11. Speaking. How much do the items in the table cost in your country? Is the cost of living high in your country? Where is the cost of living low?

12. Read the text and explain the words in bold. Money

Money is anything that is accepted as payment for goods and services and repayment of debts. The main functions of money are as follows: a medium of exchange, a unit of account, a store of value, and a standard of deferred payment.

The money supply of a country usually consists of currency (banknotes and coins) and demand deposits or 'bank money'. Bank money exists only in the form of various bank records. Bank money performs the basic functions of money, as checks are generally accepted as a form of payment and as a means of transferring ownership of deposit money.

Many items are used as commodity money such as naturally scarce precious metals. Commodity money value comes from the commodity out of which it is made. The commodity itself constitutes the money, and the money is the commodity. Use of commodity money is similar to barter.

In 1875 economist William Stanley Jevons described "representative money," i.e., money that consists of token coins, or other physical tokens such as certificates, that can be reliably exchanged for a fixed quantity of a commodity such as gold or silver. The value of representative money stands in direct and fixed relation to the commodity that backs it. But it is not composed of that commodity.

Fiat money or fiat currency is money whose value is not derived from any intrinsic value or guarantee that it can be converted into a valuable commodity (such as gold). Instead, it has value only by government order (fiat). Usually, the government declares the fiat currency (typically notes and coins from a central bank) to be legal tender. It is unlawful not to accept the fiat currency as a means of repayment for all debts, public and private.

Commercial bank money or demand deposits are claims against financial institutions that can be used for the purchase of goods and services. A demand deposit account is an account from which funds can be withdrawn at any time by check or cash withdrawal. You shouldn’t give the bank any prior notice. Banks have the legal obligation to return funds upon demand (or 'at call').

Commercial bank money is created through fractional-reserve banking. This is banking practice where banks keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) and lend out the remainder. But they maintain the obligation to redeem all these deposits upon demand.

Commercial bank money differs from commodity and fiat money in two ways. Firstly it is non-physical, and secondly, there is some element of risk that the claim will not be fulfilled if the financial institution becomes insolvent.

Vocabulary

repayment – возмещение, возврат

a store of value – средство сбережения

deferred payment – отсроченный платеж

money supply – денежная масса

currency – валюта

demand deposit – бессрочный депозит

ownership – собственность, владение

commodity money – товар, выполняющий

функцию денег

barter – бартер, товарообмен

representative money – бумажные деньги,

полностью обеспеченные золотом или

серебром

token coins – денежные знаки

back – финансировать, субсидировать

fiat money – неразменные бумажные

деньги

intrinsic value – внутренняя стоимость

cash withdrawal – снятие наличных

legal tender – законное платежное

средство

prior notice – предварительное

уведомление

assets – активы

insolvent - неплатежеспособный

13. Give Russian equivalents:

medium of exchange, unit of account, convert into, declare, highly liquid

14. Choose words from the list to fill in the gaps, then use them to make sentences:

bank, liquid, legal, main, token, means of

1. ______ assets	4. ______ records
2. ______ function	5. ______ obligation
3. ______ repayment	6. ______ coins

15. Read the text again and answer the questions:

1) What is money?

2) What are the main functions of money?

3) What does the money supply of a country consist of?

4) In what form does bank money exist?

5) What does the commodity money value come from?

6) What does representative money consist of?

7) What does the value of representative money depend on?

8) What is fiat money?

16. Correct the statements:

1. Bank money exists in the form of currency.

2. Fiat money value is derived from any intrinsic value.

3. Funds can be withdrawn from a demand deposit only after prior notice.

4. Commercial bank money does not differ from commodity and fiat money.

17. Make notes under the following headings:

Functions of money, Bank money, Commodity Money, Representative money, Fiat money, Commercial bank money.

Close your books, look at your notes an talk about money.