaths

1960 I960 1970 1980 1990 2000

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5. Imports flood Russian markets Read the text and pick up reasons why imports flood Russian markets poverty. Today 45 machines, vacuum According to the million Russians have cleaners, juice figures published by incomes below the extractors, motor units the Institute of the subsistence minimum, and motor cultivators. Consumer Market which is 1.2-fold more The following products and Marketing, the than the corresponding experienced a fall in positive shifts indicator last year. The production by a factor pronounced lately in money received in of two: tape recorders the country's April-May in and VCRs, mixers and economic situation connection with the rise mincing machines, and have not brought in average pensions, as steel enameled about any well as one-lump aide tableware. The considerable changes to veterans for Victory production of sewing in the market of Day, has been mainly machines and Hi Fi goods. spent on the acquisition stoves declined by ________________ of basic needs (above three-fourths. _ all food products), as Moreover, in Marine Leonidova, well as the purchase of comparison with April Special to Moscow seasonal goods, 1994, the rates of News including building production decline materials. even increased on The development of The volumes of some commodities. the commodities production of This applies to market for Cultural commodities for refrigerators and and everyday needs cultural and everyday freezers, televisions and household goods needs and household and sewing machines. is being held back by goods have continued However, there has the continuing rise in to remain below last been an increase in the prices (which the year's level. production of some Institute found in In April 1995, the household radio May to be 12 following products electronic goods. percent), as well as experienced a one-third Among the 16 the population's low drop in production: commodity groups purchasing capacity refrigerators and being monitored, owing to widespread freezers, washing imported articles have

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come to play an increasing role in trade. This especially concerns household electronics. The share of foreign articles in individual groups of commodities is high and comes to 58

percent for audio cassettes, 67 percent for portable color TV sets, 71 percent for video cassette recorders, and 89 percent for video cassettes. In the opinion of experts, unless Russian producers can soon

offer competitive products, they will cease to exist. And Russia will become a unique example of a large-scale consumer market without domestic production.

6 Small Firms Still Face Serious Troubles 1) Read the text and express the main idea of it. Over half a million premier of Moscow, Russia producing 10citizens will become called the development 15 percent of the unemployed this year, of small business a task GNP. This ratio is specialists in the of state concern. still far from Western Moscow Region People who were practice but this kind employment office said deprived of their usual of activity has only recently. jobs will be able to find officially existed in a new Russia for seven or Marina themselves eight years. It had to SOKOLOVSKAYA, activity. Seventy percent of the force its way Moscow News population is involved through. Although its These figures were in small business in share in the credit announced at the developed countries. side of the Moscow conference entitled And the share of small budget is 50 percent, "Small Business in the enterprises in Russia's now, it still faces a Moscow Region." It is GNP accounts for 60 lot of problems. no wonder, therefore, percent. Fifteen million Several state organs that Ernest Bakirov, people are working for are supervising small first deputy vice- small businesses in business: from the

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Finance Ministry to the Moscow Chamber of Commerce, The Moscow Association of Entrepreneurs, the Moscow Fund Supporting Small Enterprise and finally even the Russian State Committee for the Support and Development of Small Enterprise were recently created. However, things do not go smoothly. The speakers cited the uncertainty of legislation and the shortsightedness of the government's tax policy. The bulky system of accounting and a lot of bureaucratic obstacles also stifle small businesses. However, it is licensing and tax relations that pose the greatest hurdles. Alexander Ioffe, president of the Moscow fund for small enterprise, says that it is very difficult to start a new business now. At least five million rubles are required to

settle all formal questions. And this does not include expenses for equipment, rent and renovation. How can a person who has received a miserable salary during recent months cope? Thus the beginners are inevitably committed to illegal activities to earn their initial capital. Here they fall under the power of crime. The situation became even worse after the president's decree on small business was issued. The document prescribed a very high threshold of statutory capital for a limited partnership. It was planned that this money would secure the responsibility of these enterprises before their clients. In fact, however, the one who wanted to cheat his prospective clients can easily find the necessary sum, as opposed to the honest one who really decided to start his own modest

business. Our legislation is not very quick to foresee its consequences. This also applies to the existing tax legislation in the field of small business. Accountants are snowed under documents while more amendments and explanations appear to the laws passed. Small enterprise often consisting of 3-4 people cannot afford a qualified audit. That is why they are the first to be caught by the tax police. Today they talk about facilitating the tax system for small businesses. Enterprises are expected to pay in accordance with the proposed profits. However, it goes without saying that if the divergence is in favor of the enterprise the state will get the difference plus the Central Bank's rate. On the other hand, if the

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divergence happens to be in favor of the state it will hardly return funds to the enterprise's account. Nevertheless, some positive changes in small business took place, said Alexander Ioffe. The fund for support promoted several leasing companies. Ioffe maintains that aid for

equipment should become the basic way of support. Consulting firms have begun to appear in Moscow but their services cost a lot and many beginners cannot afford them. That is why the Agency for the-Support of Small Business was created. Such educational centers will open in every

prefecture over the rest of the year. The fund has developed a draft law on supporting small business. The document passed in the State Duma. Its authors consider the increase in support of small business at the expense of municipal budgets as a key factor.

2) A newspaper asked its readers a simple question. Look through some of the answer they received and answer questions below after reading the text again. Questions: 1) Why do small firms still face a lot of serious problems? 2) What does the government do to support small business?

Answers: •to face a lot of problems • to stifle small businesses

• to pose the greatest hurdles • to provide with equipment • to be caught by the tax police • to find themselves in a new activity • to become the basic way of support • to afford a quality audit • to be involved in small business in developed countries • to be existed for seven or eight years • to cite the uncertainty of legislation and the shortsightedness of the government’s tax policy • to facilitate tax system • to be committed do illegal activities

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• to pay in accordance with the proposed profits

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3) Read the text again. For statements 1-5 choose the answer A, B, C or D which you think fits best the text. 1. Small businesses in Russian produce 10-15% of the GNP because: a) things do not go smoothly b) it is difficult to start a new business now c) it is required to settle all formal questions d) they are still very young 2. The beginners inevitably fall under the power of crime because: a) licensing and tax relations pose the greatest hurdles b) the state will get the difference plus the Central Bank's rate c) our legislation is not very quick to forsee its consequences d) several state organs are supervising small business 3. The government intends to support small business: a) to facilitate the tax system b) to supply with equipment, rent c) to provide with qualified audit d) all the three statements 4. Consulting firms have begun to appear in Moscow to: a) stifle small business b) educate small business c) secure responsibility in small business d) force its way through 5. It is difficult to start a new business now because of: a) its usual jobs b) the system of accounting and a lot of bureaucratic obstacles c) amendments and explanations of the law d) municipal budgets 7 Car giant sends in the spy girls 1) Read the text paying no attention to gaps and say what it is about. --------------------By DAVID BENSON Motoring Editor --------------------1. Ford has set up a female spy team 1_____ dealers and make sure they treat women car buyers seriously and with respect. The company 2_____ women now buy four out of every 10 new cars sold in Britan.

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3. This is the 3________ proportion in Europe where the women buyers share averages three in ten. 4. And Ford says the proportion of women buyers 4____________ to increase in the next decade. 5. The company’s International women’s Marketing Panel will ensure that 5______ products and service meet the needs of female customers and that they get a fair deal. it claims to be 6_____ only European car maker to have such a panel. 7. The team is made up 7_____ British women Ford workers and others from nine European countries. It has 16 permanent members 8__________ by a sub-committee of 40. “It’s views are keenly 9_________ in research and vehicle appraisal programmers.” said a Ford spokesman. 8. The panel’s members also participate in 10____________ clinics and go on mystery shops’ during which they visit dealerships posing as prospective buyers.” 9. “Reports are then fed back to senior management so that recommendations 11_______ be considered in future plans.” 2) Read the text again and say which answer A, B, C or D fits best each space. a b c d visits to visit to have visited visit 1. says is saying say said 2. high higher highest 3. most highest continue shall continue will continue continued 4. it its it’s it is 5. the a an 6. to at for of 7. supported supporting being supported to support 8. to seek to be sought seeking sought 9. advertised advertising being advertised 10. to advertise can ought are need 11.


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Starting – up. 1) Match the words with their definitions. There is one extra word that you don’t need. 1. creditor 2. goods 3. loans 4. stock 5. debtor

6. overdraft 7. tax 8. share-holder 9. store 10. share 11. lease 12. dividend

a) quantity or supply of something kept for use as needed b) a store of goods available for sale, distribution or use c) a person or company to whom money is owed d) a person who owes money to e) a sum of money lent to somebody by a bank, allowing them to spend more money than is in their account f) a thing that is lent, especially a sum of money g) a part or portion of a larger amount which is divided among several or many people h) money that has to be paid to the government i) an owner of shares in a business company j) a share of profits paid to people who own parts of a company k) l) to permit or obtain the use of something in exchange

2. The following sentences contain phrases connected with the word “finance”. Put one of the given words in each of the sentences. overdraft, capital, cash in, creditor, stock, loan, tax, share, cash and carry, dividend, lease. 1. 2. 3. 4. 5. 6. 7. 8. 9.

May I have________ your bicycle. Everyone who helped got________ in the profits. The shop had a good _______ of camping equipment. _______is also often paid on goods and services. Japan is one of the world’s leading _________ countries. I took out an ______ to pay for my new car. They buy food in bulk at the local __________ The shops are ___________on temporary shortages by rising prices. The company has announced a ____________of 3, 5 pence per share.

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10. He set up a business with a starting __________ of $ 100000. 11. He _________out some of the land (to other members of his family). II. PERSONAL FINANCE Read and study the notions. A. Traditional banking I’m Lisa. I have an account at my local branch of one of the big highstreet banks. I have a current account for writing cheques, paying by debit card and paying bills. It's a joint account with my husband. Normally, we're in the black, but sometimes we spend more money than we have in the account and we go into the red. This overdraft is agreed by the bank up to a maximum of £500, but we pay quite a high interest rate on it. I also have a deposit account or savings account for keeping money longer term. This account pays us interest (but not very much, especiallyafter tax!). We have a credit card with the same bank too. Buying with plastic is very convenient. We pay off what we spend each month, so we don't pay interest. The interest rate is even higher than for overdrafts! Like many British people, we have a mortgage, a loan to buy our house. BrE :current account, cheque account AmE: checking account

B. New ways of banking 'My name's Kevin. I wasn't happy with my bank. There was always a queue, and on the bank statement that they sent each month they took money out of my account for banking charges that they never explained. So I moved to a bank that offers telephone banking. I can phone them any time to check my account balance (the amount I have in my account), transfer money to other accounts and pay bills. Now they also offer Internet banking. I can manage my account sitting at my computer at home. C. Personal investing Lisa again: 'We have a savings account at a building society which is going to be demutualized and turned into a bank with shareholders. All the members will get a windfall, a special once-only payment of some of the society's assets to its members.

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We have some unit trusts, shares in investment companies that put money from small investors like me into different companies. My cousin in the US calls unit trusts mutual funds. I also pay contributions into a private pension, which will give me a regular income when I stop working. I’ve never joined a company pension scheme and the government state pension is very small!' III. FINANCIAL CENTRES 1. Read and study the notions. A. Financial centres Financial centres are places where there are main-banks and other financial institutions. London as a financial centre is called the City or the Square Mile, and New York is Wall Street. Financial centres bring together investors and the businesses that need their investment. A speculator is an investor who wants to make a quick profit, rather than invest over a longer period of time. Brokers, dealers and traders buy and sell for investors and in some cases, for themselves or the organizations they work for. B. Stock markets Heather Macdonald of Advanced Components: 'We needed more capital to expand, so we decided to float the company (sell shares for the first time) in a flotation. Our shares were issued, and listed (BrE and AmE) or quoted (BrE only) for the first time on the stock market. Because we are a UK-based company we are listed on the London stock exchange. Stock markets in other countries are also called bourses. Maybe when our company is really big, we'll issue more shares on one of the European bourses!' Note: You can write stock market or stockmarket; one or two words. BrE: shares/ stocks (countable) and shares AmE: stock (uncountable)

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C. Other financial markets Other financial products include: • commercial paper: short-term lending to businesses. • bonds: longer-term lending to businesses and the government. • currencies (foreign exchange or forex): buying and selling the money of particular countries. • commodities: metals and farm products. These are traded directly between dealers by phone and computer. Commodities are also traded in a commodities exchange. Shares, bonds and commercial paper are securities, and the financial institutions that deal in them are securities houses. D. Derivatives A futures contract is an agreement giving an obligation to sell a fixed amount of a security or commodity at a particular price on a particular future date. An options contract is an agreement giving the right, but not the obligation, to buy or sell a security or commodity at a particular price at a particular future nine, or in a period of future time. These contracts are derivatives. Dealers guess how the price of the underlying security or commodity will change in the future, and use derivatives to try to buy them more cheaply. 2. a) Correct eight mistakes in italics in this article, using expressions from A opposite. Now that a lot of buying and selling can be done over computer networks, (1) breakers and (2) tradesmen do not need to be in one place, and (3) speculists can make money dealing from a computer in their living room. In New York, the area around (4) the South Bronx is traditionally home to many financial institutions, such as the New York Stock Exchange. But many of them have now moved some or all of their offices outside this expensive area. London is one of Europe's most important financial (5) towns: over 500 foreign banks have offices in' London, and its stock exchange is the largest in Europe. But more and more financial (6) institutes are not actually based in

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the traditional area of the (7) Citadel or (8) Mile Square. As in New York, they are moving to areas where property is cheaper. So, will financial centres continue to be as important in the future as they are now? b) Look at В opposite and say if these statements are true or false. 1 'Stocks’ is another name for shares. 2 "Stock market' means the same as 'stock exchange”. 3 Bourses are only found in France. 4 An American would normally talk about shares “quoted” on the New York Stock Exchange. 5 Shares in Company X are being sold for the first time. This is a flotation. c) Use expressions from С and D opposite to describe: 1 a bank that makes companies’ shares available. 2 a contract to buy 500 tons of wheat for delivery in three months. 3 coffee and copper. 4 dollars, euros and yen. 5 lending to a company for less than a year. 6 lending to a local government authority in the form of 10-year investment certificates. 7 shares and bonds, but not currencies or commodities. 8 the London Metals Exchange. 9 the right to buy shares in a company in one month, at 150 pence per share. 3. a) Decide which of the alternatives (A-H) each speaker is talking about. Write the letter of your answer in the box at the end of the sentence. There are two alternarives that you don't have to use, 1 ‘This is New York's financial centre.’ 2 'We bought euros at $ 0.94 and sold at $ 0.98.’ 3 'If I want, 1 can buy 10,000 shares at $2 in 12 months' time.' 4 ‘The government has borrowed £50 billion over a ten-year period.' 5 'Our contract is to buy 500 ounces of gold at $420 in 30 days, so we hope the price rises.' 6 The traders here deal in metals, wheat, rice, orange juice - things like that.'

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A. Square Mile В. forex E. Wall Street F. commodities exchange

С. bourse D. futures contract G. bonds H. options contract

b) Complete each sentence by writing in the gap a word formed from the verb given in brackets 1 This bank is one of London's oldest............................. institutions, (finance) 2 We deal mainly in commodities and.............................. (derive) 3 We have about 60.............................buying and selling stocks, (deal) 4 The............................. of the company raised £1.4 million, (float) 5 A............................. wants to make a quick profit, (speculate) 6 I invest in,............................- mainly stocks and bonds, (secure) c) Choose the best word to fill each gap from the alternatives given below. Put a circle around the letter А, В or C of the word you choose. Pegasus Software looks like a good buy. The company was (1)...............last year and its shares are (2)............... on the London stock (3)................When they were (4) ..............., they were valuec at 60 pence. Lots of (5)............... were attracted by the company's strong sales figures. Now the (6) worth 92 pence. 1 2 3 4 5 6


bonded quoted bourse issued auditors trade

B floated B signad B city B started B creditors B stock

C raised C noted C exchange C distributed C investors C deal


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1) Read the text and say what you have learned about financial institutions? There are many important financial institutions which provide finance for companies. These institutions provide money in different ways.  Banks Although banks specialize in supplying short-term loans, they are prepared to make loans for longer periods-up to 20 years in certain circumstances.  Insurance companies The regular premiums paid by policyholders are invested in government securities, company shares, land, and property of all kinds. The income from these investments makes it possible for insurance companies to pay out interests which are greater than the total payments made by policyholders.  Pension funds Although in many countries there is a state pension scheme to which all workers contribute, a large number of employed and self-employed people also belong to private pension schemes. The money which accumulates in these pension funds is invested and works in a very similar manner to the funds of insurance companies.  Investment trusts These are limited companies buying shares in other companies which they believe will be the most successful ones. People who then buy shares in investment trusts are paid dividends and investment funds obtain a profit too.  Unit trusts These operate in a very similar manner to investment trusts. But they are not limited companies-they do not issue shares, they issue units. These units cannot be re-sold on the open market, but they can be sold back to the unit trust at any time.  Finance houses These institutions provide the loans which finance hire-purchase schemes and leasing arrangements. Firms which sell goods on hire-purchase or who lease goods do not have to wait two or three years before their goods are fully paid for. They receive immediate payment from a finance house, and

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it is the finance house which collects the regular instalments paid by the purchaser. V. CASH CYCLE 1. Study phrases connected with the word “cash”. If necessary use the dictionary. 1. Cash 2. Cash and carry 3. Cash crop 4. Cash desk 5. Cash dispenser 6. Cash flow 7. Cash register

8. Cash card 9. Cashier

money in cons or notes a system in which goods are sold in large quantities at lower prices in ordinary shops A crop grown for selling rather than for use by the person who grows it a cash or counter in a shop where payments are made A machine (in or outside a bank) from which cash can be obtained when a special plastic card is put in and a personal number is used The movement of money into and out of a business as goods bought and sold A machine used in shops that has a drawer for keeping money in displays and records the price of each thing that is sold A plastic card given by a bank to its customers for use in a cash dispenser A person whose job is to receive and pay out money in a bank, shop, hotel A system of paying for goods when they are delivered

10. Cash on delivery 11. Cash in hand The paying for goods and services in cash

2. Study how cash cycle works. Say what these terms mean using the chart. Cash cycle

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Raw materials


Your suppliers are called creditors; you pay for supplies by paying their invoices Wages and salaries



Finished goods

Your customers are called debtors; they pay for goods by paying your invoices Stock, debtors and cash are working capital; cash is more liquid than stock

Capital investment Dividends to shareholders


Loans Share issues Bank overdrafts

3. Match the English words with their Russian equivalents. 1. raw materials 2. finished goods 3. stock 4. wages 5. salary 6. taxes 7. loans 8. overdraft 9. cash 10. share issues 11. share-holder

a) выпуск акций b) акционер c) заработная плата(рабочих) d) заработная плата (служащих) e) кредиты f) налоги g) сумма, получаемая сверх остатка на счете h) замороженные материальные средства i) готовая продукция j) сырье k) денежные средства

VI. SOURCES OF FINANCE 1. Read the text and say what sources of finance there are. For the well-established firm, the most obvious source of finance is its own profits. 1_______ . Using retained profits in the business is described as “ploughing back the profits”. It is an important source of finance for the larger firm.

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In the case of a very small firm, the necessary money will be provided by the proprietor and his family and friends with, perhaps, a loan from the local bank. Loans can be short-term and long-term ones. Short-term loans are usually repayable within three years. 2______ .The sources of loans are as follows:  Overdrafts  bills of exchange  trade credits  hire purchases  leasing. A bank overdraft is the most widely used type of short-term finance.3______ . Interest is charged by the bank only on the amount overdrawn. It is one of the cheaper forms of borrowing. Bills of exchange enable the company to obtain short-term finance from a bank or discount house where they send bills of exchange for discounting. Trade credits are quite normal in business. They are often granted by the sellers allowing the buyers to pay in some time, say in three months. A firm may acquire some equipment such as cars, lorries, office equipment and some type of machinery on hire-purchase terms. 4______. Ownership passes to the buyer when the final instalment is paid. In case of leasing the firm will also pay the outstanding amount by instalments over two or three years. When the final instalment is paid ownership does not pass to the buyer. 5_______ .In these cases they try to obtain long-term credits though they are rather expensive, which means a high interest to be paid. 2. Read the text about sources of finance again. Five sentences have been removed from it. Choose from the sentences (a-f) the one which fits each gap (1-5). There is one extra sentence which you don’t need to use. a) Instead of paying out all its profits to its shareholders, the firm can retain some within the business. b) Many such loans are for periods of one year or less. c) It makes a deposit and pays the outstanding amount by instalments over two or three years. d) The bank allows the company to overdraw its account by some agreed amount. e) Sometimes companies prefer or have to obtain loans and buy the equipment.

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f) Some companies produce goods others produce services. 3. Complete sentences not changing the contents of questions. 1. Are short-term loans usually repayable within three years? Could you tell me _______________. 2. What enables the company to obtain short-term finance from a bank? I wonder _______________________. 3. What may a firm acquire? Do you know ___________________. 4. When does ownership pass to the buyer? I’d like to find out ___________________. 5. Will the firm also pay the outstanding amount by instalments over two or three years in case of leasing? I doubt ________________________.

VII. SHARE CAPITAL AND DEBT 1. Study these notions. A. Capital Capital is the money that a company uses to operate and develop. There are two main ways in which a company can raise capital, that is find the money it needs: it can use share capital or loan capital, from investors. These are people or organizations who invest in the company; they put money in hoping to make more money. (See Unit 36)

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SHAREHOLDERS Share capital

Dividend s COMPANY


Repayment s and interest

B. Share capital Share capital is contributed by shareholders who put up money and hold shares in the company. Each share represents ownership of a small proportion of the company. Shareholders receive periodic payments called dividends, usually based on the company's profit during the relevant period. Capital in the form of shares is also called equity. A venture capitalist is someone who puts up money for a lot of new companies. C. Loan capital Investors can also lend money, but then they do not own a small part of the company. This is loan capital, and an investor or a financial institution lending money in this way is a lender. The company borrowing it is the borrower and may refer to the money as borrowing or debt, The total amount of debt that a company has is its indebtedness. The sum of money borrowed is the principal. The company has to pay interest, a percentage of the principal, to the borrower, whether it has made a profit in the relevant period or not. D. Security Lending to companies is often in the form of bonds or debentures, loans with special conditions. One condition is that the borrower must have collateral or security: that is, if the borrower cannot repay the loan, the lender can take equipment or property, and sell it in order to get their money back. "This may be an asset which was bought with the loan. E. Leverage Many companies have both loan and share capital. The amount of loan capital that a company has in relation to its share capital is its leverage.

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Leverage is also called gearing in BrE. A company with a lot of borrowing in relation to its share capital is highly leveraged or highly geared. A company that has difficult in making payments on its debt is overleveraged. 2. a) Choose the correct expressions in brackets from A, B and С opposite to complete the text. I started 15 years ago with (1 capital/dividends) of $A50, 000. We had one small restaurant in Sydney and now we have twenty throughout Australia. My (2 borrowers/shareholders) were members of my family: my parents, brothers and sisters all put up money. They didn't receive any (3 dividends/shares) for the first five years: we put all our profits back into the company! Now we want to increase the amount of (4 equity/dividends), so we are looking for outside (5 borrowers/lenders). (6 Lenders/Shareholders) have been very helpful. We obtained $A50, 000 of (7 loan capital/share capital) from a bank when we started. Now we have paid off all the (8 dividends/principal) and (9 interest/ shares) after seven years. We have taken out other loans recently, but our (10 lending/indebtedness) is not bad in relation to the size of the business. b) Answer these questions, using expressions from C, D and E opposite. 1. You want to raise money for your company, but you do not want to sell shares. What can you use instead? (2 expressions) 2. You want to raise money and you want to reassure lenders that they will get their money back if your company cannot repay. What would you offer them? (2 expressions) 3. You are interviewed by a financial journalist who wants to know why you are borrowing money. What do you tell them that you want to increase? (2 words) 4. The journalist writes an article saying that your company has a lot of debt in relation to its share capital. Which two expressions might she use in her article? 5. A few months later the journalist writes an article saying that your company has too much debt in relation to its ability to pay. Which expression might she use in her article?

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VIII. SUCCESS AND FAILURE 1. Study these notions. A. Cash mountains and surpluses Predaco is a successful company. Over the years, it has distributed some profits or earnings to shareholders, but it has also kept profits in the form of retained earnings and built up its cash reserves; it is sitting on a cash pile or cash mountain. These reserves may be used for investment or to make acquisitions: to buy other companies. B. Debt and debt problems Here are some expressions that can be used to talk about a company's debts, or a country's foreign debts: repayment when a company repays its debt and/or interest on it; servicing ‘debt repayment’ describes a particular amount repaid burden a company’s debt, especially when considered as a problem debt crisis when a company has serious difficulty repaying its debt rescheduling when a company persuades lenders to change restructuring repayment dates and terms default when a company fails to make a debt repayment Note: reschedule to

a debt restructure


repay default on service

a debt

C. Turnarounds and bailouts Doomco is in financial trouble and it is being described as sick, ailing and troubled, They've called in a company doctor, Susan James, an expert in turning round companies. There may be a turnaround and Doomco may recover. But if there is no recovery, the company may collapse completely. Ms James is currently looking for another company to bail out Doomco by buying it. This would be a bailout.

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D. Bankruptcy If a company is in serious financial difficulty, it has to take certain legal steps. In the US, it may ask a court to give it time to reorganize by filing for bankruptcy protection from creditors, the people it owes money to. In Britain, a company that is insolvent, i.e. unable to pay its debts, may go into administration, under the management of an outside specialist called an administrator. If the company cannot be saved, it goes into liquidation or into receivership. Receivers are specialists who sell the company's assets and pay out what they can to creditors. When this happens, a company is wound up, and it ceases trading, A company in difficulty that cannot be saved goes bankrupt. 2.1 Match the sentence beginnings (1-6) with the correct endings (a-f). The sentences all contain expressions from A opposite. 1 For a group sitting on a cash mountain of £2 billion, GEC's sale of 2 The group had a cash pile of nearly £300 million at the end of March 3 The airline has built its cash reserves 4 MCA's earnings for the fourth quarter rose 26 per cent to $21.8 million, 5 Raytheon has announced the $2.9 billion acquisition 6 The UK tax system encourages the distribution of earnings a because of higher revenue from home video and pay TV. b to finance plans for global expansion. с to shareholders, rather than encouraging companies to invest. d of Texas Instruments' defence electronics business. e - plenty of money for acquisitions. f Satchwell to Siebe for £80 million will make little difference. 2.2 Complete the sentences with expressions from В and С opposite. There may be more than one answer. 1 Our economy could..................... under its huge debt ....................- we owe $100 billion to foreign investors and banks alone. 2 The railway company made a profit of 140 billion yen, even after paying out 300 billion yen in debt..................... . 3 MidWest bank has made a strong.................from the dark days of the farm debt crisis.

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4 The IMF's......................might not be enough to pull the country back from debt........ . 5 Mr Owen, chairman of Energis, is to receive a bonus of nearly £900,000 for his work in ......................round 2.3 Rachel is an accountant. Correct the mistakes in italics, using expressions from D opposite. I work in the corporate recovery department of a London accountancy firm, with companies that are in financial difficulty. They may be in (1) administer, and we try to find ways of keeping them in operation. We may sell parts of the company and this, of course, means laying people off. Our US office works with a system where a company in difficulty can get (2) protectors from (3) credit, giving it time to reorganize, and pay off debts. If the company can't continue as a going concern, it (4) goes into receivers: we (5) wind off the company and it (6) ends business. We sell the assets and divide the money up among the creditors in a process of (7) liquification. IX. MERGERS, TAKEOVERS AND SELL-OFFS Study these notions. A. Stakes and joint ventures a stake an interest In a company the shares that one investor has in a company a holding Stake when more that 50 per cent of the shares of a a majority interest company are owned by one investor, giving holding them control over how it is run stake a minority interest holding

when an investor owns less than 50 per cent of the shares of a company

Two companies may work together in a particular area by forming an alliance or joint venture; they may remain separate companies, or form a new company in which they both have a stake.

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B. Mergers and takeovers General Oil and PP have announced they are going to merge. It will be the biggest ever merger in the oil industry.

Blighty Telecom is to split into two, and demerge its fixed-line and mobile businesses as part of on-doing restructuring. The aim of the demerger is to cut debt by £10 billion, Ciments de France, the French building group, is to acquire Red Square the UK for 3.1 billion euros. This is a friendly bid, as RSI are likely to welcome it and agree to it. But the takeover comes only a year after RSI rejected a hostile bid, an unwanted one. Abbot Bank is doing badly, and may become the victim of a predator.There were rumours of a possible takeover by Bullion, but it says it won't play the white knight for Abbot by coming to its defence. This leaves Abbot exposed to acquisition, and it may be prey to a big international bank. Abbot does have a poison pill however, in the form of a special class of shares that will be very expensive for a predator to buy. C. Conglomerates Cotton makes a series of acquisitions of retail and non-retail businesses, and becomes the parent company in a conglomerate or combine, with the other businesses as its subsidiaries. 1990s Low-price general retail Cotton Stores acquires Bestco supermarkets and diversifies into food retailing. 1985 Shareholders complain that Cotton Group is unfocused. They demand that its CEO should dispose of non-retail companies, which they describe as non-core assets, and reinvest the money in its main, core activity: retailing. Thev sav that this divestment and restructuring is necessary for future growth and profitability.

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2000 X. CAPITAL, INTEREST AND PROFIT 1. Read the text and understand the contents. 1. A third factor of production is capital, produced goods that are used in further production. Some capital goods might last a few years while others might last for a century or more. There are three major categories of capital goods: structures (such as factories and homes), equipment (consumer durable goods like automobiles and producer durable equipment like machine tools), and inventories (such as cars in dealers’ lots). 2. One of the most important tasks of an economy is to allocate capital across different possible investments. In deciding upon the best investment one needs a measure for the return on capital. One important measure is the rate of return on capital which is the annual net return per dollar of invested capital. It is a pure number-percent per year. 3. The resources needed to produce capital come from saving. When people save they expect a return. This is the interest rate. The yield you get when you put your money in a time deposit at a commercial bank is an example of an interest rate. Payments for the temporary use of capital goods are called rentals. One of the important functions of interest rates is to allocate the supply of loanable funds. 4. Another important type of property income is profits. Profits are defined as the difference between total revenues and total costs. Reported business profits are chiefly corporate earnings. The most important source is profits as an implicit return. Firms generally own many of their own nonlabour factors of production - capital, natural resources, and parents. In these cases, the implicit return on unpaid or owned inputs is a part of profits. A second source of profits is uncertainly associated with the return to cover uninsurable risks, and the profits earned by enterpreneurs who introduce new products or innovations. Finally, profits may result from firms exercising monopoly power on their patents, from special privileges, or due to regulation. 2. Read the text again and match A, B, C or D to fit best each sentence. 1) The text deals with ______________ a) capital, interest, investments. b) deposits, capital, products. c) property, profit, entrepreneurs.

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d) capital, profit, interest. 2) The problem under discussion concerns _______________ a) a commercial bank b) the most important tasks of economy. c) profits of enterpreneurs d) possible investments. 3) It should be stressed that there are three main categories of _________ a) consumer durable goods b) interest rate c) capital goods d) corporate earnings. 4) It is common knowledge that investment ______________ a) is one of the most important tasks of an economy. b) might last a few years. c) needs an interest rate d) Is a part of profit 5) It is clear from the text that when people save they ___________ a) decide upon the best investment b) expect an interest rate. c) own property. d) Introduce new products. 6). What are three major categories of capital goods? a) land, capital and investment b) structures, equipment and inventories c) equipment, land and capital d) inventories, savings and interest 2. Capital 1) Read the text, understand the contents. Then read it again and make a chart to see what capital is. The capital of a business consists of those funds used to start and run a business. The funds may be either the owner's (equity capital) or creditor's

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(debt capital). Capital is also classified, depending on its use, as fixed or working. Fixed capital refers to items bought once and used for a long period of time. These items include real estate, fixtures, and equipment. Working capital refers to the funds used to keep a business working or operating. It pays for merchandise, inventory and operating expenses such as rent, utilities (light and heat), taxes and wages. Cash on hand and accounts receivable are also considered working capital. Therefore, working capital is cash or anything that can be easily and quickly turned into cash. No firm should ever be started without a clear and positive understanding of where its total capital needs are coming from. The various types of financing available to business firms are usually classified as: 1. Short-term capital. This is borrowed capital that is to be repaid within one year. 2. Intermediate capital. This is borrowed capital that is to be repaid in one to five years. 3. Long-term capital. This is capital which repayment is arranged for more than five years in the future. Sources of funds for small firms: Equity capital. Personal funds - saved or inherited. Loans from relatives and friends. Commercial bank loans. Mortgage loans. The Small Business Administration. Venture capitalists. Equity capital consists of those funds provided to the business by the owners. These funds come from the personal savings of the small business entrepreneur. If the entrepreneur decides to obtain more funds through equity sources, it can be done by having partners or selling stock. When these sources are used, however, the small business entrepreneur gives up some ownership control of the business and shares the profits. Personal funds. Whenever potential creditors, partners or stockholders are invited to invest in or lend financial assistance to a new firm, their first question is, "How much has the owner invested?" Every business contains an element of risk, and outsiders who invest in a new firm wish to be sure that such risk is shared by the owner. It is important that the would-be owners have assets of their own to invest in the firm. The closer they are to 50 percent of the total capital needs that can be provided, the greater will be their independence and share of net profits. Loans from relatives and friends. Many new owners are encouraged in their enterprise by parents, relatives or friends who offer to supply loans to the firm to get it started. The best way to avoid subsequent problems is to make sure that loans are made on a businesslike basis. They should be viewed as business dealings. The right of the owner to make decisions should be respected by all parties involved.

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Commercial bank loans. The commercial bank is one of the main sources of short-term loans. Commercial bank loans are usually for short periods of time (less than one year), but many banks lend money for longer periods. The interest on a commercial bank loan is higher than many other sources. The business owner should establish a credit line with a commercial bank. A credit line means that the bank agrees to lend the business owner an amount of money, to a stated maximum, at any time. Mortgage loans. If the new firm planners own a commercial building, they can usually secure a mortgage on it with payments over as many as 30 years. It may be the building in which the new firm operates. In that case, the planners will be making mortgage payments instead of rental payments to a landlord. The small business administration is a US government agency organised to aid small business in many ways. This agency offers small businesses financial aid in the form of guaranteed loans and advice about where financial aid can be obtained. The SBA also offers educational aids and consulting services. Venture capitalists. This is a term used to refer to individuals or corporations which invest long-term equity and debt capital in promising start-up and growing businesses. Venture capitalists usually take some equity (ownership) in the firms for which they provide funding. Many venture capitalists only invest in firms that need $100,000 or more financing. 2). Translate into English. 1. капитал в форме акций 2. привлеченный капитал 3. основной капитал 4. счета дебиторов дебиторы по расчетам дебиторская задолженность 5. заемный капитал 6. источник 7. наследовать 8. ссуда коммерческого банка 9. ссуда под недвижимость 10. рисковать рискованное предприятие или начинание 11. сбережения накопления 12. предполагаемый владелец 13. поддерживать, поощрять 14. последующий 15. коммерческие сделки XI. ACTIVITY Russian Budget Holding Out 1. Read the article, understand the contents. Then make up a short review of it.”What was the economic situation of Russia from 1990 to 1995.”

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Russia's Finance Minister Vladimir Panskov and Chairman of the State Duma Committee for budget, taxes, banks and finances Mikhail Zadornov are questioned about the difficulties of the current budget process by senior researcher of the US and Canadian Studies Institute of the Russian Academy of Sciences, Alexandr Deikin. 1) Russia's finances are in serious condition but the situation is far from hopeless. The theoretical and strategic groundwork for taxation and budget structure is in process; the personnel potential of the Finance Ministry is not yet exhausted; the legislature is inclined to uphold professional rather than political or populist priorities. Joint efforts may help avoid many political and economic traps. It is now obvious that financial means could play a certain role in settling the crisis in the North Caucasus. 2) The conflict around Grozny has unexpectedly marked a turning point in the current budget process. Amended after it was adopted in the first reading, the draft Federal budget for the current year, submitted to Parliament, does not differ much from the original version. It still shows an extremely difficult economic situation in Russia. The budget deficit is estimated at R71.6 trillion, i.e. nearly 31 percent of expenditures. Financing of the social sector is unsatisfactory and the schedule of revenues is very tense. The notion, which has developed in recent years, that official budget forecasts have little to do with real life in Russia, makes one cautious about financial plans of the executive power. The government has demonstrated its lack of responsibility for its budget promises and their consequences. Nevertheless, Russia's budget is not hopeless and can be returned to normal, Finance Minister Vladimir Panskov says, especially since the Finance Ministry still has enough competent executives. 3) Mikhail Zadornov, Head of the Duma Budget Committee, is more sceptical. He believes that the state budget will remain very weak until the inflation rate is brought down to 60, to 70 percent a year and the political system in Russia becomes stable. However, even in present conditions it is possible and even necessary at each stage, to bring the budget closer to reality and current economic policy. The gap between government forecasts and real life is manifested most often in taxation. According to M. Zadornov, gradual changes in this area are the principal pre-condition for success. The taxation system set up hurriedly in 1991, is obviously outdated but our tendency to "change everything at once" will yield no positive results. The taxation structure is

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always charged with significant political content because it is a type of public agreement between the state and its citizens: the level of paid taxes should correspond to the level of paid services expected by citizens, and must be agreed upon with them. At the same time, V. Panskov realizes the need to rapidly resolve some concrete tax problems, and urges quick development of theoretical groundwork and the concept of taxation in Russia. 4) The interference of political factors in purely budget issues is a common occurrence today. V. Panskov believes that the Finance Ministers role should be, that of a pragmatic civil servant , not involved in any political games; although, he admits, it is extremely difficult to avoid politics. There are many examples to that effect, the Chechen crisis being one of them. The Minister believes that a rather tough budget construction (with all its parts closely interlinked), is a major achievement of joint efforts with the Parliament in December of last year. Changing any element in this construction could cause its collapse or serious alteration. In the Minister's opinion, the possible cost of the Chechen crises cannot be properly estimated until the conflict is resolved. He cited, though, all of the factors that keep pressuring the budget: the cost of the destruction of the statehood and economy in Chechnya under Dudaev's "peaceful" rule, alone, amounts to 1 trillion rubles. One should also add the cost of military operations; reconstruction of houses, industrial projects and transport destroyed during the hostilities; virtually free maintenance of thousands of people deprived of shelter and work, including refugees, for apparently many months to come; the possible upkeep of a temporary contingent of armed forces in Chechnya after completing military operations; the upkeep of the administration; organizational expenses, etc. The budget is sure to collapse if all of these expenses cannot be "squeezed" into the approved budgetary expenditures of the relevant departments. M. Zadornov gave a similar evaluation of the major factors affecting the total cost of the Chechen conflict. He stressed that additional military expenditures, linked with military operations, total 20 to 25 billion rubles a day. The duration of active hostilities plays a key role in estimating the total sum of "Chechen expenditures." However, even now one can assert that the conflict will hardly cost less than 5 trillion rubles. The government pledges to settle the Chechen expenditures at the expense of internal reserves of each debit item without raising the total sum of budgetary expenditures. This means, however, that debit items that can provide additional sums of such dimensions, were devised with great reserves.

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5) The idea of a thorough stock-taking of expenditure applications by departments, was advanced long ago. There have been successful examples of using these tactics on a limited scale. Last year, for instance, MPs succeeded in "finding" 8 trillion rubles "hidden" in the approved budget for 1994. This has not become a system, though. The current reconciliatory commission on the budget has not actually touched major expenditure items either. This can be attributed to drawbacks in constitutional legislation. There is no mechanism for implementing the budget; relations between the President and the budget are rather curious - the Head of State gets the draft budget only after it has been submitted to the State Duma and has no opportunity to give his input before that. Hence, supplementary instructions to the Finance Ministry from top governmental executives, regarding the financial plan and its execution would eventually undermines the economic situation in Russia. According to Chairman of the Duma Budget Committee, changes in monitoring budget execution are imminent and should be urgently introduced. Embezzlement, inefficient use of funds or their use for other purposes will not cease until Parliament begins to monitor the execution of the Federal budget, which is the principal means of public control over the government activities. 6) The Finance Ministry acknowledges the existence of "air-cushions" in budget applications by governmental institutions. However, allocation of scanty sums for some budget items is the opposite side of this matter. For instance, the Finance Minister will not likely fulfill the request by the Director of the AZLK automobile plant for granting a relatively small credit of R100 billion needed for reconstruction, for one simple reason -the 1995 budget earmarks only R140 billion for this kind of expenses (for all Russian enterprises). There are even more serious reasons for anxiety, since the initial draft budget has not provided for the indexation of expenses for all those depending on the budget. Although the reconciliatory commission has found funds to raise pensions and allowances as of 1 March 1995, salaries of budget workers will be frozen until 1 October 1995 despite the current price increase. The Finance Minister firmly supports this resolution although he understands its drawbacks. Otherwise, he contends, "the entire budget construction will collapse." Unfortunately, the current situation proves the accuracy of his statement.

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M. Zadornov was very outspoken on this matter. He pointed out that the problem of postponed indexation was caused by different factors, in particular the absence of social policy in Russia where millions of people already live in appalling conditions. The Head of the Budget Committee who signed the document on deferring indexation believes that all possible measures should be taken along with social institutions to change the situation for the better. Naturally, the problems of Chechnya and indexation do not exhaust possible threats to Russia's budget. The fact that the Duma lacks power regarding the budget, should not be played down either. The only thing that instils optimism is that, in recent months, cooperation between the State Duma and the Finance Ministry has been growing steadily. 3. Read §3 again and do the translation of it. Translate into your language not word for word.

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UNIT 3. MONEY AND BANKING SYSTEM. I. STARTING UP 1. Do the quiz individually. Then compare answers with a partner.





1. How much cash do you have with you at the moment? Do you: a) know exactly? b) know approximately? c) not know at all?


2. Do you normally check: a) your change? b) your bank statements and credit card bills? c) restaurant bills? d) your receipts when shopping e) prices in several shops before you buy something? 3. Do you: a) give money to beggars? b) give money to charities? c) give away used items such as clothing?

4. If you go for a meal with someone you don’t know well, do you: a) offer to pay the whole bill? b) suggest dividing the bill into equal parts? c) offer to pay the whole bill but expect them to pay next time? d) try to avoid paying anything? 5. What do you think about people who do not pay the correct amount of tax? Is this: a) a serious crime? b) morally wrong but not a crime? c) excellent business practice?

6. If you lend a colleague a small amount of money and they forget to pay it back, do you: a) say nothing? b) remind them that they owe you money? c) arrange to go for a drink with them and say you’ve forgotten your wallet or purse?

Read and say what Marni and Dan think about money. Whom do you agree with? What do you think about money? Use the AGREE NO IDEA CAN’T BUT

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МARNI DUNCAN, 19 Lerwick, Shetland, Scotlad  I have not yet realized the importance of money as Shetland is generally a wealthy area and we do not want for things.  1 have a Saturday job in a local shoe shop which pays $2.00 an hour, which is very low compared to what my friends get. However, I usually have enough money to buy clothes, jewellery and other accessories.  Money doesn't really affect what I do. Although facilities such as our local sports centre can be expensive, but as 1 hate all types of sport it doesn't matter to me.  Most of money I earn, I spent on Saturday night: on taxis, alcohol and getting into discos and nightclubs. Right now. I am trying to save money for a shopping holiday, but it is proving difficult. Once i have money, I always end up spending it on unnecessary items which I could easily do without!

DAN KERN AN, 18 Riverside, lllinois, USA  "Money makes the world go around". At least that's how it seems to me. Sometimes I get the feeling that people's only goal in life is to make money. I could be wrong but some athletes making more than $6 million a year, and movie stars making $8 million. I think that I am justified in feeling this way. It seems to me that these people might be just a little too materialistic. How could someone not be materialistic if they demand that much money? I wouldn't even know how to spend that much money.

 Money has tendency to fall through my fingers as if it was water. The only ways I make money are by babysitting for my sister and from relatives who give me money on my birthday and Christmas because they didn't know what else to give me. I've always considered getting a job, but I guess I don't think 1 need one yet.

 I think that Britain is quite a wealth  Overall, I really wish money wasn't country, but the money tends to be necessary, because then I unevenly spread. There are many wouldn't have to get a job. But families living in poverty. No one in there doesn't seem to be better Shetland is really poor. The majority way to do things so, 1 will just of people life comfortably due to the have to make the best of it. money we receive from the oil and fishing industries. expressions: SIDE WITH YOU DISAGREE NO VIEW STRONGLY AGREE * 3. Situation : What will you do if you have a lot of money ?

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Example : If I have a lot of money I will buy a computer centre. If I buy a computer centre I will….

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4. Match the words (1-13) with their definitions (a-m).

1 money 2 coin 3 banknote 4 deposit 5 credit 6 account 7 loan 8 invest 9 cheqeu 10 securities 11 share 12 bank 13 transaction

a) an organization or a place that provides a financial service, customers keep their money in it. b) a sum of money paid into a bank с) a wrritten statement of money paid or owed for goods and services d) a thing that is lent esp. a sum of money e) a piece of metal used as money f) a document or certificate showing who owns shares g) a piece of paper money issued by a bank h) a means of payment esp. coins and paper notes given and accepted in buying and selling i) the conducting of business ; a piece of business done j) permission to delay payment for goods and services until after they have been received k) to use money to buy eg. shares or property, develop a business enterprise in order to earn interest, bring profit l) a special printed form on which one writes an order to a bank to pay a sum of money from ones account to other person m) any of equal parts into which the money of a business company is divided, giving the holder a right to a portion of the profits

5. Complete sentences with one of the given words. transactions, cheque, loan, credit, notes, coins, money, bank, deposit, invested, deposit account, shares, accounts 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

How much _________ is there in my account? He had some _________ in his pocket. My salary is paid directly into my _______ . He only exchanges _________ and traveler’s cheques. The money is being kept on _________ or in a ________ ________. I bought if on ________. The _________ show a profit of $ 9000. I’m only asking for a ________ - I’ll hay you back. The government has _________ heavily in oil exploration. Are you paying in cash or by ________.

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11. ________ valued at $ 60 each. 12. Legal commercial property_________. ІІ GLIMPSES OF HISTORY OF MONEY Read the text and understand the contents. Read the text about the history of money again and match paragraphs A-E with the objects below (1-5). А. At different periods of time and in different parts of the world many different commodities have served as money. These commodities were: cattle, sheep, furs, leather, fish, tobacco, tea, salt, shells etc. The illustration shows shells which were threaded into strings or belts called wampum. The experts underline that to serve effectively as money a commodity should be fairly durable, easily divisible, and portable. B. None of the above-mentioned commodities possessed all these qualities and in time they were superseded by precious metals. First they were superseded by silver and later by gold. When a payment was made the metal was first weighed out. C. The next stage was the cutting of the metal into pieces of the metal into pieces of definite weight and so coins came into use. D. Paper money first came into use in the form of receipts given by goldsmiths in exchange for deposits of silver and gold coins. After goldsmiths became bankers their receipts became banknotes. That’s how the first banknotes came into existence. E. At first coins were worth their face value as metal. But later token coins of limited value as legal tender were issued. Now smaller denomination coins are made from bronze and are often referred to as coppers. Bigger denomination coins are made from cupronickel and are usually called silver. 1. 2.

3. Find words in the text which mean the same as the following: duration, efficiently, have, valuable, being, offer.

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4. Arrange these nouns into two columns: singular and plural.

cattle, sheep, leather, fish, tobacco, tea, salt, shells, furs, commodities, money, silver, gold, coins, deposits, banknotes, bronze, coppers, cupronickel 5. Form different parts of speech with the help of suffixes from these

words. Consult a dictionary. different, divisible, portable, denomination, payment, fairly, easily, effectively, settler ІІІ BANKING SYSTEM 1. Study the table “Banking System” and say what types of banks there are. What is the role of money?

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promotes, stabilizes, regulates, exercises, facilitates, provides  international monetary cooperation  the expansion and balanced growth of international trade  foreign currency exchange markets  balance of payments  with technical assistance  surveillance over exchange rate of member countries

there are, are called, are known as …Investing Institutions Discount Houses Financial Markets National Savings Industrial Banks Merchant Banks Special Financing Institutions Commercial Banks Issuing Banks Retail Banks Building Societies Joint Stock Clearing Banks

controls, issues, mints, lends, and borrows, manages, provides, exercises, supplies         

banking system coins banknotes nation’s gold reserves money the national debt economic information surveillance over exchange rate various banker’s cards

is considered (believed, thought, said) to be       

a means of payments a medium of exchange a standard of value a unit of value a store of value a standard of deferred payment a monetary unit

…еxists in the form of…  coins, securities (shares, banknotes, obligations, bills)

pays attention to, is concerned with, provides, must have, is engaged in  external financing of the economic growth of developing counties  financing to creditworthy countries The borrowing … … increased prospects for repayments.  education and human services  environment  modification of governmental policies  evaluating of previous lending

are involved in, include, offer, issue, grant, discount, provide           

current account services deposit account services savings account services foreign exchange transactions services in foreign trade payments bills of exchange loans to their customers cash dispensers safe custody investment management services cheques and cheque cards

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2. Bank Accounts. Put each word or phrase in the group below in its correct place in the following passages: a) Opening an account 1. formalities 2. overdraft 3. open 4. branch 5. account 6. fill in 7. bank charges It’s very simple to (a)______ a bank (b) _______ in Britain. There are very few (c) ________ . Just go to your local (d) ______ . (e)______ a few forms, and that’s it. You will probably only have to pay (f) ______ if there is no money in your account or if you borrow money from the bank, in other words if you have an (g) ______ . b) Current and deposit accounts 1. notice 2. current 4. withdraw 5. deposit

3. cheque 6. interest

For regular everyday use most people prefer a (a) ______ account. This normally earns no (b) _____ but you are given a (c) _____ book, which makes shopping and paying bills very easy. A (d) _____ account earns interest but it’s not so easy to (e) ______ your money You sometimes have to give a week’s (f) _____. c) Using your account 1. balance 2. deposit 3. withdrawal 4. standing order 5. statement At regular intervals, perhaps monthly, you will receive a (a) ______ from the bank, giving details of each (b) ______ (money you put in) and (c) ______ (money you take out). If you’re not sure how much money you have in your account, you can just go to your bank and ask what your (d) ______ is. If you have to make a regular payment like rent you can ask the bank to pay this amount for you automatically. This arrangement is called a (e) ______. 3. Words connected with money A. Match the phrases in the box with verbs below. The phrases can be used more that once. The first one has been done for you. a good salary the bill money someone back a new car a fortune

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someone £5 win: make: earn: lend: pay: afford: owe: spend: borrow: cost:

£ 5 from someone

money, a fortune, a new car …………………………………………………….. …………………………………………………….. …………………………………………………….. .……………………………………………………. …………………………………………………….. …………………………………………………….. …………………………………………………….. …………………………………………………….. ……………………………………………………..

ІV INTRODUCTION TO BANKING AND FINANCIAL MARKETS 1. Read the text and understand the contents. Consult a dictionary. 1. A commercial bank borrows money from the public, crediting them with a deposit. The deposit is a liability of the bank. It is the money owed to depositors. In turn the bank lends money to firms, households or governments wishing to borrow. Commercial banks are financial intermediaries with a government license to make loans and issue deposits, including deposits against which cheques can be written. Major important banks in most countries are included in the clearing system in which debts between banks are settled by adding up all the transactions in a given period and paying only the net amounts needed to balance inter-bank accounts. 2. The balance sheet of a bank includes assets and liabilities. We begin by discussing the asset side of the balance sheet. Cash assets are notes and coins kept in their vaults and deposited with the Central Bank. The balance sheet also shows money lent out or used to purchase short-term interest-earning assets such as loans and bills. Bills are financial assets to be repurchased by the original borrowed within a year or less. Loans refer to lending to households and firms and are to be repaid by a certain date. Loans appear to be the major share of bank lending. Securities show bank purchases of interest-bearing longterm financial assets. These can be government bonds or industrial

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shares. Since these assets are traded daily on the Stock Exchange, these securities seem to be easy to cash whenever the bank wishes, though their price fluctuates from day to day. 3. We now examine the liability side of the balance sheet which includes, mainly, deposits. The two most important kinds of deposits are sure to be sight deposits and time deposits. Sight deposits can be withdrawn on sight whenever the depositor wishes. These are the accounts which we write cheques, thus withdrawing money without giving the bank any warning. Therefore, most banks do not pay interest on sight deposits, or chequing accounts. Before time deposits can be withdrawn, a minimum period of notification must be given within which banks can sell off some of their high-interest securities or call in some of their high-interest loans in order to have the money to pay out depositors. Therefore, banks usually pay interest on time deposits. Apart from deposits banks usually have some other liabilities as, for instance, deposits in foreign currency, cheques in the process of clearance and others. 2. These expressions are all connected with Banking System. Can you complete them? 1. t_ _ _s_ _ _ _ _ _s 2. s_ _ _ r_ _ _ _ s 3. l_ _ b_ _ _ _ _ _s 4. f_ n_ _ _ _ _l a_ _ _ _s 5. s_ _ _ k E_ _ h _ _ _e 6. d_ _ _s_ _ _r 3. Make a word pair (there is one extra verb that you don’t have to use). borrow accounts owe liabilities balance price include sight deposits interest fluctuate depositor withdraw cheques write coin pay money like

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4. In each sentence there is one word which is wrong. Find and correct the word at the end of the line. 1. A commercial Bank lends money from the public. _______ 2. The financial sheet of the bank includes assets and liabilities. _______ 3. Loans appear to be the major token of bank lending. _______ 4. Therefore, banks usually impose interest on time deposits.________ 5. Commercial banks are financial intermediaries with a government document to make loans and issue deposits._______ 5. Read the article again. For statements 1-7, choose the correct answer a, b, c, or d. 5.1. Cash assets are deposited with a) major important banks c) the Central Bank b) financial markets d) financial intermediates 5.2. The balance sheet of a bank possesses a) coins b) loans c) cheques d) assets and liabilities 5.3. Loans seem to be an important share of bank a) notification b) deposits c) lending d) accounts 5.4. There exists two major types of deposits a) securities and money b) sight deposits c) transactions and bonds deposits d) loans and bills


5.5. Bonds and industrial shares are traded daily a) in commercial banks b) by depositors c) on the stock Exchange d) by the government 5.6. A lot of banks do not pay interest on a) time deposits b) balance sheet c) debts d) none of these 5.7. The balance sheet shows money used to buy


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a) loans and bills c) chequing accounts

b) sight deposits d)foreign currency

3. Make a word pair (there is one extra verb that you don’t have to use). borrow accounts owe liabilities balance price include sight deposits interest fluctuate depositor withdraw cheques write coin pay money like 4. In each sentence there is one word which is wrong. Find and correct the word at the end of the line. 1. A commercial Bank lends money from the public. _______ 2. The financial sheet of the bank includes assets and liabilities. _______ 3. Loans appear to be the major token of bank lending. _______ 4. Therefore, banks usually impose interest on time deposits.________ 5. Commercial banks are financial intermediaries with a government document to make loans and issue deposits._______ 5. Read the article again. For statements 1-7, choose the correct answer a, b, c, or d. 5.1. Cash assets are deposited with a) major important banks c) the Central Bank b) financial markets d) financial intermediates 5.2. The balance sheet of a bank possesses a) coins b) loans c) cheques d) assets and liabilities 5.3. Loans seem to be an important share of bank a) notification b) deposits c) lending d) accounts

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5.4. There exists two major types of deposits a) securities and money b) sight deposits and time c) transactions and bonds deposits d) loans and bills 5.5. Bonds and industrial shares are traded daily a) in commercial banks b) by depositors c) on the stock Exchange d) by the government 5.6. A lot of banks do not pay interest on a) time deposits b) balance sheet c) debts d) none of these 5.7. The balance sheet shows money used to buy a) loans and bills d) foreign currency c) chequing accounts b) sight deposits

V MONEY: REAL AND COUNTERFEIT 1. For statements (1-5 )choose the best answer from A,B,C,D.

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1 Read this part of the text. Tick (v) the lines which are correct and underline the unnecessary words. The first sentence done for you. 1) Money has four functions: a medium of exchange or 1 the means of the payment, a store of value, a unit of account and 2_______ a standard of de ferred payment. When used to as a medium 3_______ of exchange, money is considered to be distinguished from 4_______ other assets. Money as the medium of exchange is believed 5_______ to be used in one a half of almost all exchange. Workers 6_______ exchange labour for money, people buy or sell goods in 7_______ exchange for money as well. 8_______ People do not accept money to consume it directly but 9_______ because it can subsequently be used to buy things, they 10_______ wish to consume. To see the such advantages of a medium 11_______ of exchange, imagine a barter economy, that is, an economy 12_______ having no medium of exchange. Goods are to traded directly or swapped for other goods. The seller and the buyer each other must want something the other has to offer. Trading is very to expensive. People spend a lot of time and effort finding others with whom they can make swaps. Nowadays, there exists actually no purely any barter economies, but economies nearer to or farther from the barter type. The closer is the economy to the barter type, the more of wasteful it is. Serving as a medium of exchange money is presumed to have been so an essential function for centuries. 2. Read the next part of the text . Use the words given in capitals (13-21) at the end of each line to form a word that fits in the same line. 2) The unit of account is the unit in which prices are 13. Accounting quoted and accounts are kept. In Britain, for instance, 14. InConvenient prices are quoted in pounds sterling; in France, in 15. Expect French francs. It is usually ________ to use the same 16. Inflate unit to measure the medium of exchange as well as to 17. Quick quote prices and keep accounts in. However, there 18. Pay may be _______. During the rapid German ________ 19. Economics of 1922-23 when prices in marks were changing very 20. Nation ______, German shopkeepers found it more 21. Great convenient to use US dollars as the unit of account. 22. Existence Prices were quoted in dollars though _______ was

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made in marks. The same goes for Russia and other post-communist _______ that used the US dollar as the unit of account, keeping their ________ currencies as means of actual payment. The higher is the inflation rate, the ______ is the probability of introducing a temporary unit of account alongside the _______ units for measuring medium of exchange. 3. Read the third part of the text and complete the following sentences (1-11) with the necessary word (a-k) that fits the sentence. 3) Money is a store of value, for it can be used to a) Value make 1… in future. For money to be accepted in 2…, it b) Exchange has to be a store of value. Unless suitable for buying c) Currency goods with tomorrow, money will not be accepted as d) Loans payments for the goods supplied today. But 3… is neither e) Convenient the only nor necessarily the best store of 4…. Houses, f) Means stamp collections, and interest- bearing bank accounts all g) Purchases serve as stores of value. h) Account Finally, money serves as a5… of deferred payment or a i) Standard unit of account over time. When money is borrowed, the j) Medium amount to be repaid next year is measured in units of k) Money national 6…, pounds of sterling for the United Kingdom, for example. Although 7…, this not an essential function of money. UK citizens can get bank 8… specifying in dollars the amount that must be repaid next year. Thus, the key feature of money is its use as a 9… of exchange. For money to be used successfully as a 10… of exchange, it must be a store of value as well. And it is usually, though not always, convenient to make money the unit of 11… and standard of deferred payment. VІ DIFFERENT KINDS OF MONEY 1. Read the text and answer question below it. 1. In the 19th century 1… was mainly gold and silver coins. These are examples of commodity money, ordinary 2… with industrial uses (gold) and 3… uses (cigarettes), which also serve 4… a medium of exchange. To use a commodity money, society must either 5…back on other uses of that commodity or devote scarce resources to producing additional quantities of

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the commodity. But there are less expensive ways for society to produce money. 2. A token money 6… a means of payment whose value or purchasing power as money greatly exceeds its cost 7… production or value in uses others than as money. A $10 note is worth far more as money than as 3 x 6 inch piece of high-quality paper. Similarly, the monetary value of 8… coins exceeds the amount you would get by 9… them down and selling off the metals they contain. By collectively agreeing to use token money, society economizes on the scarce resources 10… to produce money as a medium of exchange. Since the manufacturing costs are tiny, why 11… everyone make $10 notes? The essential condition for the survival of token money is the restriction of the right to 12… it. Private production is illegal. Society enforces the use of token money by making it13… tender. The law says it must be accepted as a means of payment. 3. In modern economies, token money is supplemented by IOU money. An IOU money is a medium of exchange based on the debt of a private firm or individual. A bank deposit is IOU money because it is a debt of the bank. When you have a bank deposit the bank owes you money. You can write a cheque to yourself or a third part and the bank is obliged to pay whenever the cheque is presented. Bank deposits are a medium of exchange because they are generally accepted as a payment. What kinds of money have you read about? What does commodity money mean? What does token money mean? What does IOU money mean? 2. Read the text again and choose a, b, с or d that fits best each space. 1 2 3 4 5 6 7 8 9 10 11 12 13

A a money goods consuption as cuts has for the most melted required don't to supply legally

B money good having like cut have of most melts requiring doesn't supplies legal

C item of money a goods possess the same as to cut are in a most to melt having required isn't supplying illegal

D some money a lot goods usage so as cuting is at mostly melting being required hasn't supplied illegally

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3. a) Find words in the text that have the following meanings. 1) an article, a product or a material that is bought and sold . 2) a sum of money paid in to a bank . 3) the action or process of buying . 4) money made of metal . 5) a round piece of metal or plastic used to operate certain machines or a form of payment . 6) a sum of money owed to smb .

VII VARIOUS SERVICES OF BANKS Read the text and say what services Banks offer. Banker’s services cover an enormous range of activities today. A full list would include:  Current account services They are extended to anyone whom banks regard as reliable. A new depositor should be recommended by his employer or should present a reference. If this proves satisfactory the bank will accept a deposit from him which will be entered in his current account. A cheque book will then be issued free of charge. Once the customer has received his cheque book he may use the cheques to order the banker to pay out sums of money from his current account. Money is being paid into and paid out of the account as often as the customer finds convenient.  Deposit account services Companies and individuals can deposit cash resources that are not needed at present. They can withdraw the money either any day they need it or after a certain period in case of time deposits.  Savings account services It enables small savers to put money away for particular purposes, for example for holidays.  Other services: o foreign exchange o foreign exchange transactions o services in foreign trade payments

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o o o o o o o o

discounting bills of exchange granting loans investment management services cash dispensers and automated teller machines safe custody economic information banker’s credit cards and many others

VIII MONETARY SYSTEM AND MONETARY POLICIES 1. Read the text and find out: a) how the Central Bank acts; b) if the Central Bank can impose reserve requirements on commercial banks; c) if the Central Bank is responsible for the governments monetary policy. d) what bonds depend on. Today every country has a Central Bank. It acts as a lender to commercial banks and it acts as a banker to the government, taking responsibility for the funding of the government’s budget deficit and the control of the money supply which includes currency outside the banking system plus the sight deposits of the commercial banks against which the private sector can write cheques. Thus, money supply is partly a liability of the Central Bank (currency in private circulation) and partly a liability of commercial banks (chequing accounts of the general public). 1_______ . In addition, the Central Bank can impose reserve requirements on commercial banks, that is, it can impose the minimum ratio of cash reserves to deposits that banks must hold. The Central Bank also sets discount rate which is the interest rate commercial banks have to pay when they want to borrow money.2________ . Thus, the Central Bank is responsible for the government’s monetary policy. Monetary policy is the control by the government of a country’s

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currency and its system for lending and borrowing money through money supply in order to control the level of spending in the economy. 3________ . Hence, when the price level doubles, other things equal, we expect the demand for nominal balances to double, leaving the demand for real money balances unaltered. 4________. The quantity of real balances demanded falls as on the other hand, when interest-on bearing assets are risky, people prefer to hold some of the safe asset, money. When there is no immediate need to make transactions, this leads to a demand for holding interest-bearing time deposits rather than non-interest-bearing sight deposits. The demand for time deposits will be larger with an increase in the total wealth to be invested. 5_________ . Being sold and purchased by the Central Bank, bonds depend on the latter for their supply and price. Interest rates affect household wealth and consumption. Consumption is believed to depend both on interest rates and taxes. Higher interest rates reduce consumer demand. Temporary tax changes are likely to have less effect on consumer demand than tax changes that are expected to be permanent. 6__________ . With a given money supply, higher income must be accompanied by higher interest rates to keep money demand unchanged. A given income level can be maintained by an easy monetary policy and a tight fiscal policy or by the converse. 2. Read the missing sentences A-G below and then read the text again. Choose the sentence that best fits each gap (1-6). There is one extra sentence that you don’t need to use. A. The Central Bank controls the quantity of currency in private circulation and the one held by the banks through purchases and sales of government securities. B. People want money because of its purchasing power in term of the goods they will buy. C. The demand for money is a demand for real money, that is, nominal money deflated by the price level to undertake a given quantity of transactions. D. There also exists a close relationship between interest rates and incomes.

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E. Companies are involved in many activities: banking, marketing, selling, buying, and production. F. Having set discount rate, the Central Bank controls the money market. G. Interests are a tool to regulate the market for bonds. 3. Complete the following sentences with words in listed which have the same meaning as the underlined words. Liable choose perform rely profit Demands possess tactics cost 1. The Central Bank acts as a lender to commercial Banks. 2. The Central Bank can impose reserve requirements on commercial Banks. 3. The Central Bank is responsible for governments monetary policy. 4. When interest-bearing assets are risky, people prefer to hold some of the safe asset, money. 5. Being sold and purchased by the Central Bank, bonds depend on the latter for their supply and price. 6. A given income level can be maintained by an easy monetary policy and a tight fiscal policy or by the converse. IX ACTIVITY 1. Study this table and say what objectives and functions of the Central Bank are. Цели деятельности и функции Центрального банка Российской Федерации Подотчётен Государственной Думе Члены назначаются и освобождаются ГД Назначается и освобождается ГД

Банк России

Совет директоров

Председатель Банка России

Национальный банковский Совет

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Защита и обеспечение устойчивости рубля, в том числе его покупательной ЦЕЛИ способности и курса по отношению к иностранным валютам Разрабатывает и проводит единую государственную денежно-кредитную политику, направленную на защиту обеспечения устойчивости рубля Осуществляет валютное регулирование, включая операции по покупкепродаже иностранной валюты Организует и осуществляет валютный контроль как непосредственно, так и через уполномоченные банки Принимает участие в разработке прогноза платёжного баланса РФ, организует составление платёжного баланса

Развитие и укрепление банковской системы РФ

Обеспечение эффективного и бесперебойного функционирования системы расчётов

Осуществляет государственную регистрацию кредитных организаций

Монопольно осуществляет эмиссию наличных денег и организует их обращение

Осуществляет надзор за деятельностью кредитных организаций

Устанавливает правила осуществления расчётов в РФ

Регистрирует эмиссию ценных бумаг кредитных организаций

Является кредитором последней инстанции организации, кредитной организует

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РФ Проводит анализ и прогнозирование состояния экономики РФ в целом и по регионам, прежде всего валютнофинансовых и ценовых отношений, публикует соответствующие материалы и статистические данные

систему рефинансирования Устанавливает правила проведения банковских операций, бухгалтерского учёта и отчётности для банковской системы

1.1. Role play: A.You are a foreign journalist who takes great interest in the activity of the Central Bank. Ask questions you are interested in the activity of the Bank of Russia. B. You are a member of the board of directors of the Central Bank. Answer all questions a foreign journalist is going to ask you.

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3. Read the text below and answer these questions. Pay no attention to the gaps. 1) Which way of making money appeals to you the most? 2) Can you think of any other ways of getting rich? MONEY, MONEY, MONEY You could win the lottery or inherit a fortune at (0) the age of 50. But most of us dream about getting rich as soon as (1) _______ can. So, if you want to find out how to make a fortune, read on. Be a supermodel Follow the example of Linda Evangelista, (2) _______ won’t consider getting out of bed for less (3)_____£10,000. That’s the minimum fee the supermodel (4) _______ Canada charges for a day’s work, and she (5) ________ thought to earn $2 million a year. But a model, don’t give (6) _______ hope. There are other ways (7) _________ getting money. Write a brilliant book If you are a best seller, you probably wouldn’t have to work again. The author Peter Mayle, who had previously (8) ________ in advertising, wrote two amusing books about his home (9) ________ the South of France. The books were very successful, (10) ________ he also made a fortune from the TV series. If he makes a film, he will no doubt make even more money. Have a bright idea Bette Nesmith invented something (11) ________ make every secretery’s life a little easier – she invented Liquid Paper, the original typewriter correction fluid. She came up with idea (12) _______ day while she was working (13) ________ a typist. By (14) ________ so, she changes office life forever and earned herself a fortune (15) ________ the same time. 3.1. Read the text again and think of one word which best fits each space. Example: (0) the

4. Who wants to be a millionaire? A. In pairs or small groups, discuss these questions. 1. Do you think people with money should do more to help those without money? How?

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2. Have you even given any money to a charity or to someone who really needed it? Why? Why not? B. Read the text about a man called Charles Gray. As you read, look out for the answers to these question. Take no notice of the gaps. 1. In what way is Charles Gray different from most people? 2. How does he feel about his way of life now? 3. What do you think of what he did? Sixteen years ago, Charles Gray was a millionaire. He worked as a university professor and had a huge six- bedroomed mansion in the centre of Eugene, Oregon. Today he has nothing. But this is no sob story- there have been no Stock Market crashes or terrible illnesses or gambling debts. Charles Gray is poor on purpose. (0) H And this, he says, has brought him happiness. Charles Gray was born into a poor family where he developed, as he puts it, a kind of working-class dislike of the rich. However, he became very successful, in the traditional American dream fashion. (1) _____ He married for love but later inherited both a large mansion and a small fortune- a little over $2 million. (2) ______ The enormous amount of money that he had inherited began to make him feel guilty and uncomfortable. It bothered me that people all over the world were starving and didn’t have a fair chance. The solution came when his wife Leslie announced over breakfast one morning that she thought they should give away half of their money. Instead of choking on his cornflakes, Charles reaction was “What an excellent idea” (3) ______ Soon afterwards, they moved out of their big house into a smaller apartment. But in spite of giving away more money that most people make in their lifetime, Charles still wasn’t happy. Although he was a lot poorer than he had been the year before, he wasn’t poor enough. Then he thought up the idea of dividing the world’s wealth by its total population, and working out how much each person should have. (4) ______ So he gave away everything he still owned, and decided to try and live on his fair share. At this point his wife decided to leave. Now, sixteen years later, he lives in a small rented caravan in the backyard of someone else’s house. He does not need to buy much, so he only has to work for a few hours a week. He grows his own vegetables and in the summer he collects the fruit that most people can’t be bothered too hard and being over-ambitious is a major cause of unhappiness, a view which many people would agree with.” We have grown richer, because the consumer

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goods that are put before us are so appealing. (5) _____ It doesn’t contribute to happiness- in fact many people are more miserable. They would be much happier if they wanted less and worked less”. He believes that most people try to escape from the rat race by earning so much money that they will be free from everyday worries, but most people never succeed. (6) ______ He is no longer guilty about his undeserved wealth, and says “I’m much happier now – I wouldn’t go back to being rich for anything – no way” C. Seven sentences have been removed from the text. Choose from the sentences A-H the which fits each gap (1-6). There is one an extra sentence that you do not need. There is an example at the beginning. A. He has found an easier way of getting out of it, and has discovered that choosing to be poor makes you free. B. Most people would be very happy with this, but Charles Gray was different. C. He worked out that this came to about $100 a month. D. She always used to say that Charles was the most unselfish person in the world. E. So the Grays set up a small charity and gave away half of their money to their favorite causes. F. But in order to pay for a bigger house or better car you have to put in an enormous amount of work. G. He passed his exams, got a car, credit cards and a good job as a university professor. H. Tired of being a “have” in a word of “have-nots”, he made the deliberate choice to get rid of his wealth. D. Now answer these questions. 1. Which answers depend mainly on reference devices? 2. Which answers depend mainly on the context? E. Match the words and phrases from the article 1-5 with their meanings in a-e. 1 sob story a products bought and used by consumers 2 over-ambitious b competitive society 3 consumer goods с sad tale to make you cry 4 the rat race d wealthy and poor people 5 the “haves” and “have-nots” e wanting to succeed too much

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F. Think of four different ways of finishing these sentences. Example: If Charles Gray were my father… … I would be angry with him for giving all the family’s money away. … I would try to make him see a psychiatrist. … I would feel proud of him. … I would be worried about his health. 1 If my parents gave all their money away, … 2 If I were a millionaire, … 3 If I lived a long way from my family, … 4 If I had a year’s holiday, …

UNIT 4. ACCOUNTING I. STARTING-UP 1. Form all possible words with the help of the following suffexes. Translate the words.

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ability ing

tancy able


2. Fill each of the gaps below with one appropriate form. accountancy, accountable, accounting, accountant, accountability. 1) Who are you ________ to in this organization. 2) ________ of local government to Parliament is great. 3) ________ usually specialize in making the most important financial reports. 4) The_______ of our company is on the second floor. 5) _________ is said to be the main language of accountants. 3. Match the words (1-13) connected with “accounting” with their definitions (a-m). Study them. a) a written statement of money paid or owed for goods or 1) auditor services b) to give a satisfactory record of money in one’s care 2) withdraw c) required or expected to give an explanation of one’s 3) report actions, expenditure 4) communicate d) a person whose profession is to keep or check financial accounts e) money gained in business esp the differences between the 5) entity amount earned and the amount spent f) a person who officially examines the accounts of a 6) transaction company g) a spoken or written account of smth heard, seen, done, 7) accountable studied h) a person whose job is keeping records of the financial 8) account for affairs of a business smth i) to obtain gradually or gather together an increasing 9) accountant number or quantity of smth j) a piece of business done /cheque /credit /cash transactions 10) bookkeeper k) a thing with distinct and independent existence 11) profit l) to move or take sb/smth back or away 12) accumulate m) to make smth known 13) account 4. Getting paid 1) Study these notions.

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A) Shipping and billing When you ask to buy something, you order it, or place an order for it. When the goods are ready, they are dispatched or shipped to you. An invoice is a document asking for payment and showing the amount to pay. The activity of producing and sending invoices is invoicing or billing. B) Trade credit Vaclav is talking about his furniture business: 'Of course, we don't expect our business customers to pay immediately. They are given trade credit, a period of time before they have to pay, usually 30 or 60 days. If a customer orders a large quantity or pays within a particular time, we give them a discount, a reduction in the amount they have to pay. But with some customers, especially ones we haven't dealt with before, we ask them to pay upfront, before they receive the goods. Like all businesses, we have a credit policy, with payment terms: rules on when and how customers should pay. This is a part of controlling cash flow, the timing of payments coming into and going out of a business.' C) Accounts Jennifer and Kathleen are businesswomen. Jennifer has her own company in Britain and Kathleen owns one in the US.

I'm waiting to be paid by some of my customers. These are my debtors. They owe me money.

The people and organizations we sell to are our customers or accounts. The most important ones are key accounts.

The customers that I'm waiting to be paid by are my accounts receivable or receivables.

The suppliers and other organizations that I owe money to are my creditors. I must remember to pay tax to the Inland Revenue on time!


There are some companies that owe me money, but I get the feeling I'm never going to get paid: they're bad debts and I've written them off.


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2) A) Put these events in the correct order 1. Messco dispatched the goods to Superinc. 2. Superinc ordered goods from Messco. 3. Superinc eventually settled the invoice. 4. Superinc did not pay the invoice on time. 5. Two weeks later, Superinc had still not received an invoice, making them think. Messco's invoicing was not very efficient. 6. Someone in accounts at Messco chased the invoice by phoning the accounts department at Superinc. 7. When the goods arrived, Superinc noticed there was no invoice and asked Messco to issue one. 8. Messco's accounts department raised an invoice and sent it to Superinc. B) Complete these sentences using expressions from В opposite. 1. a constant problem. I get materials from suppliers on a 30-day payment basis, bur I'm supplying large companies who pay me on a 60-day payment term. 2. With some types of new wine, you can pay a special price ........and wait for it to be delivered in about ten months’ time. 3. Small businesses complain that larger companies abuse………….by paying invoices too slowly. 4. We offer a two per cent .......................for payment within ten days. 5. We have a very strict……………: our ... are that everyone pays within 30 days. C) Replace the underlined words with expressions from С opposite, using British English. My name's Saleem and I own a clothing company. Our (1) most important customers are department stores. Getting paid on time is very important and we have an employee whose job is to chase (2) people who owe us money. Of course, we pay (3) suppliers and other people we owe money ro as late as possible, except the (4) tax authorities, who we pay right on time! Luckily, I haven't had much of a problem with (5) people who don't pay at all, so we haven't had to (6) decide not to chase them any more.


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1. Study these notions. A) Accounts Hi, I’m Fiona and I’m an accountant. I work in Edinburgh for one of the big accountancy firms. We look at the financial records or accounts of a lot of companies. We work with the accountants of those companies, and the people who work under them: the bookkeepers. I like my profession: accountancy. Sometimes we act as auditors: specialist outside accountants who audit a company’s accounts, that is, we check them at the end of a particular period to see if they give a true and fair view (an accurate and complete picture). An audit can take several days, even for a fairly small company. When a company’s results are presented in a way that makes them look better than they really are, even if it follows the rules, it may be accused of creative accounting or window dressing. Of course, I never do this! The profession is called accountancy (BrE) or accounting (AmE). The activity is called accounting (BrE and AmE). B) Results ‘A firm reports its perfomance in a particluar period in its results. Results for a particular year are shown in the company’s annual report. This contains, among other things, a profit and loss account. In theory, if a company makes more money than it spends, it makes a profit. If not, it makes a loss. But it’s possible for a company to show a profit for a particular period because of the way it presents its activities under the rules of another. My firm operates in many countries and we are very aware of this! A pre-tax profit or pre-tax loss is one before tax is calculated. An exceptional profit or loss is for something that is not normally repeated, for example the sale of a subsidiary company or the costs of restructing. A company’s gross profit is before charges like these are taken away; its net profit is afterwards. The final figure for profit or loss is what people call informally the bottom line. This is what they really worry about! If a company is making a loss, commentators may say that it is in the red. They may also use expressions with red ink, saying, for example, that a company is bleeding red ink or haemorrhaving red ink. BrE: profit and loss account AmE: income statement III. ACCOUNTING 1. Read the text, understand the contents.

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Accounting can be defined as the measuring and recording of all relevant financial data concerning a particular entity, that is business, government organization, etc. Financial reporting is the communicating of such information in an appropriately summarized form. In the UK such a summarized form is called «Accounts». In the USA it is called «Financial statements». These accounts or statements are communicated to interested parties both within and outside the organization. Financial reporting provides information that is useful to present potential investors, creditors and other users in making rational investment, credit and other economic decisions. Accounting is often referred to as the «language of business», and, as a direct result of the work of accountants and auditors. A wide range of different users of financial reporting are able to answer questions such as: How much profit did the company make last year? How much should I lend to the company? Is this company more successful than its competitors? How much can I withdraw from the company? Was last year improvement over the year before? Accountants are therefore those individuals specialized in the «art» of capturing the correct data and preparing the most meaningful financial reports from that data. They are «producers» of financial information, which is then made available to «consumers» such as owners and lenders. Accountants are assisted in their work by bookkeepers, who operate some form of accounting system, usually computerized, to help capture, accumulate categories, summaries and report many thousands of transactions that affect an economic entity every year. 2. Use the word in bold to complete the second sentence so that it has a similar meaning to the first. 2.1 Accounting can be defined as the measuring and recording of all data. is sure Accounting __________ as the measuring and recording of all financial data. 2.2 Financial reporting provides information that is useful to present potential investors, creditors, other users in making economic decisions. provided Information ____________________ to present potential investors, creditors, other users in making economic decisions.

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2.3 Accounting is often referred to as the “language of business”. is said Accounting __________________ to as the “language of business”. 2.4 Accountants are therefore those individuals specialized in the «art» of capturing the correct data and preparing the most meaningful financial reports from that data. specialized Accountants ____________ in the «art»of capturing the correct data and preparing the most meaningful financial reports from that data. 2.5 Accountants are assisted in their work by bookkeepers. assist Bookkeepers _________ accountants in their work. IV. BOOKKEEPERS, ACCOUNTANTS, AUDITORS AND CONTROLLERS You are going to read the article about bookkeepers, accountants and controllers. Eight sentences have been removed from the article. 1. First read the text and understand the contents. Pay no attention to gaps. Bookkeepers deal in taxes, cash flow, which include cash receipts and cash disbursements, sales, purchases and differend business transactions of the company. 1________________. At the end of a period, usually a month, the totals of each book of original entry are posted into the proper page of the Ledger.2_________________. On the basis of all the totals of each account in the Ledger, the bookkeepers prepare a Trial Balance. Trial Balance is usually drawn up every quarter. The accountant’s responsibility is to analyse and interpret the data in the Ledger and the Trial Balance. 3__________________________________. No expansion or reorganization is planned without the help of the accountant. New product and advertising campaigns are also prepared with the help of the accountant. The work of accountants is rather sophisticated. 4________________________________. Certified accountants in England are called chartered accountants. In the USA the certified accountants are called certified public accountants. 5___________________. Junior employees in large companies, for example, offer practice accounting and then take the examination.

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The chief accounting officer of a large company is the Controller, or Comptroller. Controllers are responsible for measuring the company’s performance. 6____________________________. This position is very close to the top executives of the company. 2. Then choose from the text sentences (A-G) the one which fits best each gap (1-6). A. The Ledger shows all the expenditures and all the earnings of the company. B. Many accountants have special certificates after they pass examinations to the institute of accountants. C. The accountant is to determine the ways in which the business may grow in the future. D. They interpret the results of the operations, plan and recommend future actions. E. These auditors are internal auditors. F. But it is not necessary to have a certificate to practice accounting. G. Bookkeepers first record all the appropriate figures-in the books of original entry or journals. 3. Answer the following questions in a written form. Say what these professions are involved in. — What do bookkeepers deal in? — What is an accountant responsible for? — What are controllers engaged in? 4.Make up questions beginning with the given words, not changing the contents of the first one. — What does Ledger show? Could you tell me __________. — How does the bookkeeper prepare a Trial Balance? Could you let me know _________. — Is expansion or reorganization planned without the help of the accountant? Can you find out _________. — Do accountants always take the examination? I’d like to know _________. — Is the position of a controller very close to the top executives of the company? Do you think _________. — What way do auditors review financial records?

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An asset is something that has value, or the power to earn money. These include: current assets: money in the bank, investments that can easily be turned into money,money that customers owe, stocks of goods that are going to be sold. fixed assets: equipment, machinery, buildings and land. intangible assets: things which you cannot see. For example, goodwill: a company’s good reputation with existing customers, and brands: established brands have the power to earn money. If a company is sold as a going concern, it has value as a profitmaking operation, or one that could make a profit. B) Depreciation Joana Cassidy is head of IT (Information Technology) in a publishing company: ‘Assets such as machinery and equipment lose value over time because they wear out, or are no longer up-to-date. This is called depreciation or amortization. For example, when we buy new computers, we depreciate them or amortize them over a very short period, usually three years, and a charge for this is shown in the financial records: the value of the equipment is written down each year and written off completely at the end. The value of assets at any one time is its book value. This isn’t necessarily the amount that is could be sold for at that time. For example, land or buildings may be worth more than shown it the accounts, because they have increased in value. But computers could only be sold for less than book value.’ C) Liabilities

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Liabilities are a company’s debts to suppliers, lenders, the tax authorities, etc. Debts that have to be paid within a year are current liabilities, and those payable in more than a year are long-term liabilities, for example bank loans. D) Balance sheet A company’s balance sheet gives a picture of its assets at the end of a particular period, usually the 12-month period of its financial year. This is not necessarily from January to December. 2. Chose the best word from the brackets ( ) to fill the gap in each sentence. RETAIL BUSINESS FOR SALE: £125,000 1. Newsagent’s shop for sale as a going (buseness/ concern/ .................. . outler) 2. ............... assets include shop, fittings and a new delivery van. 3. The estimated ............... value of these assets is £ 120,000. 4. ................. assets include stock worth £ 15,000. 5. The most important ............... asset is our good reputation. 6. The .................. of our customers is included in the asking price.

(Permanent/ Firm/ Fixed) (book/ invoice/ paper) (Current/ Present/ Actual) (invisible/ invaluable/ intangible) (goodness/ goodwill/ goodbye)

3. Complete each of the numbered sentences (1-5) by writing one word in the gap. The first letter has been given to help you. Over time the equipment that a company owns loses value. 1. For example, computers and other IT equipment _d_ _ _ _ _ _ _ very quickly. 2. When we do our accounts, we _a_ _ _ _ _ them over three years. 3. So the value of a $6,000 PC is _w_ _ _ _ _ _ down by a third in the first year. 4. The depreciation of $2,000 is shown as a _c_ _ _ _ _ in our financial records. 5. Depreciation of all assets is shown on the _b_ _ _ _ _ sheet at the end of the year.

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4. Choose the best word from the brackets ( ) to fill the gap. 1. Our .................... include a € 12,000 tax bill and the € 8,000 we owe our suppliers. (assets/ debtors/ liabilities) 2. Our .................... are valuable because they have good customer recognition. (brands/ types/ makes) 3. Company cars depreciate quickly. We write them ................. completely after five years. (up/ out/ off) 4. Our ..................... year runs from the 1st of June to the 31st of May. (financial/ revenue/ capital) 5. Our only ...................... liability is a € 10,000 bank loan to be paid off over five years. (current/ long-term/ fixed) VI. ACCOUNTS AND BALANCE SHEETS 1. Read the text and understand the contents. From the Trial Balance, prepared by the bookkeeper, the accountant creates a Profit and Loss Statement and Balance Sheet. A Profit and Loss Statement or a Profit and Loss Account, shows the income or loss of the company for the period. The Profit and Loss Statement is made only on the basis of those accounts of the Ledger which affect the profit and loss of the company. The profit and Loss Statement may contain the following items:  Sales  Trading profit  Depreciation  Rent received  Interest paid  Profit before tax  Tax

Profit after tax Dividends Profit retained Earnings per share

The other accounts of the Ledger which reflect the assets, liabilities, and capital of the firm make up a Balance Sheet. This shows the net worth or book value of the company. A Balance Sheet made up for Johnson and Co., a specimen company, may appear as follows:

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BALANCE SHEET Johnson and Co. 31 December, 199x Assets Cash $5500 Petty cash fund 100 Accounts Receivable 750 Notes Receivable 100 Inventory Merchandise on hand 2080 Furniture and Fixtures 2750 Total Assets $11280 Liabilities Accounts payable 800 Notes payable 500 Total liabilities 1300 Capital Johnson Capital at the beginning 8000 Profit for the period 1980 Total capital 9980 Total capital and liabilities $11280

The two sides of the Balance Sheet that is Total Assets and Total Capital and Liabilities are always to be equal. 2. Read the text again about accounts and balance sheets. For statements 1-7 choose the correct answer A, B, C or D. 2.1 It is quite clear from the text includes__________. a) profit and balance sheet b) statements and total assets c) liabilities and capital d) profit and loss statement and balance sheet




2.2 The accountant will never forget to include____________ into Profit and Loss statement. a) merchandise on hand b) tax

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c) total capital d) two sides of the balance sheet 2.3 A Profit or Loss Account shows___________. a) inventory b) petty cash fund c) dividends d) income and loss 2.4 On the basis of all the totals of each account the bookkeeper prepares_________ . a) accountant’s report b) trial balance c) auditor’s report d) balance sheet 2.5 ________ is said to be the most important thing in work of a book bookkeeper. a) account b) Ledger c) Balance sheet d) capital of the firm 3. Find in the text and write down words which have the following meaning: a) a debt, financial obligation b) a thing, esp. property owned by a person, company, that has value and can be used or sold to debts c) wealth and property that can be used to produce more wealth d) a regular payment made for the use of land, buildings, machinery e) a part or portion of a larger amount which is divided among several or many people f) the condition that exists when two opposites are equal or in correct proportions g) advantage, benefit h) a book in which a bank, a business firm records its financial accounts. 4. Fill each of the gaps below with the words listed in an appropriate form.

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ledger, capital, balance, interests, rents, assets, liabilities, share. 1. His __________ included shares in the company and a house in France. 2. A business is in need of a substantional injection of new __________ . 3. _________ are going up again. 4. They have to minimize his tax __________ . 5. We each pay an equal _________ in the profits. 6. This newspaper maintains a good ____________ . 7. Deside what is in the ____________ of shareholders. 8. He was asked to inspect the sales ______________.

VII. GOVERNMENT ACCOUNTING 1. Read the text and understand the contents. 1. A number of concrete events have contributed to the change in attitude that permitted this transformation of government accounting. First, over the years, the size and complexity of government operations have increased as the government has become engaged in procuring complex machinery and using it for a variety of purposes. This development created the need for a system that would facilitate the maintenance of records of assets as well as data for the computation of fixed and variable costs. 2. Second, economic management has begun to make more demands on the type and timely supply of accounting information. In particular, changes in the domestic economy, such as inflation, hyperinflation, or recession, require adjustments in historical data for analytical purposes. 3. Third, accounting data became necessary to measure the performance of organizations so as to serve the immediate purpose of policy formulation and the broader purpose of accountability. Accountability has evolved from being limited to the observance of laws and the regulations to being concerned with the use of allotted resources and the effectiveness with which those resources are used. Fourth, accounting has to address not only immediate liabilities but also those that would be redeemed at a later stage. It became imperative to strengthen accounting system so that they would be able to measure and disclose these liabilities.

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4. Fifth, the role of external aid and related conditionally required the adoption of internationally accepted government standards for maintenance of accounts. As most of the aid was used for specific commercial or quasicommercial purposes, it required the introduction of the commercial type of accounting in those areas of government that were funded by foreign aid. Similar insistence on standards by regional organizations, such as the European Union, also contributed to major changes in the accounting practices of member countries as well as those aspiring to become members. 2. Match the following questions (1-5) with answers (a-e). 2.1 Why has the government become engaged in procuring complex machinery and using it for a variety of purposes? 2.2 What do changes in the domestic economy require? 2.3 Is accounting data necessary for government accounting? 2.4 Does accounting have to address only immediate liabilities? 2.5 What did external aid require from the government accounting? a) they require adjustments in historical data for analytical purposes. b) it has also to adress those liabilities that would be at a later stage. c) the size and complexity of government operations have increased. d) it required the introduction of commercial type of accounting. e) accounting data became necessary to measure the performance of organizations. 3. Match the words in italic with words that could replace them from (a-e). 1) A number of concrete events have contributed to the change in attitude that permitted this transformation of a) requirements government accounting. 2) This development created the need for a system that would facilitate the maintenance of records of assets as b) brought into well as data for the computation of fixed and variable being costs. 3) Economic management has begun to make more demands on the type and timely supply of accounting c) reinforce information. 4) It became imperative to strengthen accounting systems so that they would be able to measure and d) donated disclose these liabilities. 5) Similar insistence on standards by regional e) affair organizations, such as the European Union, also

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contributed to major changes in the accounting practices of member countries as well as those aspiring to become members. 4. Write down sentences containing: a) gerund (§ 1, 3); b) infinitive (§2) with “to”. Translate them into Russian. VIII. EFFECTIVE GOVERNMENT ACCOUNTING Read the text and think of one word that best fits each space. Performed, account, data, standards, balance, differences, accounting, control, entities, flow, benefits, levels, latter. The need of central agencies tend to be different from those of the spending agencies or the legislature. Essentially, these 1___________ reflect basic distinctions between macro and micromanagement. 2_________ is the common instrument of both. Standards may thus not always be uniform and may, in certain cases, take into 3___________ the unique features of an agency. The standards must represent a 4____________ between what is needed and what is practicable. If the 5_____________ is substantially different from the former, a phased implementation program may be appropriate. In some cases, the existing 6___________may need to be replaced or modified, and the need as well as the utility of the proposed standards should be dearly demonstrable. The standards should be dear and viable. Above all, there should be a balance between the costs incurred in developing the standards and the expected 7_____________ . The standards are not substitutes for operations, nor do they consist of forms designed for the purpose of recording 8_________ . They provide the rationale, the philosophy, and the objective as well as the meaning for the regular accounting activity in a public entity. The applicability of the standards to government and its 9____________ raises two issues. These standards may not necessarily apply to all 10______________of government. The increasing decentralization of responsibilities implies that most of the talks that were hitherto 11_____________ by the central government would be performed at the provincial, regional, state, and local levels. But a Major part of the funding for these tasks may continue to 12__________from the central government in the form of either shared revenues or block grants. In either event, the lack of congruence between resources and responsibilities make it

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imperative to establish standards for operational 13____________and accounting system at all levels. IX. ACTIVITY 1. What do you Know About Money? 1. Why do public companies publish annual reports? 2. Who uses the information in a profit and loss account? 3. A balance sheet shows total assets and total liabilities: Which term refers to what the company owns and which refers to the company’s debts? 4. Do the directors or the shareholders own the company? 5. A dividend is the share of the ______________ that the shareholders receive. 6. Which word means the total sum of money which is coming into the company? 7. Profit minus the costs associated with preparing the goods for sale is called gross/net profit. 8. The total profit without subtracting costs and overheads is called gross/net profit. 2. Bookkeeping as Part of Accounting Cycle Read the text and do a written translation. For management of any company to be efficient, extensive and accurate information concerning receipts and payments, assets and liabilities, depreciation of assets and other data about company status are required. Such information being obtained mainly from different records, additional funds and time should be invested in bookkeeping and accounting system. In general, accounting and bookkeeping mean identifying, measuring, recording economic information about any business, bookkeeping being considered the preliminary stage and pan of the larger field of accounting. The task of bookkeeping is to ensure the record-keeping aspect of accounting and therefore to provide the data to which accounting principles are applied in the preparation of financial statements. Bookkeeping provides the basic accounting data by systematical recording such day-to-day financial information as income from the sale of products or services, expenses of business operations such as the cost of the goods sold and overhead expenses’ such as a rent, wages, salaries. Accounting principles determine which financial events and transactions should be recorded in the bookkeeper’s books. The analysis and

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interpretation of these records is the primary function of accounting. The various financial statements produced by accountants then provide managers with the basis for future financial planning and control, and provide other interested parties (investors, the government) with useful information about the company. Modern accounting system is considered to be a seven-step cycle. The first three steps fall the bookkeeping function, such as: 1) the systematic recording of financial transactions; 2) the transferring of the amounts from various journals to general ledger (also called “posting step”); 3) the drawing up of the trial balance. Record keeping of companies is based on a double-entry system, due to which each transaction is recorded on the basis of its dual impact on the company’s financial position. To make a complete bookkeeping record of every transaction in a journal, one should consider interrelated aspect of every transaction, and entries must be made in different accounts to keep the ins (receipts) and outs (payments) balanced. A typical account is known to have two sides: the items on the left side are called debits, while the items on the right side are credits. Thus, double-entry bookkeeping doesn’t mean that the same transaction is entered twice, it means that the same amount of money is always debited to one account and credited to another account, each record having its own effect on the whole financial structure of the company. Certain accounts are increased with debits and decreased with credits, while other accounts are increased with credits and decreased with debits. In the second step of the accounting cycle, the amounts from the various journals are usually monthly transferred to the company’s general Ledger – a procedure called posting. Posting data to the ledgers is followed by listing the balances of all the accounts and calculating whether the sum of all the debit balances agrees with the sum of all the credit balances. This procedure known as the drawing up of a trial balance and those that follow it usually take place at the end of the fiscal year. By making a trial balance, the recordkeeping accuracy can be checked. The trial balance having been successfully prepared, the bookkeeping portion of the accounting cycle is completed. The double-entry system of bookkeeping enables every company to determine at any time the value of each item that is owned, how much of this value belongs to creditors, the total profit and how much belongs to the business clear of debt. Thus, one advantage of the double-entry system is that its information is complete enough to be used as the basis for making

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business decisions. Another advantage is that errors are readily detected, since the system is based on equations that must always be in balance. 3. Test 1 3.1 For each sentence, choose the best word to fill the gap from the alternatives given. Put a circle around the letter, A, B or C, of the word you choose. 1. This company was set up as a small family …………… in 1977. A. empire B. corporation C. business 2. Sally Green is on the board of ……………… . A. directors B. founders C. managers 3. Tom East is the ……………….. executive in charge of Marketing. A. chief B. head C. Senior 4. Last year we made ……………. of £ 1.5 million. A. liabilities B. profits C. finances 5. The corporate …………… we try to present is of a business that truly values its customers. A. image B. logo C. ladder 6. We …………. about 20 people in our London office and most have been with us for years. A. hire B. employ C. appoint 7. Each year, we …………….. two or three graduates as trainee managers. A. recruit B. qualify C. situate 8. We pay reasonable salaries and offer excellent fringe ............... . A. perks B. tips C. benefits 9. Next month we are going to .................. two new products. A. forecast B. innovate C. launch 10. We have carried out a lot of market .................. over the past year. A. focus B. research C. development 3.2 Write the abbreviations below in words. One word has been given in each case to help you. 1. HR H _ _ _ _ _ Resources 2. IT I _ _ _ _ _ _ Technology 3. CEO Chief E _ _ _ _ O _ _ _ _ 4. CAD C _ _ _ _ Assisted D _ _ _ _ _ 5. RSI Repetitive S _ _ _ _ I _ _ _ _ _ 6. PLS P _ _ _ _ _ L _ _ _ _ _ _ _ Company

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3.3 Match each sentence beginning (1-5) with the correct ending. Write the letter (a-f) of the ending you choose in the box below. There is one extra ending that you don’t have to use. 1) The company has equal a) I was offered early retirement opportunities 2) Please send your application b) with a covering letter, by Monday form, 9th May. 3) The health and safety inspection c) policy to fight discrimination. noticed 4) Last month, I achieved my sales d) candidates had to do psychometric target tests. 5) When the firm downsized, e) that the fire extinguisher was missing. f) so I got a performance-related bonus. 4. Test 2 4.1 For each sentence, choose the best word to fill the gap from the alternatives given. Put a circle around the letter, A, B or C, of the word you choose. 1. We do our printing in-house but we .................. delivery to a small, local company. A. supply B. source C. subcontract 2. We have set up quality ....................... as part of our TQM system. A. circles B. lines C. corners 3. We need a ................... market economy where the government doesn’t try to control prices. A. base B. low C. free 4. Until last year they .................. the market but now they face some stiff competition. A. penetrated B. dominated C. segmented 5. Our new .................. protects our eggs on the way to the shops and it looks good on the shelves. A. production B. packaging C. promotion 6. If you want to save some money buy ................ products rather the top brands. A. generic B. durable C. consumer 7. If you pay cash for this TV we will give you a 5% ................... .

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A. hike B. sale C. discount 8. Our prices are low because we cut out the ................ and sell directly from the factory. A. middleman B. marketer C. manufactures 9. Customers who use our .................. card get one point for every pound they spend. A. franchise B. sponsorship C. loyalty 10. We had nearly 5,000 ................... to our website last week. A. hits B. visitors C. views 11. We can increase our profit ................. by reducing our overheads. A. account B. margin C. costs 12. We’ve made a loss for the past three years but we should break ..................... this year. A. even B. up C. Our 4.2 Match each sentence beginning (1-5) with the correct ending. Write the letter (a-f) of the ending you choose in the box below. There is one extra ending that you don’t have to use. 1) Our only long-term liability is a) profit of $ 1.2 million for last year. 2) Syntectic PLS reported a pre- b) the learning curve has been very tax steep. 3) We fell behind with our c) we can sell the stock in our repayments so warehouse. 4) Next time I’m going to trade up d) they started undercutting us. to 5) Now we’ve got the product e) a £ 5,000 bank loan over three years. right, but 6) We’ll solve our cash flow f) they sold the house we’d put up as problem collateral. g) Something at the hign end or the range. 5. Succes and failure A) Cash mountains and surpluses Predaco is a successful company. Over the years, it has distributed some profits or earnings to shareholders, but it has also kept profits in the form of retained earnings and built up its cash reserves; it is sitting on a cash pile or cash mountain. These reserves may be used for investment or to make acquisitions: to buy other companies.

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B) Debt and debt problems Here are some expressions that can be used to talk about company's debts, or country's foreign debts:


repayment servicing

when a company repays its debt and/or interest on it; 'debt repayment’ describes a particular amount repaid burden a company’s debt, especially when considered as a problem crisis when a company has serious difficulty repaying its rescheduling when a company persuades ledgers to change restructuring repayments dates and terms default when a company fails to make a debt repayment Note: reschedule


a debt restructure

repay to default on service

a debt

C) Turnarounds and bailouts Doomco is in financial trouble and it is being described as sick, ailing and troubled. They've called in a company doctor, Susan James, an expert in turning round companies. There may be a turnaround and Doomco may recover. But if there is no recovery, the company may collapse completely. Ms James is currently looking for another company to bail out Doomco by buying it. This would be a bailout. D) Bankruptcy

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If a company is in serious financial difficulty, it has to take certain legal steps. In the US, it may ask a court to give it time to reorganize by filing for bankruptcy-protection from creditors, the people it owes money to. In Britain, a company that is insolvent, i.e. unable to pay its debts, may go into administration, under the management of an outside specialist called an administrator. If the company cannot be saved, it goes into liquidation or into receivership. Receivers are specialists who sell the company's assets and pay out what they can to creditors. When this happens, a company is wound up, and it ceases trading. A company in difficulty that cannot be saved goes bankrupt.

UNIT 5.FOREIGN TRADE I. STARTING - UP 1) Match the words with their definitions. There is one extra word (1 - 16 ) that you don’t need. 1 Competition a) to test the ability of smb; to stimulate 2 Leader b) to try to win sth by defeating others who are trying to do the same 3 Follower c) a supply of smth that a company, an organization or an individual has and can use to increase wealth

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4 Niche 5 Challenge 6 Advantage 7 Compete 8 Specialize 9 Relations l0 Consumption 11 Export 12 Import 13 Labour 14 Resources

d) a condition or circumstance that puts one in a favourable position compared to other people e) a person or thing that leads f) work, especially hard physical work g) an opportunity in business h) to bring goods, services, ideas from a foreign country into one’s own country i) activity in which people compete j) a supporter of a particular person, cause, belief k) links, contacts or dealings between people, group or countries 1) the using up of food, energy, resources m) to become an expert in a particular subject branch; to give a particular attention to a product n) to sell and transport goods to a foreign country

2) The following sentences contain phrases connected with the word "competition" Put one of the given words in each of the sentences. relations, import, niche, leader, advantage, challenge, competition, consumption, competing, resources, labour, specializing, exported. 1. We are in with several other companies for the contract. 2. Gas and oil always increases in cold weather. 3. The job doesn't really him. 4. Several companies are with each other to gain the contract. 5. He has the of a steady job. 6. The company lacks the financial to invest in new technology. 7. This country is a world in wealth care. 8. relations between workers and employers leave much to be desired. 9. A company should find a in the market. 10. There is a shop in this district in hand-made chocolate. 11. The country has to most of its raw materials. 12. Currently only 5% of their output is . 13. Friendly exist between our two countries. II. FOREIGN TRADE 1) Read the text and understand contents. What is now called international trade has existed for thousands of years. Long before there were nations with specific boundaries. Foreign trade

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means the exchange of goods and services between nations, but speaking strictly in economic terms, international trade today is not between nations. It is between producers and consumers or between producers in different parts of the globe. Nations do not trade, only economic units such as agricultural, industrial, and service enterprises can participate in trade. Goods can be defined as finished products, as intermediate goods used in producing other goods, or as agricultural products and foodstuffs. International trade enables a nation to specialize in those goods it can produce most cheaply and efficiently and it is one of the greatest advantages of trade. On the other hand, trade also enables a country to consume more than it can produce if it depends only on its own resources. Finally, trade expands the potential market for the goods of a particular economy. Trade has always been the major force behind the economic relations among nations. Different aspects of international trade and its role in the domestic economy are known to have been developed by many famous economists. International trade began to assume' its present form with the establishment of nation-states in the 17th and 18th centuries, new theories of economics, in particular of international trade, having appeared during this period. In 1776 the Scottish economist Adam Smith, in “The Wealth of Nations”, proposed that specialization in production leads to increased output and in order to meet a constantly growing demand for goods it is necessary that a country's scarce resources be allocated efficiently. According to Smith's theory, it is essential that a country trading internationally should specialize in those goods in which it has an absolute advantage — that is, the ones it can produce more cheaply and efficiently than its trading partners can. Exporting a portion of those goods, the country can in turn import those that its trading partners produce more cheaply. To prove his theory Adam Smith used the example of Portuguese wine in contrast to English wool. Half a century later, having been modified by the English economist David Ricardo, the theory of international trade is still accepted by most modern economists. In line with the principle of comparative advantage it is important that a country should gain from trading certain goods even though its trading partners can produce those goods more cheaply. The comparative advantage is supposed to be realized if each trading partner has a product that will bring a better price in another country than it will at home. If each country specializes in producing the goods in which it has a comparative advantage, more goods are produced, and the wealth of both buying and selling nations increases.

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Trade based on comparative advantage still exists: France and Italy are known for their wines, and Switzerland maintains a reputation for fine watches. Alongside this kind of trade, an exchange based on a competitive advantage began late in the 19th century. Several countries in Europe and North America having reached a fairly advanced stage of industrialization, competitive advantage began to play a more important role in trade. With relatively similar economies countries could start competing for customers in each other's home markets. Whereas comparative advantage is based on location, competitive advantage must be earned by product quality and customer acceptance. For example, German manufacturers sell cars in the United States, and American automakers sell cars in Germany, both countries as well as Japanese automakers competing for customers throughout Europe and in Latin America. Thus, international trade leads to more efficient and increased world production, allows countries to consume a larger and more diverse amount of goods, expands the number of potential markets in which a country can sell its goods. The increased international demand for goods results in greater production and more extensive use of raw materials and labour, which means the growth of domestic employment. Competition from international trade can also force domestic firms to become more efficient through modernization and innovation. It is obvious that within each economy the importance of foreign trade varies. Some nations export only to expand their domestic market or to aid economically depressed sectors within the domestic economy. Other nations depend on trade for a large part of their national income and it is often important for them to develop import of manufactured goods in order to supply the ones for domestic consumption. In recent years foreign trade has also been considered as a means to promote growth within a nation's economy. Developing countries and international organizations have increasingly emphasized such trade. 2. For statements 1 - 10 chose the best answer from А, В, С or D. 2.1. The theory of international 2.2. Adam Smith was the first trade is used by to propose a) nations with specific a) exchange of goods boundaries b) trading partners b) economic units c) specialization in production c) enterprises d) potential markets d) by most modern economists 2.3. Comparative advantage implies

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a) to bring a better price to the producer b) to increase world productions c) to rise the growth of domestic employment d) to expand the domestic market 2.4 Nowadays foreign trade is said a) to aid economically depressed sectors in the world b) to be a means to promote growth within a nation's economy c) to produce cheap goods d) to increase agricultural products and foodstuffs 2.5 Comparative advantage is based on a) new theories of economics b) on country's scarce resources c) location d) national income 2.6. Comparative advantage appeared in a) 1776 b) 1786 c) 17 and 18 centuries d) the 19 century 2.7. Long ago the main task of foreign trade was to a) expand trade relations b) accept specialization c) exchange goods and services between nations f) develop similar economies 2.8. Competitive advantage depends on a) location b) home markets c) product quality and customer acceptance

d) similar economies 2.9. Comparative advantage was modified in a) France and Italy b) North America c) Switzerland d) Scotland 2.10. To compete in the international market domestic firms must have a) efficient economy b) modernized economy c) innovative economy d) all of these

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3) Find a word or phrase in the text that means: a) a large amount of money property b) A condition or circumstances that puts one in a favorable position compared to other people c) involving comparison or comparing d) involving people competing against each other e) the exchange of goods and services for money or other goods f) a place or position g) of on inside a particular country, not foreign or international 4) Choose a sentence that reflects the main idea.  Trade enables a country to consume more.  Trade expands the potential market for the goods of a particular country.  Nations depend on trade for a large part of their national income.  International trade leads to more officient and increased world production, expands the number of potential markets in which a country can sell its goods, allows countries to consume a larger and more diverse amount of goods. III. TYPES OF PAYMENTS IN FOREIGN TRADE. 1) Read the first part of the text and say what types of payments are used in Foreign Trade. I. Payment of goods supplied in the local trade is a rather simple matter. It is made either in advance or within a sensible short period after delivery. If a buyer fails to pay, there comes legal action after which payment can be enforced. The matter is different in foreign trade because a great deal of time is spent on correspondence, despatch and delivery. It is here that banks play a fundamental part. Their services have to be paid for, but are not expensive and always necessary - the bank comes into each transaction at this or that stage. Payments in foreign trade are usually made by: 1. banker's transfer; 2. bill of exchange; 3. letter of credit. As well as in the local trade, payment may be made a) in advance; b) on open account. Payments in advance are used 1) when a buyer is in urgent need; 2) when a buyer is unknown to a seller; 3) in the case of a single 46

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isolated transaction. The method of payment in these cases will probably be by banker's draft or banker's transfer. Open account terms are granted by a seller to a buyer of unquestionable reputation in whom he has complete confidence, e.g. regular customers, agents or distributors. In these cases payment is made quarterly by bill of exchange or banker's transfer. II 1) Read this part of the text. Use the words given in capitals at the end of each line to form a world that fits in the space in the same? The banker's transfer is a mere transference of money 1. Buy from the bank account of 1. a in his own country to 2. Sell the bank account of the 2. in the seller's country. It 3. Necessity is only3. for the customer to send a letter of 4. Instruct 4._________ to his bank or use a 5. form. The 5. Specially transfer is executed at 6. rates of exchange and 6. Currency subject to any exchange control 7. of the countries 7. Regulate concerned. 2) Read this part of the text. Look carefully at each line. Tick (v) the lines which are correct and underline the unnecessary. The bill of exchange (B/E) is a written of order from a creditor to a debtor to pay on demand or at a specified date to a stated sum of money to a person named on the bill, or to his an order. The bill is drawn by the creditor on the debtor, and is sent to the debtor or his agent to pay from or accept (to acknowledge the debt). The debtor accepts it through the signing his name on the front of the bill, together with the date. The bill becomes now legally binding', and the acceptor must meet it at or before the due date. Failure to meet the bill on the due to date will result in total discredit for the creditor, and legal action can follow. An unpaid bill is called "dishonoured", and the creditor can protest it, which gives to him the right to prosecute the debtor. 3) Read this part of the text and decide which answer А, В, С, or D The letter of credit (L/C) is the 1 generally used method 2 payment in the export trade. It starts with the buyer 3 instructs his bank to issue the L/C for the amount of the purchase and in favour of the seller. The buyer's bank 4 this instruction, a special 5 form containing full details of the transaction, to its agent (a bank cooperating with it) in the seller's country. On 47

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6 the instruction, the agent bank informs the seller about the credit. The seller can now 7 out the buyer's order, knowing that when he 8 so, money will be paid at once by the agent bank. The buyer is equally secure, because the agent bank will pay 9 his behalf only if the conditions of the transaction 10 completely by the seller. A L/C may be paid to the seller not immediately upon execution of the order, if there 11 an agreement 12 the seller and the buyer the agent bank can accept a bill of exchange 13 by the seller on the agent bank. The buyer gets credit and the action is absolutely safe for the seller, who 14 discount the bill for ready cash if he needs it. a b с d 1 more most much many 2 in by of for 3 who what which that 4 is sending sends to send sent 5 being printed printing printed to print 6 being received to receive received receiving 7 to carry carry carried carrying 8 does has done had done have done 9 on in by from 10 executed are ...executed are ... executing execute 11 is Will be are has 12 besides apart from between among 13 having drawn to draw drawing drawn 14 can may should ought 4. Translate into English: 1) Одним из наиболее часто употребляемых способов оплаты во внешнеторговых операциях является аккредитив. 2) Владелец векселя может продать его банку по номинальной стоимости. 3) Оплата товара отечественным поставщикам производится обычно или посредством предоплаты или в течение некоторого разумного периода времени после поставки товара. 4) Вы можете оплатить данный товар по текущему курсу обмена валюты. 5) Условия оплаты по открытому счету предоставляются по покупателю с безупречной репутацией. 48

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6) Номинальная стоимость; денежное обеспечение; индоссировать документ (сделать передаточную надпись); пущенный в обращение вексель; дисконтировать вексель (снижать учетный процент при досрочной оплате) 5. Fill in the required prepositions: 1) Payment goods the home trade is made either advance or a reasonably short period delivery. 2) There is little time lost correspondence and delivery. 3) A bill exchange is an order written form addressed one person another to pay demand one demand or a named date a certain sum money __ or his order. 4) The banker's transfer is carried current rates exchange. 5) This transaction is simple and may be speeded cabled instructions if desired. 6) The L/C is ideal individual transactions or series, it gives protection both the seller and the buyer. 6. Read and translate the text in writing : One of the features of the bill of exchange is Importance that it is . It means that it can be used by the Negotiate holder to pay his own debts. To do this, the of Hold the B/E must endorse it, i.e. sign his name on the bill before Hand it in to the next holder. The of the bill can also Own sell it to the bank, who will pay face value, less interest: this Count is called to a bill. The other way to Usage a bill is to leave it as security for a loan. Know It is due to its free negotiability that the B/E is Pay to be a useful means of in foreign trade. Success Undoubtedly, its ________operating depends on confidence and trust. Before handling bills each company's status and Individuality reputation are thoroughly checked and taken into account. IV. CUSTOMS TARIFFS IN RUSSIA 1. Read the text and answer the questions below the text. In every country import-export rates are supposed to fulfil four functions: - to protect home producers from foreign competition in order to increase their own competitiveness in the domestic market; 49

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- to limit exporting products in which there is a shortage in this country and to regulate foreign trade transactions for political interests; - to supply local consumers, both legal entities and individuals, with products which are not produced in this country or produced insufficiently; - to provide the state budget with additional financial resources. In order to put these issues into practice, the Russian government changed its import rates in 1994. The change of import duties' affects mostly the status of foodstuff imports. Inflation and the subsequent price increases energy, equipment and other materials make storage, processing the products and their packing very expensive. Foreign suppliers have the opportunity to sell products at lower prices, though sometimes their products are of lower quality. Food intervention of imported goods has led to the reduction in the production of some agricultural products inside Russia. So the change of customs tariffs is based on an objective necessity to protect local commodity producers and does not conflict with the General Agreement on Tariffs and Trade. Customs duties are levied only on those types of products which are produced in sufficient quantities. The level of imposition by import rates was increased at an average of five to seven percent. Formely, the import rates were, calculated as a percentage of the customs value of the imported goods. At the present time there is a universal order for introducing rates as an absolute sum for the imported unit (kilogram, liter, piece) value. For some types of agricultural products, mainly fruits and vegetables, seasonal duties with limited duration are in force. Apart from the duties on foodstuffs the duties on some types of industrial products have also been increased. This step of the government is related to the fact that during the last several years Russian industry has experienced difficulties connected with the success of sale of imported cars, electronics, and some other types of industrial import. Duty rates have been increased on different transport vehicles, on completing articles for assembling electronics and computers, on consumer electronics and on metal-cutting machines. The minimum duty sums per one item for cars depend now on the engine volume and the year of production. The regulations for granting a delay in payment for import duties have also been changed. Previously, the delay was permitted for a period of no more than thirty days. This delay was granted to the importer with no additional fees or expenses. Under the new regulations, this period is prolonged up to sixty days, but a certain interest is collected throughout the whole duration of the delay. 50

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Export duties in Russia were set up in 1992. At that time world prices were much higher than internal ones and export was highly profitable, though it seriously hurt the level of domestic consumption. Nowadays, in relation to the increase in domestic prices, the existence of export duties negatively affects the ability for long-term export deals. So export duties are supposed to be cancelled in future. Answer the following questions: 1) When did the Russian government change import duties rates? 2) What did this change mostly effect? 3) What was the result of inflation? 4) How does food intervention influence the home agriculture? 5) What are customs duties levied on? 6) What do the duty sums for cars depend on? 2. Look through the text again and find: a) ing-forms and infinitives; d) translate sentences including them into Russian. 3. Use the word in bold to complete the second sentence so that it has a similar meaning to the first. a) Export duties in Russia were set up in 1992. They set up_______in 1992 b) Russian government changed its import rates in 1994. Russian__________________________________in 1994. c) Apart from the duties on foodstuffs the duties on some types of industrial products have also been increased. increased The government____________________________apart from. the duties on foodstuffs. d) Foreign suppliers have the opportunity to sell products at lower prices. don't miss the opportunity Foreign suppliers _____________________________________at lower prices. e) The change of import duties affects mostly the status of foodstuff imports. is sure The status of foodstuff imports_______________________________the change of import duties. f) Food intervention of imported goods has led to the reduction in the production of some agricultural products inside Russia. that 51

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It was____________________________of some agricultural products inside Russia. 4. Read the text again and think of words which best fits each space. 1. All taxes, customs duties and other charges levied connection the performance this Contract Russia are to be paid the Sellers and those levied outside Russia are to be paid the Buyers. 2. The simplest form a tariff is one which consists a single column levying the same rate duty all imports. 3. addition customs duties proper, many countries levy extra charges one kind or another. The most common form is a surtax charged as a percentage the duty. 4. The internal taxes are a different kind. They are collected imports many countries. These are usually levied the same rate as similar products domestic origin. Included this category are sales taxes, excise taxes, V.A.T., turnover and transaction taxes, and the like. 5. Value added tax (VAT) Read the text and say what VAT is; Value Added Tax (VAT) is a Government tax. At present the standard VAT rate is 17,5 %. Everyone in Britain must pay VAT on almost everything they buy. VAT is usually incorporated in the price. Visitors to Britain can reclaim the tax when they leave Britain and present the appropriate documents issued by she shop. Usually when they buy rather expensive things like furs, gold, hi-fi goods etc., they should wonder if the shop operates the VAT scheme. 6. Give the English equivalents of: Hалоговая ставка; таможенные сборы; взимать налог (3 варианта); дополнительное налогообложение (2 варианта); внутренний (федеральный) налог; налог на продажу; акцизный сбор; налог с оборота; налог на добавленную стоимость; взимать определенный процент от стоимости товара за хранение дополнительные финансовые ресурсы; ставки импортной пошлины; продовольственные промышленные товары; оборудование; хранение, переработка и упаковка товаров, таможенные тарифы; ввозная таможенная пошлина; уровень налогообложения; стоимость единицы товара; сезонные 52

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пошлины; комплектующие; уровень внутреннего потребления; в среднем. 7. Retell the text according to the following plan: 1) The functions of import-export rates. 2) Customs tariffs as an objective necessity to protect a local market. 3) The increase of import rates. 4) The problem of export duties.

V. INTERNATIONAL BUSINESS 1. Read the text and choose a suitable word that fits best each space International business is 1 in importance. The United States is 2 the biggest exporter and the biggest importer in the world. About 25,000 U.S. firms are engaged in some types of international business activity. The concept of international business includes the concepts of balance of trade (the relationship 3 exports and imports) and balance of payments (the difference between inward and outward cash flows). Countries are usually better off if they 4 in certain products or commercial activities. A country has 5 absolute advantage in marketing a product if it is in a monopolistic position or produces the item at the lowest cost. It has a comparative advantage if it can supply the product more efficiently or at 6 cost than it can supply other products. Some countries refuse 7 because they want to be self-sufficient, particularly in certain strategic areas. The five levels of involvement in world business are casual or accidental exporting, active exporting, foreign licensing, overseas marketing by the firm, and foreign production and foreign marketing. The three primary obstacles to world business 8 economic, social, and cultural obstacles; tariffs and trade restrictions; and political and legal obstacles. There 9 a movement toward multinational economic integration in many parts of 10 world. Three basic formats exist: the free trade area, the customs union, and the common market or economic union. Multinational corporations are those operating internationally-have become11 dominant in foreign markets that in 12 countries they are now the object of close scrutiny. Companies 13 abroad should act fairly and responsibly. 53

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1 2 3 4 5 6 7 8 9 10 11 12 13

a is grown both beside well specialize an low specializing are will be -----------------such any operating

b growing either apart from specialized a lower specialize is is an such as several operated



grows neither between has specialized the lowest specializes have Have been the so In great deal of being operated

grew every among specialize ----------------lowers to specialize has has been a The same as plenty operate

VI ACTIVITIES 1. International Relations A summit meeting 1. Put each of the following words or phrases in its correct place in the passage below. summit meeting breakdown leader item spokesperson news conference preliminary settle hold agenda The American President and the Russian (a) have announced their intention to (b) _______________ a (c) in Vienna next month. The two countries have already had (d) ___ talks and decided on an (e) for the meeting. The main (f)__________ will be a discussion about the nuclear arms situation. At a (g) _________ he d in Washington yesterday a government (h) _______________ told journalists that the unfortunate (i)____ of last year's talks between the two countries had been caused by disagreements over arms. He said the Vienna meeting would be a chance for the two nations to (j) ______ their differences. Diplomatic relations 2. Put each of the following words or phrases in its correct place in the passage below. 54

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diplomatic relations ambassadors split embassies in protest at resume links break off Neighboring countries A and B had always had very good, close relations, but in 1992, owing to a disagreement over the exact location of the border between them, a (a) began to develop. Finally, in 1994, (b) _ military activity by country B near the border, country A announced its intention to (c) (d) with country B. Both countries withdrew their (e) _ __ and the (f; in the two countries were closed down, it is hoped that a solution will be found and that it will be possible to (g) normal trade, cultural and diplomatic (h) as soon as possible 3 Put one of the following words in each space in the sentences below. in for over of on at about by (a) The French leader hasn't yet decided _____ a date the meeting. (b) At a summit meeting each country is represented its head of government. (c) The announcement was made _______ a news conference Moscow. (d) __________________ The ambassadors had a discussion the peace treaty (e)The breakdown the talks surprised everyone. (f) The American ambassador walked out of the meeting protest the Russian speech (g) A spokeswoman said there was some disagreement the agenda _____________________________ the meeting


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UNIT 6. WORLD ORGANISATIONS I. STARTING – UP 1. Match the words with their definitions №


1 Organization 2 Tariff 3 Negotiations 4 Transition 5


6 7

Duty Customs



9 Regulations 10 Total 11 Contribute 12 Consultation 13 Cooperation

definitions a) to give smth, esp money on goods, to help a person or an organization b) a tax paid on imports c) a rule or restriction made by an authority b) a tax paid on imports e) the process or period of changing from one state or condition to another f) working together for a common purpose g) of money or currency h) the taxes that must be paid to the government on goods brought in from other countries I) a tax charged on particular goods esp on imports j) a system of money used in a country k) discussion aimed at reaching an agreement. l) a meeting for discussion. m) the activity of organizing smth.

2) Fill in gaps with the most suitable word. One word is extra which you don’t need. Transition, customs, regulations, negotiations, organization, contribute, monetary, currency, total, consultations. 1. She is brilliant but her work lacks . 2. Top tevel on trade matters between the American and Chinese delegations took place yesterday. 3. A settlement was reached after lengthy . 4. The firm made a profit of $ 200000. 5. This organization is engaged in of banking and tax laws. 6. They supported a single European . 7. The have seized large quantifies of smuggled heroin. 8. The unit of Japan is yen. 9. Will the country be able to make a peaceful to democracy? 10. Everyone should if they possibly can. 56

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II. THE WORLD TRADE ORGANISATION 1. Read the text and decide which answer A, B, C or D best fits each gap The World Trade Organisation (WTO),1 is the successor of the General Agreement on Tariffs and Trade (GATT), 2 on I January 1995, and is the legal and institutional basis of the multilateral trading system. It provides the principal contractual obligations 3 how governments frame and implement domestic trade legislation and regulations. The essential functions of the WTO 4 : - administering and implementing the multilateral and plurilateral trade agreements which together make up the WTO; -5 as a forum for multilateral trade negotiations; - seeking to resolve trade disputes; - overseeing national trade policies; - cooperating 6 other international institutions involved in global economic policy-making. In accordance with the «most favoured nation» (MFN) clause, members 7 grant to the products of other members no less favourable treatment than that accorded to the products of 8 other country. Quotas are generally outlawed, but tariffs or customs duties are legal in the WTO. The WTO extends previous GATT rules that laid down the basis on which governments could impose compensating duties. The WTO Agreement agriculture is designed to provide on 9 fairness in farm trade. The WTO agreement 10 intellectual property will improve conditions of competition. And 11 agreement will do the same for trade in services. GATT provisions encouraging industrialized countries 12 to assist trade of developing nations are maintained in the WTO. Developing countries are given transition periods to adjust to the 13 WTO provisions. Least-developed countries are given 14 more flexibility for their goods. The WTO authorities are: the Ministerial Conference, the General Council, three Councils: for Trade in Services for Trade-Related Aspects of intellectual property rights four Committees: on Trade and Development, on Balance of Payments, on Trade and Environment, on Budget, Finance and Administration. The Secretariat is located to 15 Geneva a


c 57


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1 what 2 establishes

whose was established

which established

3 having determined 4 have 5 to act 6 at 7 dare to 8 no 9 to increase


to determine

who has been established determining

is acting by have to some having increased on the other to assisting more difficult

are being acted for are to any increasing

were acts with is to several increased

with another to have assisted most difficultest so a

for others being assisted a more difficult

10 at 11 other 12 to assist 13 difficulter 14 same 15 the

even ----------

such an

III. The European Economic Community and the European Union Read the text and think of one word which best fits each gap. You will have to use some of the words more than once. Currency, to, establishment, of, the, member, on, customs, with, established, or, services, objective, among, in, economic. The European Economic Community, the Common Market, or the EEC was in 1957 by the Treaty of Rome. The original six member countries of the Community were France, West Germany, Belgium, Italy, Luxembourg and Netherlands. Then a few other countries joined the Community. Britain, together the Irish Republic and Denmark, joined the EEC on 1st January, 1973. The Community formed an enormous trading area of almost 250 million people, and accounted for two fifths the world's trade. The membership allowed imports to enter member countries either free of duty or at lower duties.


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All member countries contributed а common budget for certain purposes, based on relative total output of goods and , or gross national product. Under the Community regulations, people of countries were allowed to enter freely another member state to travel or to work there. The of the original six members of the Treaty of Rome was to create a process leading towards the goal of unification. This political purpose was spelled out in 1969 in Hague where the objective of «paving the way for a united Europe» was recognised and was realfirmed in 1983 in the Stuttgart Solemn Declaration; and in 1986 in the Single European Act, member states undertook «to transform relations as a whole their states into a European Union, and stipulated that the European Communities and European Political Cooperation would have as their objectives to contribute together to ma king concrete progress towards European Unity». The process creating an economic involvement and dependence that would go far to meet most member states ultimate goal of European Unity was realised 1992 with the signing at Maastricht of the Treaty on European Union, which set as its objective the establishment of «a European Union... a new stage in the process of creating an ever closer union among the peoples of Europe». Provision was made for the Union become a reality through, inter alia, the establishment of and monetary union, including the creation of a single (the euro) and the introduction of Union citizenship (and eventually removal of frontiers, under the Shengen System).

IV. International Monetary Fund: objectives and history 1. First read the text and answer the questions : a) What is the purpose of IMF? b) What are the functions of IMF? The purpose of the International Monetary Fund (IMF) is to promote international monetary cooperation through a permanent institution that provides the machinery for consultation and collaboration on international monetary problems. The function of the IMF is to facilitate the expansion and balanced growth of international trade, to promote orderly and stable foreign currency exchange market, and to contribute to balance of payments adjustment. The IMF monitors members' macroeconomic policies makes financial resources available to them in times of balance of payments difficulties, and provides them with technical assistance. 59

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Much of the IMF's work is centered on annual consultations with each member country to ensure that its national policies in the area of economic growth, price stability, financial conditions, and exchange rates take into account their consequences for the world economy and avoid unfair exchange policies. To ensure compliance with these basic tenets. the Fund is empowered to exercise firm surveillance over the exchange rate policies of member countries. 2) Read the text again and find in it words which mean the following: 1 the quality or state of being stable 2 to the progress of smth or support smth 3 a reason for doing smth; a function of smth 4 a sum of money saved or made available for a particular purpose 5 a measurement of how fast or how many times happens in relating to 6 smth else 7 doing something or working together for a common purpose 8 careful watch kept on sb suspected of doing wrong help V. The World Bank. First Read the text, paying no attention to gaps, and understand the contents. Consult a dictionary. The world bank is a sister institution to the IMF and was set up at the same time. 1______________. While IMF exists to provide short-term loans, the purpose of the World Bank is to provide long term loans to assist economic development. The World Bank is the world's foremost intergovernmental organization concerned with the external financing of the economic growth of developing countries. 2______________. Before recommending a Bank loan, the staff of the Bank must be reasonably satisfied that the productivity of the borrowing country will be increased and that the prospects for repayment are good. A country must be judged creditworthy. Engineering investigations are frequently carried out to determine the probable relation of a proposed project to benefits and costs. The Bank has shifted somewhat away from project lending for example a dam or a highway or a port); it has become concerned with education and other human services, the environment, and structural adjustment loans, the modification of governmental policies that are thought to have impeded long-run growth. 3________________. Recently it has acceded to the requests of the American secretary of the treasury to help ease the huge, outstanding, largely commercial-bank debt. Voting 60

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power in the Bank is determined by the size of each member nation's subscription. 4_____________. Ultimate power rests with the Board of Governors of the Bank. The governors meet annually in September. The day-today affairs of the Bank are determined by executive directors who live permanently in Washington, D.C. They hire a president, who hires a staff. 5________________. Read the missing sentences (a-e) then read the text again. Choose the sentence which fits best each gap. a) By tradition, rather that law, the President of the Bank is an American, usually a banker, proposed by the president of the United States. b) The Bank has also paid increasing attention to the evaluation of previous lending. c) Subscriptions are based on a formula that takes into account such variables as the value of each nations foreign trade and its total output. d) It has now some 150 member countries. e) The official title of the Institution is the International Bank for Reconstruction and Development.


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LITERATURE 1.Market Leader.Intermediate Business Course.D.Cotton, D.Kent,2001. 2.Countdown. To First Certificate. Oxford. M.Duckworth and K.Gude. 2004. 3.Business Vocabulary in Use. Professional English. Bill Mascull, 2004. Cambridge. 4.Test your Business Vocabulary in Use. Tricia Aspinall and G.Bethell. Cambridge University, 2004. 5.А.Д.Пароятникова, М.Ю.Полевая. Английский язык для гуманитарных вузов. 6.Right Word, Wrong Word. L.G.Alexander,2001. 7.Intermediate Vocabulary. B.J.Thomas,2000. 8.В.П.Кузовлев, Н.А.Лана. English Student’s book, 2000. 9.Oxford Advanced Learner’s Dictionary,1998. 10.English Grammar: reference and practice. Н.И.Петряева, Г.А.Глебова, Белгород, 2006. 11.Английский язык. Методические указания для студентов-заочников неязыковых специальностей. Белгород, 1998. 12.Шевелева С.А., Стогов В.Е. Основы экономики и бизнеса: Учебное пособие по англ. языку.- М.: Культура и спорт, ЮНИТИ, 2002.