I. Scan through the text. Monetarism

Monetarism as an economic theory states that inflation is caused by an excessive supply of money. Thus the best way to manage and control a country's economic system is to limit the amount of money in circulation. Where there is too much money it will cause the price of goods to rise, i.e. the value of money will fall. The concept of money supply (all the money that exists in a country's economic system at a particular time) plays an important role in economic policymaking, because many economists believe that it is the quantity of money within the economy that ultimately determines real price levels, the rate of economic growth, and the rate of inflation. The Federal Reserve Banks in the United States and the Bank of England in the United Kingdom regulate the money supply to stabilize their respective economies. The Federal Reserve Banks, for example, can buy or sell government securities, thereby expanding or contracting the money supply. Monetary systems are today very much alike in all the major countries of the world. Monetary systems consist of three levels: [1] the holders of money (the “public”) – individuals, businesses, governmental units; [2] commercial banks, which borrow, by way of demand deposits (= bank deposits that can be withdrawn without advance notice), from the public and make loans to individuals, firms, or governments; and [3] central banks, which have a monopoly on the issue of money, serve as the bankers for the central government and the commercial banks, and have the power to determine the quantity of money in circulation.

1) What does monetarism state? 2) What is the best way to manage an economy? 3) What will cause the price of goods to rise? 4) What plays an important role in economic policymaking? 5) What do economists believe? 6) What might be done to expand or contract the money supply? 7) What is the first level of monetary systems? 8) What is the second level of monetary systems? 9) What is its third level?

II. Agree or disagree with the following statements.

1) Deflation is caused by an excessive supply of money. 2) Too much money in circulation does not cause the price of goods to rise. 3) To limit the amount of money in circulation is the best way to control an economy. 4) Money supply plays an insignificant role in economic policymaking. 5) The quantity of money in circulation has a strong influence on real prices. 6) The quantity of money in circulation has a strong effect on the rate of economic growth. 7) Commercial banks do not borrow money from the public.

III. Translate the following words, phrases and statements from Russian into English.

Монетаризм; стабилизировать; соответственный; регулировать; темп экономического роста; инфляция; быть причиной; чрезмерный; денежная масса в обращении; стоимость; мнение; управлять; контролировать; количество; разработка политического курса; полагать; в конце концов; определять; уровень; государственные ценные бумаги; таким образом; расширять; сокращать; денежный; главный; держатель; фирма; правительственные подразделения; занимать; вклад до востребования; ссуда; эмиссия; темп развития инфляции; Федеративный резервный банк; общественность.

Монетаризм — это экономическое учение, согласно которому принцип жесткого контроля над количеством денег в обращении является основным инструментом денежно-кредитной политики, особенно направленной против инфляции. Монетаризм обычно влечет за собой сокращение расходов населения и временное установление высоких процентных ставок

IV. Complete the following statements.

1) Monetarism states … 2) The best way to control a country's economic system is … 3) … will cause the price of goods to rise. 4) The concept of money supply plays … 5) Many economists believe … 6) … regulate the money supply to stabilize … 7) … can buy or sell … 8) Monetary systems consist of …

V. Scan through the text and answer the questions that follow.