VIII. Give terms for the following definitions.

1. The bank in a country usually having official standing in the government, having responsibility for issuing banknotes, and acting as banker to the government and the banking system.

2. A motive for holding money arising from uncertainty by which people hold money to meet contingences the exact nature of which cannot be foreseen.

3. The role of the Central bank whereby it stands ready to lend to banks and other financial institutions when financial panic threatens the financial system.

4. The interest rate that the central bank charges when the commercial banks want to borrow money.

5. A minimum ratio of cash reserves to deposits which the central bank requires commercial bank to hold.

6. A motive for holding money arising because people dislike risk and are prepared to sacrifice a high average rate of return to obtain a portfolio with lower but more predictable rate of return.

7. The value of money holdings uncorrected for the price level.

8. A motive for holding money reflecting the fact that payments and receipts are not perfectly synchronized.

9. The set of judgements by which the Bank of England decides the details of new-securities in relation to redemption date and rate of interest.

10. A control measure whereby the commercial banks must deposit at the bank of England some of their cash reserves, which couldn't be counted as part of the bank's cash reserves in meeting their reserve requirements.

11. The interest given up by holding money rather than bonds.

IX. Say whether the following statements are true or false. Extend your idea.

1. There is no possibility that the bank of England can go bankrupt because it always meet withdrawals by its depositors by printing new banknotes a little more quickly.

2. The central bank can reduce the money supply by reducing the amount of cash that the commercial banks must hold as reserves.

3. The central bank can induce the commercial banks voluntarily to hold additional cash reserves by setting the discount rate at penalty level.

4. Open market operations are a means by which the Bank alters the monetary base, banks' cash reserves, deposit lending, and the money supply.

5. When you've tried everywhere else to get money for your holidays, you go to the lender of last resort.

6. Public sector borrowing requirement (PSBR) must be met by printing money; therefore there is a direct link between the size of PSBR and money supply.

7. Money is a nominal variable, not a real variable.

8. The existence of uncertainty increases the demand for bonds.

9. The best measure of the opportunity cost of holding money is the real interest rate.

10. An excess demand for money must be exactly matched by an excess supply of bonds: otherwise people would be planning to hold more wealth than they really possess.

X. Complete the sentences with prepositions:

1. Of the total capital, 19 % is expected to be reserved a) … strategic investors.

2. If you see a computer b) … under $400, you should snap it c) … .

3. Some profits of the firms are usually retained, either to be spent d) … the expansion of is a special loan f) … people who want to buy a house.

4. Many people these days buy things g) … credit instead of buying h) … cash.

5. A mortgage is a special loan e) ... people who want to buy a house.

6. High interest rate has an impact i) … the consumer’s ability to buy a new home.

7. Changing interest rates is a method that is used quite frequently j) … slowing k) … or speeding l) … the economy.

8. The interest rate m) … the central bank will influence the rates commercial bank set n) … their customers.

9. If there is a limited amount of money available, the suppliers (the banks) will charge a higher price (the interest rate) as demand o) … money increases.

10. Exchange rate mechanisms are ways to control the value of the national currency

p) … other currencies.