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1.4 Comprehension Understanding the reading

      1. Give extensive answers to the questions. Use the following expressions to present your answers:

  • On second thought I should admit that ...

  • Let’s look beneath the cabbage leaf ...

  • In a nutshell, ...

  • To cut a long story short, ...

  1. What are the basic components of dealings in the world product and financial markets?

  2. Why are exports and imports the most important international activity for most nations?

  3. What does the word combination “balance of trade” mean and how is a favourable balance of trade maintained?

  4. What are the ways of improving a deficit in the balance of payments? In what way does it affect imports?

  5. In what way can investments affect a nation’s balance of payments?

  6. In what way can capital for investments abroad be restricted and why? Give facts to illustrate it.

  7. When do the countries devalue their currencies? What impact does it have on the nation’s balance of payments? Why are the advantages derived from devaluation soon eliminated?

  8. How do you account for the role and function of insurance in international trade?

  9. What is purchased when a nation hires work force from another country? Why does immigration contribute to invisible trade of some countries alongside with imports and exports?

  10. What happens to the imported goods when a tariff or a quota is imposed?

  11. What are the peculiarities of using gold in financial relations? Why do some countries have an agreement with the Federal Reserve Bank of New York to hold their gold in safekeeping?

  12. What are the advantages and disadvantages of free trade arrangements?

Scanning*

1.4.2 Scan the text to determine whether these statements are true (t) or false (f). With a partner, discuss why.

e.g. In my opinion it is true that/I’m afraid it is false that ..., because ...

1.

If the country runs a trade deficit, net exports are negative, exports are less than imports, indicating that the country sells fewer goods and services abroad than it buys from other countries.

2.

As the price in any market serves the important role of coordinating buyers and sellers in that market, international prices help coordinate the decisions of consumers and producers as they interact in world markets.

3.

The prudent exporter purchases insurance for his cargo’s voyage because the exporter who has purchased insurance pays less for his cargo’s voyage.

4.

If the exchange rate changes so that a dollar buys more foreign currency, that change is called a devaluation of the dollar.

5.

An economy’s saving can be used either to finance investment at home or to buy assets abroad.

1.4.3 Scan the text and find the information to complete the following lists:

  1. Invisible trade involves the exchange of such services between nations, as

A ________________________________________________________

B ________________________________________________________

C ________________________________________________________

D _______________________________________________________

E ________________________________________________________

2. Investments significantly affect a nation’s balance of payments, because capital enters a country enabling it

A ________________________________________________________

B ________________________________________________________

C ________________________________________________________

D _______________________________________________________

E ________________________________________________________

F ________________________________________________________

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