IV. Text a

WHAT IS MONEY

Money is one of the man’s greatest inventions and the fact that all but the least developed of human societies use money indicates that it is an essential tool of civilization.

The world money derives from Latin “Moneta” which was one of the names of the Roman goddess Junona. It is known that in her temples ancient coins were minted.

In the absence of some forms of money, exchange may take the form of barter which is the direct exchange of goods and services for goods and services.

Barter will serve man’s requirement quite adequately when he provides most of his needs directly and relies upon market exchanges for very few of the things he wants.

In a barter system, a farmer who wants a television has to find someone with an extra television who also wants food. Simply finding someone who has a television available isn’t sufficient. The person with the television has to have a coincident want, that is, the person with the television has to want the food that the farmer has to trade. In today’s world, finding people with coincident wants for all the exchanges we make would be a monumental task. Consider your area of specialization. Think about how difficult it would be if you had to trade the output of your talent for a pen, a milk shake, a car, an apartment, a pair of shoes, and so on.

The great disadvantage of barter is the fact that it depends upon a “double coincidence of wants”.

As the extent of specializations increases, the barter system proves very inefficient and frustrating.

To avoid this havoc, an alternative system of exchange evolved. It was apparent that exchange would be much simpler if everyone was willing to accept some common item in a trade. Each person could trade whatever he or she produced for one, common thing. Something like money.

Money overcomes the problems of a barter system and the need for a coincidence of wants.

Throughout history, societies have used many commodities as money. Money comes in all shapes and sizes.

Such commodities as horses, dogs, teeth, shells, spices, tobacco and so on were all at sometime, somewhere used as media of exchange.

The ancient Roman sometimes used salt as money. Precious metals such as gold and silver, and gems such as rubies, emeralds and diamonds, have often been used as money. The majority of nations in the world today use currency - coins and paper bills – for money.

Money can be considered as assets, i.e. something that you have and is of value. It is a part of person’s wealth, but is has a characteristic that is different from all other forms of wealth. This characteristic is that it can immediately be exchanged for any other form of wealth, goods or services you may require. Although many forms of wealth can be transferred or exchanged for other assets, the one most widely used and acceptable in a country is money. This attribute is called liquidity. It means that a liquid asset (money) can be exchanged for other goods or services without paying a high cost for the privilege of the transfer. Money can be converted to other assets with ease, but money will always have the same nominal value.

V. Match the equivalents of the following words.

1. goods and services a) необхідний інструмент

2. nominal value b)прямий обмін

3. greatest invention c)людське суспільство

4. coincident wants d)товари та послуги

5. ancient coins e)умовна вартість

6. essential tool f)найвеличніше відкриття

7. human society g)збіжні бажання

8. direct exchange h)стародавні монети