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5. monetary value
6. to use currency exchange rate
7. relation in value
8. management of the amount of money
9. to place into economy
10. management of interest rates
11. the monetary policy of the government
12. to borrow money from a bank
13. income from lending money
14. nominal interest
15. to adjust for inflation
16. real interest
17. the rise of prices for goods and services
2. Translate the following combinations into English.
1. приниматься в оплату товаров и услуг
2. использовать различную валюту
3. бумажные деньги и монеты, выпускаемые федеральным правитель-
ством
4. денежная стоимость товаров и услуг
5. использовать валютный обменный курс
6. отношение в стоимости
7. валюта повышается в цене
8. валюта обесценивается
9. покупать больше единиц другой валюты
10. управление денежной массой
11. управление процентными ставками
12. денежная политика правительства
13. доход от одалживания денег
14. приспосабливаться к инфляции
15. подъем цен на товары и услуги
3. Match the notion and its definition.
Money Currency Exchange rate Interest Inflation Monetary policy
1. the money we pay for borrowing money from a bank
2. anything that is generally accepted in payment for goods and services
3. the rise of prices for goods and services over time
4. paper money and coins issued by federal government
5. management of the amount of money placed into economy by the govern-
ment and management of interest rates
6. the relation in value between kinds of money used in different countries
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4. Define the meaning of the words highlighted in the text.
up
down
no change
To soar
5. Look at the list of words and phrases. Which are associated with suc-
cess and which are associated with failure?
Boom expansion decline crash growth recession
Slump golden age bull market bear market
6. Build two vocabulary networks around these topics.
1. currency 2. shares
Explain the meaning of the words and phrases.
Exchange rate EMU stock market spot rate yen
Nikkei sterling dividend Dow Jones FTSE -100
7. Complete the table with these words.
To stay the same to recover to soar to dip to peak
To hit the bottom to increase to plunge to fall to rise
To stabilize to decrease
DISCUSSION
Nick Leeson and collapse of Barnings
Read the story of Nick Leeson and discuss the questions.
On February 26 1995 the world was shocked by the news that Britain’s oldest
bank Barings had collapsed. People were even more surprised when they learned that
it was due to the actions of just one man – a young trader called Nick Leeson.
Leeson had started working at Barings’ Singapore office in 1992, when he was
15 years old. Using the bank’s money, he bought and sold financial contracts at
SIMEX, the Singapore Monetary Exchange. This can be a very risky business, but
Barings thought it knew what it was doing.
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1. Is it normal for large, well-established companies to collapse as a result
of one person’s actions?
Leeson quickly became a star of the Singapore office and its profits contracts
trading grew dramatically. His bosses in London were delighted. But they didn’t
know the full story. In fact, while the huge profits appeared in the official reports, he
was hiding his losses in a secret account. And his losses were much, much bigger!
The truth was that Nick Leeson had never behaved like an ordinary trader. He
saw the financial markets as a gambling casino and, just like a losing gambler, he
believed that he would win in the end. So, towards the end of 1994 he decide to solve
his problems by making a very big gamble.
2. When a fairly junior member of a company is suddenly very successful,
what do you think should be the management’s most appropriate response?
Explain why?
A delight b interest c curiosity d suspicion
3. Is Nick Leeson right – and the financial markets a gambling casino? Or
are they a place for careful, responsible investment? What is your view?
Leeson thought that the Tokyo stock market would remain fairly stable for the
next few months. He knew that he could make a good profit from this situation by
selling a special kind of option contract – so he sold thousands and thousands of
them. But, unfortunately, Japan was entering in a very unstable period.
On 17 January 1995 a huge earthquake hit the industrial city of Kobe. In response, the Tokyo stock market plunged. Leeson’s gamble had gone badly wrong and
Barings had lost a huge sum of money.
4. What do you think was the best thing for Leeson to do in this situation?
A Contact his bosses and explain everything.
B Take a long holiday.
C Continue gambling in the hope that he would win the money back again.
D Any other options.
Leeson didn’t stop gambling. He believed that by spending an enormous
amount of his bank’s money, he could control the market and save his position. But
he was wrong. By February 23, he had lost more then 300 million and the game was
over. The following day he and his wife flew to Malaysia for a holiday.
Back in London, Leeson’s bosses realized what had happened. Day by day, as
the losses grew, it became clear that Barings was bankrupt. On March 6 it was sold a
Dutch bank for just 1 pound.
5. Who do you think was really responsible for this banking collapse: Nick
Leeson or his bosses?
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6. What kind of punishment do you think Nick Leeson and his bosses de-
served?
None dismissal a fine a prison sentence
On March 2 1995 Leeson was arrested by German police at Frankfurt airport
on his way from Malaysia to the UK. He was later sentenced to six and a half years in
a Singapore Jail. On May 1 of the same year, twenty-one members of Barings’ senior
staff resigned or were sacked by the new owners.
7. Do you think that Leeson and his bosses were fairly treated? Give your
reasons and retell the text.
READING
I
Money
When the English colonists first settled in the new World they brought little of
the money they had used at home, which they called pounds, shillings and pence. It
didn’t really matter, because the Indians they traded with were not interested in Brit-
ish money. The native Americans were willing to exchange food for small pieces of
paper and metal. They would, however, trade fish, furs and other essentials through
barter. Barter is the exchange of one good or service for another.
The earliest form of trade was by barter. But barter has many drawbacks. Many
problems associated with barter led the Massachusetts colonists to turn to wampum.
Wampum, a form of money among native Americans in Massachusetts in the 1640’s,
consisted of certain black and white shells. (Black shells were worth twice as much as
the white ones.) Both colonists and Indians would cheerfully accept wampum in
payment for anything they had to sell in those days. Wampum became the medium of
exchange in this early colonial period. Those who had to have English money could
purchase it at the rate of six white shells to the penny. Wampum served as money to
those early settlers, and money represented a vast improvement over barter.
What is money? Money can be anything that is generally accepted in payment
for goods and services. From the earliest times precious metals, such as gold and
silver, along with copper, have been the most popular forms of money. But they were
not the only forms. In some societies favored things such as tobacco, fish hooks,
shells and various forms of paper were used as money.
1. How did the first British settlers exchange goods with native Ameri-
cans?
2. What is barter?
3. What is wampum?
4. What is money?
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II
Qualities of money
Stability. The value of money should be more or less the same today as tomor-
row. In societies where the value of money fluctuates (goes up and down) people will
hoard it in the hope that its value will increase, or spend it immediately thinking it
will be worth less tomorrow. Either action could be harmful to the economy.
Portability. Modern money has to be small enough and light enough for people to carry. Bowling balls would not be a practical form of money.
Durability. The material chosen has to have a reasonable life expectancy. For
that reason most currencies use a very high quality paper for their money.
Uniformity. Equal denominations of money should have the same value. It’s
easy to see that if some quarters or dollar bills were worth more than others, things
could be pretty confusing.
Divisibility. One of the principal advantages of money over barter is its ability
to be divided into parts. In other words, while making change for a dollar is easy,
making change for a chicken is more difficult.
Reconcilability. Money should be easily recognized for what it is and hard to
copy. The quality of the paper and the earnings make paper money extremely difficult to counterfeit.
We can also define money by what it does, which is to provide: a medium of
exchange, a medium of value, a store of value.
A medium of exchange. The principal difference between a barter economy
and a money economy is that in the barter economy you must find someone who has
what you want and wants what you have. In a money economy people can sell what
they have to anyone and use the money to buy what they want. Money, therefore, is
the medium that enables exchanges to be made easily.
A measure of value. Money enables us to state the price of something in terms
that everyone can understand.
Store of value. Money enables us to use the value of something that we sell
today to make a purchase sometime in the future.
Comment each quality and function of money.
III
Currency
Currency. The money you are most familiar with, currency, consists of the
paper money and coins that you use almost daily. Currency is legal tender. This
means the law requires that it must be accepted in payment for a debt.
Demand deposits. The largest single component of money supply is listed under the heading demand deposits. Demand deposits are checking accounts held by
commercial banks. They are called “demand deposits” because they are available “on
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demand” simply by writing a check. Commercial banks, which are used by both
business and the general public, do most of the nation’s banking business. But why
are checking accounts listed as a component of the “money supply”?
The answer takes us back to our definition of money, which is anything that is
generally accepted in payment for goods and services. Since checks are generally
accepted (they are virtually the only form of payment used by business), they are a
form of money.
The value of checks an individual or firm can write depends on the amount of
money on deposit in the checking account of that individual or firm. Thus, the total
amount of checkbook money available at any point in time is equal to the total of all
demand deposit.
Other checkable deposits. A checkable deposit is one that enables the deposi-
tor to make withdrawals and payments by check. Most savings banks, savings and
loan association, and credit unions offer check-writing privileges with some of their
accounts. These comprise the second largest component of the money supply.
Traveler’s checks. Traveler’s checks are checks sold in a variety of denomina-
tions by bank and travel agencies. Buyers pay the face amount of the check plus a
small fee for the service. Traveler’s checks owe their popularity to the fact that, un-
like cash, they can be replaced if they are lost or stolen. The $8 billion in travelers’
checks is the smallest component of the money supply.
Give the definition of every kind of deposit.
IV
What are the causes of inflation?
Demand-pull inflation. A situation in which there is “too much money chas-
ing too few goods” is often described as demand-pull inflation. When demand in-
creases faster than industry’s ability to satisfy that demand, prices will increase. Dur-
ing the Vietnam War, for example, government spending for military goods served to
increase the purchasing power of many Americans since it was not accompanied by a
tax increase. Meanwhile, factories that might have been producing consumer goods
turned to the production of goods for use in the war. The result was the increase in
the demand for goods and services at the very time that industry’s ability to satisfy
that demand was being redirected. Since it was mot possible to increase output to
satisfy demand, prices rose.
Cost-push inflation. A period of rising prices due to an increase in the cost of
production is called cost-push inflation. When, for example, labor unions win wage
increases greater than workers increases in productivity, management may choose to
raise prices to maintain profits. With prices going up, other unions and workers might
demand wage increases to keep up with the increased cost of living, and so on, in an
inflationary spiral. Similarly, efforts by producers to increase profits by increasing
prices rather than by reducing costs could also trigger an inflationary spiral.
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Although “demand-pull inflation” and “cost-push inflation” explain how cer-
tain round of inflation begin, there are other factors to consider. Sometimes, for example, sudden unexpected shortages of a basic commodity can cause price increases.
This happened in 1974 and 1980 when OPEC oil boycotts ran the price of petroleum
up to record levels, creating severe cost-push inflation.
Explain the difference between demand-pull inflation and cost-push inflation.
MARKETING
UNIT 2
I
Marketing Functions
To an economist, everything that takes place between production and consumption falls into the category of marketing.
A market is where buyers and sellers come together. Marketing, then, includes the activities that bring buyers and sellers together. It is more then product
advertising. Marketing includes buying and selling, transporting and storing, product planning, market research, product support, customer service, financing, insuring and other functions.
Business firms collect information about the market to forecast potential
sales. Before finished goods can be sold, they must be selected and purchased.
Goods must be shipped to the place where they are sold. Then goods must be advertised, promoted and sold. Before they are sold, goods are stored in warehouses.
II
Marketing Complex
The four important elements of marketing are called marketing complex.
They are also known as the four P’s of marketing – product, price, promotion and
place.
A firm can vary its marketing complex by changing one or more of its elements to reach a firm’s target market.
The product element of marketing complex includes decisions about product
design, brand name, packing, warranties and the like.
The pricing element includes both base price and discounts of various kinds.
The promotion element is a key part of marketing. It focuses on providing information to target market. The major forms of promotion include advertising and
publicity.
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The final part of marketing is place. Entrepreneurs must know “when” and
“where” consumers will buy their goods. The place element involves not only
transporting and storing but also the selection of intermediaries.
Active Vocabulary
consumption – потребление
to include – включать
activity – вид деятельности
transporting - транспортировка
storing – хранение
market research – исследование рынка
product support – поддержка продукта
insuring – страхование
to forecast – прогнозировать
to purchase – покупать
warehouse – склад
to reach – достигать
to vary – варьировать, изменять
target – цель
decision – решение
brand name – торговая марка
packing – упаковка
warranty – гарантия
discount – скидка
publicity – широкое оповещение
consumer – потребитель
to involve – включать, вовлекать
intermediary – посредник
Tasks
1. Translate the following combinations into Russian.
1. to take place between production and consumption
2. to fall into the category
3. to include the activities
4. to bring buyers and sellers together
5. product advertising
6. buying and selling
7. transporting and storing
8. product planning
9. market research
10. product support
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11. customer service
12. financing and insuring
13. to collect information about the market
14. to forecast potential sales
15. finished goods
16. must be selected and purchased
17. must be shipped to the place
18. be advertised, promoted and sold
19. must be stored in warehouses
20. the four P’s of marketing
21. to vary its marketing complex
22. by changing one or more of its elements
23. to reach a firm’s target market
24. to include decisions about product design
25. brand name
26. packing, warranties and the like
27. both base price and discounts of various kinds
28. a key part of marketing
29. to focus on
30. to provide information to target market
31. the major forms of promotion
32. to include advertising and publicity
33. to involve not only transporting and storing
34. the selection of intermediaries
2. Translate the following combinations into English.
1. потребление товаров и услуг
2. виды деятельности, включающие транспортировку и хранение
3. проводить исследование рынка
4. включать поддержку продукта и страхование
5. покупать товар на складе фирмы
6. прогнозировать продажи
7. достигать цели
8. варьировать решения
9. включать решения по поводу торговой марки, упаковки и скидки
10. включать гарантии и широкое оповещение потребителей
3. Choose the necessary word and put it in the sentence.
1. Everything that takes place between production and ………… falls into the
category of marketing.
2. A ………. is where buyers and sellers come together.
3. Marketing includes ………. that bring buyers and sellers together.
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4. Business firms collect information about the market ………. potential
sales.
5. Before finished goods can be sold, they must selected and ………. .
6. Goods must be ………. to the place where they are sold.
7. Goods are stored in ………. .
to forecast, warehouses, market, shipped, activities, purchased, consumption.
4. Fill in the blanks.
1. A market is where ………. and ………. come together.
2. The four important elements of marketing are called ………. .
3. The product element of marketing complex includes decisions about
………. and the like.
4. The pricing element includes both ………. and ………. of various kinds.
5. The promotion element focuses on providing information to ………. mar-
ket.
6. The major forms of promotion include ………. and ………. .
7. The place element involves not only ………. and ………. but also the se-
lection of ……….. .
5. Questions and tasks.
1. What does marketing mean?
2. What activities does marketing include?
3. What are the major marketing functions?
4. Why do business firms collect information about the market?
5. What must be done before finished goods are sold?
6. Where can the goods be stored?
7. What do we sometimes call the four P’s of marketing?
8. How can a firm vary its marketing complex?
9. List all the elements of marketing complex
10. What does product element include?
11. What are the major forms of promotion?
12. What element includes both base price and discounts of various kinds?
13. What element is a key part of marketing?
14. What does it focus on?
15. What must entrepreneurs know?
16. What does the place element involve?
6. Translate into Russian using the expressions from previous tasks.
1. Производство и потребление попадает под категорию маркетинга.
2. Маркетинг включает в себя различные виды деятельности.
3. Рынок – это место, где встречаются производители и потребители.
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