Практикум по развитию навыков устной речи на английском языке

General understanding:

l. Have all former Second World countries moved to capitalistic direction? Do you agree that NATO's membership is an entrance ticket to the developed countries community?

2.What is the present position of the Russian Federation in the described system of classification?

3.Do you find Heckscher-Ohlin theory reasonable? Give examples to prove or disapprove it.

21

Text 10

Read and discuss the text.

Protectionism and Free Trade.

Protectionism takes many forms. Tariffs or taxes are levied on imports, and nontariff rules, in the form of quotas, quality and labeling standards, and a myriad of other restrictions, tend to keep foreign nations' goods and services out of domestic markets. Subsidies to domestic firms similarly disadvantage foreign competitors although foreign consumers get cheaper goods as a result.

The absence of protectionism is termed free trade, wherein goods and services flow across international boundaries on the primary basis of comparative advantage. Free trade is commonly under attack from protectionists.

The United States and most other countries offer in their laws certain trade preferences favoring some nation's goods and services for economic, political, and social reasons. The best-known U.S. preference is the so-called most-favored nation status. Any nation so qualified by the U.S. Congress is permitted to pay only the lowest level of U.S. tariffs. Non-qualifying nations face stiffer barriers against their goods when they seek to export into the U.S. market. Some element of international prestige is associated with the most-favored nation title.

Tariff and nontariff barriers are the subject of continuing global debate and confrontation. National leaders have constituents who fear foreign inroads into their markets and/or demand special terms and conditions favoring their products over others. Periodically, the principal nations join in detailed and lengthy multilateral negotiations to reduce trade barriers. These are mainly under the aegis of the General Agreement on Tariffs and Trade (GATT). The overriding objective is to try to keep trade as free and open as possible so as to encourage greater world growth, employment, income, and investment. History records many instances where growing protectionism has led to international trade wars and eventually has caused political wars among belligerents.

When multilateral talks falter, bilateral agreements escalate between individual nations.

Moreover, when global negotiations stall, there is a strong tendency for groups of nations with common geography and interests to form economic blocs, e.g., the European Economic Community, North American Free Trade Agreement (U.S., Canada, and Mexico), Association of Southeastern Nations, etc.

The future role of the United States in global affairs is changing because this nation—despite its superpower status—cannot alone police the world or dominate developments as in the past. Hence, global progress will depend more and more on alliances and «shared leadership».

22

Few nations can survive for long in economic isolation from the rest of the world simply because political/geographical boundaries do not coincide with the natural resources, skills, and other essentials for the betterment of human welfare. Moreover, in matters of the environment, energy, and water, each nation has an impact on its neighbors and potentially more and more of the world.

World trade and financial flows reflect sharp variances in needs and advantages among individual countries. At any given time some nations will show surpluses in trade and payments balances, while others will experience corresponding deficits.

Balance of trade refers to the relationship of imports to exports of goods and services. Balance of payments is a more comprehensive measure that is defined variously to include financial investment flows of different maturities and purposes. Official or government-to-government payments and receipts also influence importantly changes in economic relationships among countries.

Aggregate surpluses and deficits must balance for the world as a whole. Chronic surpluses or deficits in any single country or region will cause economic and political repercussions and tensions. Surpluses often must be invested outside the nation, while deficits constitute international accounts payable which must be paid from reserves or financed by loans, financial aid from international bodies, or foreign government grants.

Actual measures of economic and financial flows between nations and across the world tend to be weak, with large annual «errors and omissions»; yet these data form the basis for major policy decisions with far-reaching consequences for war or peace.

Vocabulary:

to levy – взимать налог myriad – мириады, множество

domestic market – внутренний рынок

most-favored nation status – статус страны наибольшего благоприятствования

stiff – жесткий

constituent – избиратель, компонент

multilateral negotiations – многосторонние переговоры under the aegis – под эгидой

belligerent – воинственный

to falter – запинаться, спотыкаться to escalate – обостряться

to stall – задерживаться, глохнуть to coincide – совпадать corresponding – соответствующий

receipt – подтверждение оплаты, квитанция

23

Text 11

Read and discuss the text.

International Reserves and Monetary Supervision.

The financial reserves of each nation are a measure of strength used by international leaders and investors in judging risks. «Hard» currencies are usually in strong demand and backed by substantial reserves and general economic strength, while «soft» currencies lack these attributes. Capital resources are more and more accepted as the fundamental indicator of economic and financial power of financial and commercial organizations. Capital stringencies loom as a persistent problem in the years ahead.

Major international lenders and investors as well as official institutions use various types of risk measures to evaluate the economic and financial strength of the countries of the world. Transfer risk concerns the prospect for being able to repatriate collected funds from the borrowing country. Credit risk pertains to the ability of the borrower to fulfill the repayment terms of the original loan agreement.

Financial reserves usually include U.S. dollars, other key currencies, special drawing rights (SDRs) issued by the IMF, and gold. In recent years the official IMF policy has been to de-emphasize gold as too inflexible a reserve for dynamic global monetary and economic purposes, but the use of gold persists. SDRs are based on a basket of currencies and are made available to IMF members by allocation from time to time to provide additional liquidity for the international monetary system. SDRs, however, are restricted to government-to-government use.

The IMF offers financial assistance to member nations who confront balance of payments difficulties. Its economic and currency surveillance and conditions vary directly with the progress and prospects for improved economic and financial stability of the country applying for support.

The central, or government policy-level, banks -e.g., the Federal Reserve in the United Status, the Deutsche Bundesbank in Germany, the Bank of Japan, and the Bank of England—are primarily responsible for the overall direction and function of domestic monetary policy and operations, and supervise related international activities as well. The central banks of the leading Western nations generally work closely to improve the global monetary system, and to conduct varying degrees of coordinated currency-support actions in times of severe market fluctuations. The IMF serves in many respects as a lender of last resort to central banks. The former socialistcommunist nations are becoming more involved in world trade and finance in order to achieve their economic growth and welfare goals.

Fundamental changes are taking place in the global financial system. This is because of excess institutional capacity, heavy private and governmental debt problems, inadequate capital at a time when regulatory capital requirements are increas-

25

ing, technology, speculation, deregulation, privatization, statutory revisions altering competition, entry of former communist nations into world markets and international economic and financial organizations, and a host of other developments.

Vocabulary:

to back – поддерживать, финансировать substantial – прочный, основательный attribute – признак, атрибут

to loom – неясно вырисовываться to repatriate – репатриировать

persistent problem – постоянная (непрекращающаяся) проблема to emphasize – подчеркивать, обращать внимание

additional liquidity – дополнительная ликвидность to persist – настаивать

surveillance – патрулирование

lender of last resort – заимодатель в последней инстанции severe – жесткий, строгий

statutory revisions – установленные законом изменения

Answer the questions:

l. What are «hard» and «soft» currencies?

2.What are the central monetary institutions in Germany, the USA, Japan?

General understanding:

1.What do financial reserves include?

2.What is IMF's function?

3.What changes are taking place in the global financial system?

26

Text 12

Read and discuss the text.

Monopolies, Oligopolies and Perfect Competition.

Economists assume that there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market, which allows price to change in response to changes in supply and demand. Furthermore, for almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier have equal ability to influence price.

In some industries, there are no substitutes and there is no competition. In a market that has only one or few suppliers of a good or service, the producer(s) can control price, meaning that a consumer does not have choice, cannot maximize his or her total utility and has have very little influence over the price of goods.

A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be economic, social or political. For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that oftentimes, one entity has the exclusive rights to a natural resource. For example, in Saudi Arabia the government has sole control over the oil industry. A monopoly may also form when a company has a copyright or patent that prevents others from entering the market. Pfizer, for instance, had a patent on Viagra.

In an oligopoly, there are only a few firms that make up an industry. This select group of firms has control over the price and, like a monopoly, an oligopoly has high barriers to entry. The products that the oligopolistic firms produce are often nearly identical and, therefore, the companies, which are competing for market share, are interdependent as a result of market forces. Assume, for example, that an economy needs only 100 widgets. Company X produces 50 widgets and its competitor, Company Y, produces the other 50. The prices of the two brands will be interdependent and, therefore, similar. So, if Company X starts selling the widgets at a lower price, it will get a greater market share, thereby forcing Company Y to lower its prices as well.

There are two extreme forms of market structure: monopoly and, its opposite perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. Perfect competition means there are few, if any, barriers to entry for new companies, and prices are determined by supply and demand. Thus, producers in a perfectly competitive market are subject to the prices determined by the market and do not have any

27

leverage. For example, in a perfectly competitive market, should a single firm decide to increase its selling price of a good, the consumers can just turn to the nearest competitor for a better price, causing any firm that increases its prices to lose market share and profits.

Vocabulary:

in response – в ответ substitute – заместитель

impediments – помехи, преграды

leverage – использование кредита для совершения финансовых сделок.

Answer the questions:

1.What allows price to change in response to changes in supply and demand?

2.What is restricted due to high costs or other impediments? What impediments can you name?

3.By what is perfect competition characterized?

General understanding:

1.What is monopoly? Give the examples.

2.What is oligopoly? Give the examples.

3.What does perfect competition mean?

28

Text 13

Read and discuss the text.

Financial pyramids.

In the mid 90-ies, experienced a period of mass creation of financial pyramids. This period has become an integral part of the history of transition period. Nevertheless, financial pyramids were not specific opening of their founders, but were still one page in the history of the emergence such organizations in the world. Age pyramid schemes has strong impact on society. A lot of people invested their money in pyramids. In the media, a large number of articles of various content on the organization pyramids. Happening attracted interest of the authorities (government, the tax police, etc.). Significant were the consequences for the country's era of financial pyramids, some of them continue to affect the economic situation in so far.

In fact, immediately after the collapse of major companies of the pyramids, marking end of mass pyramid-building, the process of reflection occurred Event society, including economists. Most studied question of financial pyramids in, the reasons for people to participate in them, the importance of these organizations to the economy. Within this work will be considered during the construction of financial pyramids in, with view of world history question. The aim of this work is to compare events that occurred in in mid-1990's, with several other pyramids and the allocation of common and distinctive features of these phenomena. Up still not clearly defined what the financial structure to consider the financial pyramid. Excrete many features and signs of financial pyramids.

Among them, high yield securities companies and the rapid growth of their course payment of dividends to investors through new revenues from investors’ availability of powerful promotion campaign, which promotes financial structure, Contact organizers corrupt pyramid scheme with the authorities.

emergence of pyramids

Pyramids existed in different countries at different times. None however, they have many similarities, which will be considered as a detail. First of all, will be considered the context of the situation prevailing in countries where there is such a thing as a financial pyramid.

In a situation in which emerging pyramid, pyramid schemes can be divided into two groups. Of the first group initially appear as pyramid. (Eg AO MMM). Of the second group become financial pyramids due to certain reasons at one of stages of development. They were originally created as an absolutely normal companies, financial institutions and could not be a financial pyramid. (For example, the T-bills in ). Among the conditions in which there pyramid can be divided into four main.

29

1)First of all, there must be a stock market or securities. Market makes it possible to exist the main instrument of financial pyramids: securities or shares, with significant fluctuations in their prices.

2)there should also be no legal restrictions on the organization activities of financial institutions, acting on the pyramidal principle.

It should be noted that the Financial pyramid, as a rule, is absolutely legal, lawful. This legislative restrictions mostly do not exist because of lack of experience. But at the same time it must be said that, as the researchers note, improvement of laws are not able to block financial fraud, as it essentially not prohibit financial pyramid, as such, but merely carrying out some operations, which are most often used to create financial bubbles. Thus, their appearance is difficult, but not canceled.

3)The third important condition for the appearance of bubbles is the ability of people to save (to buy shares, securities), then there is a certain level of material welfare.

4)Finally, the last major condition is the existence of the tendency of the population to invest money in financial institutions, including non-financial pyramids.

There are three approaches to the explanation of people's participation in the financial pyramids: economic, psychological and sociological.

1)Economic approach explains participation in pyramid schemes phenomenon of information asymmetry i.e. limited awareness population on the progress of investment projects, due to the fact that their Organizers do not provide full information.

2)The psychological approach is based on the original predisposition people make mistakes contributing to the emergence of bubbles: predisposition to optimism, to overestimate their chances to self-righteousness.

3)The sociological approach is to transform the various people achieve mass concentrations in the audience, and then into the crowd, behavior which programmed by the media (an important part of that - advertising) and other methods of influence. Also, pollsters introduce the concept of trust as a factor massive investment behavior. "A significant influence on the formation has confidence in the representations that are formed, one hand, in terms of public communication associated with the media information and communication, and on the other - in the private sphere, in which high significance of personal experience and opinions of friends and acquaintances. In accordance with the fact how is the company and the situation in general, there is a system risk indicators and well-being and is determined by the range of information sources, credible, and builds up a strategy of action.

Vocabulary:

transition period – переходный период excrete – выделять

emergence – появление

financial fraud – финансовые махинации

30