money

TOPIC 3. MONEY

Make up sentences combining A and B. Start with the phrase ‘ONE CAN’

A B

Earn money	that is to get money as salary or wages
Spend money	when one buys something as a customer
Save money	when one wants to buy something expensive, or one lives economically.
Make money	and then he grows rich, acquires wealth
Loan money	that is to give money at an interest(in a bank)
Borrow money	that is to take money with a promise to pay back in future
Lend money	that is to give it to somebody for a period of time
Owe money	that is to borrow money when one becomes a debtor, and owes it to the lender
Accumulate	that is to store up a large amount of money
Donate money	that is to give it to a good cause
Raise money	i.e. to collect it in somebody’s favour
Pay money	i.e. to give it to someone in exchange for services or goods
Invest money	i.e. to put money into shares\ business in something
Waste money	i.e. to spend it on something which is not worth it
Charge money	for goods and services

Answer the questions:

1. What do you do with money more often? Regularly? Never?

2. What would you like to do with money if you had more than the barest minimum? Much of it.

3. What do you think is the wisest way to deal with money?

TEXT 1

Money can be anything that is generally accepted in payment for goods or services. Almost every society now has a money economy based on coins and paper notes of one kind or another. However, this has not always been true. In primitive societies a system of barter was used. Barter was a system of direct exchange of one good or service for another. Somebody could exchange a sheep, for example, for anything in the market-place if they considered to be of equal value. Barter, however, was a very unsatisfactory system because people's precise needs seldom coincided. People needed a more practical system of exchange, and various money systems developed based on goods which the members of a society recognized as having value. Cattle, grain, teeth, shells, feathers, skulls, salt, elephant tusks and tobacco have all been used. Precious metals gradually took over because, when made into coins, they were portable, durable, recognizable and divisible into larger and smaller units of value.

A coin is a piece of metal, usually disc-shaped, which bears lettering, designs or numbers showing its value. Until the eighteenth and nineteenth centuries coins were given monetary worth based on the exact amount of metal contained in them, but most modern coins are based on face value, the value that governments choose to give, irrespective of the actual metal content. Coins have been made of gold (Au), copper (Cu), aluminium (Al), nickel (Ni), lead (Pb), plastic, and in China even from pressed tea leaves.

Nowadays however valuable metal has generally been replaced by paper notes.

The use of paper money in Western civilization began in the Middle Ages. The major forms of money in those days, gold and silver coins, were inconvenient to carry and liable to be stolen.

To make business transactions safer and more convenient, people began depositing their coins with local goldsmiths, who gave them a written receipt in exchange for the coins. In this way, the goldsmith became a kind of medieval banker.

Merchants accepted the receipts in payment for goods because they could redeem the receipts for gold at the goldsmith's shop. In time, the goldsmiths' receipts became very popular with merchants and travelers who had to move large sums of money. As their use spread, the earliest form of paper money in Western Europe came into being.

Now most governments issue paper money in the form of notes, which are really 'promises to pay'. It may or may not be backed by gold or silver. Paper money is obviously easier to handle and much more convenient in the modern world. Cheques, bankers' card, and credit card are being used increasingly and it is possible to imagine a world where 'money' in the form of coins and paper currency will no longer be used.

Although anything can serve as money, it should possess the following qualities:

● Portability. Modern money has to be small enough and light enough for people to carry.

● Durability. The material chosen has to have a reasonable life expectancy. For that reason most countries use a very high quality paper for their money.

● Divisibility. One of the principal advantages of money over barter is its ability to be divided into parts.

● Recognizability. Money should be easily recognized for what it is and hard to copy. The quality of the paper and the engravings make paper money extremely difficult to counterfeit.

Money and its functions.

Money provides us with a medium of exchange, a measure of value, and a store of value.

A Medium of Exchange. It is the very greatest use. The principal difference between a barter economy and a money economy is that in a barter economy you must find someone who has what you want and wants what you have. In a money economy people can buy or sell goods in exchange for money. Workers exchange labour services for money. Money is the medium through which people exchange goods and services.

A Measure of Value. Money enables us to state the price of something in terms that everyone can understand. We can say the eggs we have for sale are worth 85 cents a dozen. This is a far simpler than having to figure out how much milk or meat we would expect in payment for a dozen eggs.

Store of Value. Money is a store of value because it can be used to make purchases in the future. For example, our egg seller could put the money from the day's sale toward a college education sometime in the future.

Money takes up very little space, and if you put it in a bank, it is as safe as anything in this world can be. But modern money has some very serious disadvantages as means of storing up value. In the old days, when money was in the form of gold and silver coins, the metal in each was really worth the amount stamped on the coin. But the paper in modern paper money and even the metal in most modern coins are worth very much less than the amount written on them. As a result, the buying power of modern money can change very greatly in a short time.

Money also serves as a unit of account. It is the unit in which prices are quoted and accounts are kept. In Britain prices are quoted in pounds sterling, in France in francs. It is usually convenient to use the units in which the medium of exchange is measured as the unit of account as well. However there are exceptions. During the rapid German inflation of 1922-23 when prices in marks were changing very quickly, German shopkeepers found it more convenient to use dollars as the unit of account. Prices were quoted in dollars even though payment was made in marks, the German medium of exchange.

What is money?

How are goods exchanged in a barter economy?

Why was the barter an unsatisfactory system?

Can you imagine a world without money in the form of coins and paper currency? Why?

What qualities should money possess?

What are the functions (uses) of money?

Does modern money have any serious disadvantages as means of storing up value?

What else can be used instead of money as a store of value?

What is the unit of account in our country?