Excess, to exceed, excessive

To dispose of excesses, excess of loss, excessive stock, to exceed a credit.

A deposit, to deposit, depository, depositor.

A deposit in a bank, a deposit at notice (at short notice), to pay a deposit, to deposit as security, deposit with fixed period, a call deposit, a checkable deposit, non-interest banking deposit, short deposit, a trust deposit, authorized depository, savings depositor.

Ex.5. Match the item in column A with its definition in column B.

A B

1. barter a. Tourists frequently carry instead of money.

2. currency b.Anything generally accepted in payment for

goods and services.

3. demand deposit c.The value of money.

4. legal tender d. A period of rising prices.

5. money e. Money in a checking account.

6. components of the money f. Its supply automatically expands and contracts

supply with business activity.

7. purchasing power g. Exchanging a good or service for another.

8. inflation h. M1, M2, and M3.

9. travelers’ checks i. Law requires that it should be accepted in

payment of debt.

10.elastic currency j. Government-issued paper money and coins.

Ex.6. Arrange the letters in brackets into definitions of given statements.

1.A generally accepted medium of exchange (ynome). 2. The amount of goods and services to be bought by customers (oepwr chasngiupr). 3.Paper money and coins issued by the federal government (crrncyue). 4. A period of rising prices, in which the purchasing power of nation currency falls (nilotifan). 5. People who put their money into savings accounts or bonds to guarantee a fixed rate of return-interest (verssa). 6. An institution to coordinate lenders and savers acting as a “financial middleman” (kanb).

Ex.7. Insert the words from the ones given below. Say which function of money you think to be the most important.

Money is because sellers will pay with things in exchange for money knowing that it can be used … other goods and services. From earliest times, precious metals such as gold, silver, and copper have been the most popular forms of money. Still, they were not only forms. Just as certain native American tribes used shells, other peoples … things like tobacco, fishhooks, and whales’ teeth as money, a medium of exchange.

Although anything can serve as money, as a practical matter whatever is chosen should have the following qualities:

Stability. The value of money should be more or less the same today as tomorrow. In societies in which the value of money fluctuates (goes up and down), people will save it in hopes its … will increase, or spend it immediately thinking it will be worth less tomorrow. Either could be harmful to the economy.

Portability. Money has to be small and light enough for people to carry. Bowling balls would impractical.

Durability. The material chosen must have a reasonable life expectancy. For that reason most countries use high-quality paper. U.S. currency actually contains cloth fibers, which is why it doesn’t disintegrate if you accidentally send it through a washing machine.

Uniformity. Equal denominations of money should have the same value. People could become confused if some quarters of dollar bills were … more than others.

Divisibility. One of the principal … of money is that it can be divided into parts. In other words, making change for a dollar is easy; making change for a chicken is not.

Recognizability. Money should be hard to copy and easy to recognize for what it is. The quality of the paper and intricate engravings make paper money extremely difficult … .

After accepting a money payment, one can either spend it or set it aside for use at a later time. The ability of money to hold its value over time is known as … . Money … us to state the price of something in terms that everyone can understand. One can say that a dozen eggs is worth $ 1.50. This is far simpler than figuring out how much milk, or clothing one can barter for a dozen eggs. Money allows you and … to agree on a wage, and it lets you measure the value of a new thing.

(to purchase, advantages, employer, to counterfeit, accepted, worth, values, a store of value, enables)

Ex.8 Read and translate the sentences paying particular attention to if - clauses (underlined).

1. You have a 500% overdraft and have just received a letter from the bank asking you to reduce this by $200 by the end of the month. Otherwise they will start legal proceedings against you. If you don’t reduce your over draft, the bank will start legal proceedings.

2. One of your clients has written to you applying for a personal loan. However, she has not included enough information about her financial situation for you to decide whether or not to approve the loan. If you have got more complete information you would have made a decision about the loan.

3. One of your major business clients has just hinted that it is prepared to change banks unless you arrange more favourable credit terms. If you don’t provide him with cheaper credit you will lose one of your best customers.

4. A friend has invited you to join her as a partner in a new business venture, but you did not feel you had necessary experience and refused his invitation. If you had had more experience you would have accepted the offer.

5. You are making arrangements with your bank for a holiday in Italy next month and are not sure about what currency to take. If you took traveller’s cheques it would cost you less than if you bought foreign currency.

6. You have just received a selection of press articles about your bank. Two of them are in German. Unfortunately Jack Wubben, who is the only person in the office who speaks German, is on holiday. If he were here, he would translate the articles.

Ex.9 Put the verb into proper form.

1. Equities would decrease if the owners (to withdraw) funds from the business.

2. If the company (to choose) proper ways to use its assets for producing goods and rending services, it would have earned enough revenue to stay in business.

3. If the company (to introduce) a new product, it would have increased the company’s future cash flows.

4. Until the customer received commodities or promised to pay the company in the future, the revenue (not to be recorded) in accounts receivable.

5. As the cash is received from the issuance of bonds, this figure (not to be shown) in the income statement.

6. As soon as there (to be) a change in the amount of one item in the balance sheet, it will be always accompanied by an equal change in some other item.

7. The same amount of depreciation would be evaluated each year if the accountant (to choose) the straight-line method.

8. As the cash (to be paid) to a purchase equipment, this figure will be added to the asset account of a plant.

Ex.10 Read the texts. Make up two or three sentences with if-clauses. Use them when answering the questions.

Text 1.

a) Has money undergone changes in the course of usage?

b) What might happen if the money did not change?

c) What could not have taken place if a computerized payment system had not been developed?

Money has become even more complex and sophisticated than currency. Today, most money consists of electronic entries in accounts stored on banks’ computers. But even “electronic money” is changing as people look for ways to use their computers to exchange with one another. For example, banks and businesses team up to develop computerized payment systems. Known as e-billing, you can receive your bills on-line, and pay your bills through online payment services offered by your local bank or other institutions with such services. With no actual currency exchanging hands, “money” is being transferred.

Such change shows that money continue to evolve as people are looking for better ways to exchange with one another. No matter what form money has taken, however, it will always be a medium of exchange, a store of value, and a measure of value.

Text 2.

1. Would the banking system of the USA have changed if it had not been for Great Depression?

2. Why did many believe that the banks had contributed to the collapse?

3. What helped to change the face of banking?

The Great Depression, which began in 1929, dealt a terrible blow to the American spirit. In the four years following the Wall Street Stock Market Crash of 1929, the economy shrank by 30%, a quarter of U.S. workers were unemployed and about 11,000 banks, a third of the total, failed. For depositors, “a failed bank” often meant the loss of the life’s savings. To the general public it appeared that the stock market crash causing the Great Depression.

Many believed, too, that banks had contributed to the collapse. Their belief led the Congress to investigate the securities market and the banking system. The Congress discovered that banks had been engaged in numerous questionable practices:

- banks left depositors’ funds to the brokerage houses they owned,.

- banks lent to depositors to buy securities from brokerage houses they owned.

- banks sold their customers’ stocks and bonds to their depositors.

Those practices had led to the Glass-Steagall Act of 1933 which prohibited banks, investment banks, and insurance companies from entering one another’s business. By the 1980s, however, Glass-Steagall began to look obsolete. Meanwhile, computers, electronic fund transfers, money market funds and ATM machines, none of which were around during the Great Depression, began to change the face of banking. Banks began selling mutual funds and certain insurance policies, while brokerage houses began offering accounts and other bank-like services.

Ex. 11 Read the text. Answer the questions given below.

So there are four systems that we use. Cash with order is ideal: but most customers want a period of credit, so it’s not always easy to insist on the cash first. The next one I mentioned was Open Account; and there three ways that open account customers can pay us: by cheque, by telegraphic transfer, or by mail transfer. BUT: we don’t give a customer open account facilities until we have business references from two major firms and from a bank. Open Account is OK with people you know well, but don’t go round offering it to strangers! Now bills of exchange or draft. We use two types: sight bills, which are a little like a cheque; and time bills, which are paid after a certain period .OK? Sight bills, time bills, OK. Now, the type of payment system I prefer to use is irrevocable letter of credit. The word “irrevocable” is important. It means that there is no risk: the banks guarantee that we get our money: and that’s the way I like it.

1. Who do you think is speaking? Why?

2. Which form of payment is preferable and why?

3. Which do you think is the most secure way of payment?

Ex.12. Read and translate the text. Use a dictionary if necessary. Entitle it.

The 1907 crisis, also called the Wall Street Panic, was especially severe. The Panic caused what was at that time the worst economic depression in the country’s history. It appears to have begun with a market crash brought about by both a modest speculative bubble and the liquidity problem and reserve pyramiding just discussed. Centered on New York City, the scale of the crisis reached a proportion so great than banks across the country neatly suspended all withdrawals - a kind of self-imposed bank holiday. Several long-standing New-York banks fell. The unemployment rate reached 20 per cent in the fall of 1907. Millions lost their deposits as thousands of banks collapsed.

The crises was terminated when J.P. Morgan, a man of unscrupulous tactics and phenomenal wealth, personally made temporary loans to key New York banks and other financial institutions to help them weather the storm. He also made an appeal to he clergy of New-York to employ their Sunday sermons to calm the public’s fears. Morgan’s emergency injection of liquidity into the banking system undoubtedly prevented an already bad situation from getting still worse. Although private clearinghouses were able to supply adequate temporary liquidity for their members, only a small portion of banks were members of such organizations.

What would happen if there were no J. P.Morgan around during the next financial crisis? Just how bad things could really get? There began to emerge both on Wall Street and in Washington a consensus for an institutionalized J.P. Morgan, that is, an institution that could provide emergency liquidity to the banking system to prevent such panics from starting. The final result of the Panic of 1907 would be the Federal Reserve Act of 1913.

Ex.13. Read and translate the text.

1. Speak about the way the Federal Reserve System controls the supply of money and credit.

The Federal Reserve System, also known as the “Fed”, is an independent U.S. government agency. Its most important function is to manage the country’s supply of money and credit.

The Federal Reserve has three main tools for maintaining the control over the total supply of money and credit in the economy. The first is discount rate, or the interest rate that commercial banks pay to borrow funds from Reserve Banks. By raising or lowering the discount rate, the Fed can promote or discourage borrowing and, thus, alter the amount of revenue available to banks for making loans.

The second is the reserve requirement. These are the percentages of deposits, set by the Federal Reserve, that commercial banks must set aside either as currency in their vaults or as deposits at their regional Reserve Banks. These percentages cannot be used for loans. In 1980 the Federal Reserve gained the authority to set reserve requirements for all deposit-taking institutions.

The third tool, which is probably the most important is known as open market operations. It is the buying and selling of government securities when the Federal Reserve buys government securities from banks, other businesses or individuals, it pays for them with a check (a new source of money that it prints) drawn on itself. When the check is deposited in a bank, it creates new reserves – a portion of which can be lent or invested- further increasing money supply.

These tools allow the Federal Reserve to use monetary policy to promote specific goals though certain factors do complicate the ability of the “Fed” to achieve them (employment problems, nation’s balance of payment difficulties, etc.)

2. Which problems of economic life can be solved by the FED? Prove it by an example from the text.

Ex.14.Questions and assignments for economic reasoning and discussion.

1. Do you remember what the prices of goods and services were when you were teen- agers? Report your findings to the class and use the consumer price index to

convert “yesterday’s” prices to ‘to-days’. Were common items really less

expensive in the “good old days”?

2. Have you ever been to a local bank? What services do they offer? Are they costly?

What are the jobs performed by the people who work there?

3. Do you know anything about history of banking (with special emphasis on the

events preceding the creation of Central banks)?

4. Can you clearly explain how money is made by banks?

Ex.15. Choose the letter of the item that best completes the statement or answers the question.

1. A bowling ball would not be useful as money because it lacks which of the following qualities?

1. Stability.

2. Portability.

3. Durability.

4. Recognizability.

2. Of the following, which is the largest component of the money in circulation?

1. Paper money.

2. Coins.

3. Checking accounts.

4. Savings accounts.

2. What gives a value to a $10 bill?

1. The cost of the special paper it is printed on.

2. The gold used to ‘back it up’.

3. The cost of the labor to print it.

4. The $10 in goods and services for which it can be traded.

2. In a money economy, money serves as a

1. Medium of exchange.

2. Measure of value.

3. Store of value.

4. All of the above.

2. A check is considered money because checks are

1. Easily obtained from a bank.

2. Generally accepted in payment for goods and services.

3. Easier to carry than metal coins.

4. Similar in appearance to paper currency.

2. The value of money

1. Can increase or decrease.

2. Remains the same at all times.

3. Increases with the passage of time.

4. Rises when prices rise.

2. The buying power of money

1. Increases during periods of inflation.

2. Decreases during inflation.

3. Decreases during deflation.

4. Is unaffected by inflation or deflation.

2. Which of the following groups will be hurt most by rising prices or inflation?

1. People on fixed incomes.

2. Bondholders.

3. Borrowers.

4. Lenders.

2. When demand increases faster than industry’s ability to satisfy this demand,

1. Prices rise.

2. Cost-push inflation exists.

3. There is an over-supply of goods and services.

4. All of the above.

2. Which statement about financial institutions is not correct?

1. A financial institution provides services in order to make a profit.

2. Banks only hold deposits for safe-keeping.

3. Bank-loans become additions to the money supply.

4. A central function of all financial institutions is to make loans to borrowers.

2. Which of the following groups will benefit most from rising prices?

1. People on fixed incomes.

2. Bondholders.

3. Borrowers.

4. Lenders.

2. Bank reserves are

1. Funds banks lend to other banks.

2. Funds set aside for future investment.

3. The sum total of customers’ deposits.

4. A percentage of deposits a bank must set aside.

2. The maximum amount of money that commercial banks can create depends upon the demand for loans and

a. The amount of cash on hand.

b. The amount of its excess reserves.

c. The gold and silver in its vault.

d. The supply of Federal Reserve notes issued.

2. Financial institutions

1. Accept and hold deposits only for business firms.

2. Accept and hold deposits only in the form of savings accounts.

3. Consider interest rates earned on loans a minor source of income.

4. Help collect and transfer funds in checking accounts.

Use your answers as the basic points when speaking about banking as an important financial institution.

UNIT VI . 1. The Role of Government in the Economy.