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VIII. Answer the following questions:

1. In what function is money accepted as payment for goods and services? 2. What is money as a medium of exchange? 3. What does money express as a measure of value? 4. How does money function as a store of value? 5. What are the most familiar forms of money in the United States? 6. What is the difference between coin and currency? 7. What does the term currency refer to? 8. What are the most important characteristics of modern money? 9. What is the life-time of metallic coins? 10. How is the smallest denomination of coin called in the United States? 11. What is the major cause of inflation?

IX. Translate into English:

1. Гроші функціонують як засіб обігу, міра вартості та запас вартості. 2. Різні види грошей перебувають в обігу в Сполучених Шта­тах Америки. 3. Запас вартості означає, що товари та послуги можна легко конвертувати в гроші. 4. Термін «валюта» відноситься до паперо­вих грошей, а «монета»  до грошей, виготовлених з металу. 5. Су­часні гроші мають ті самі характеристики, що й примітивні гроші. 6. Мета­леві гроші не виходять з обігу аж доти, доки їх не загублять. 7. Пенні — монета найменшої вартості в обігу. 8. Те, що грошова маса щороку зростає на 10—12 відсотків, є основною причиною інфляції.

Reading drills

1. Practise the pronunciation of the following words:

a) stress the first syllable:

bank, safe, lend, fund, business, temporarily, functional, saver, borrower, cash, gain, asset, debt, property, possession, claim, balance, interest, loan, bond, statement, sheet, customer, prosper.

b) stress the second syllable:

fulfil, distinct, community, provide, excess, examine, liability, condense, return, invest, investment, attract, attractive, liquidity, convert, deposit, reflect, effect, increase, diversify.

c) stress the third syllable:

institution, understanding, obligation, introduce.

Text B

Banks fulfil two distinct needs in a community. For one they provide a safe place for people to deposit their money1. For another, they lend excess funds2 to individuals and business temporarily in need of cash3. In effect, banks act as functional institutions that bring savers and borrowers together4.

To gain a clear understanding5 of the way in which a bank operates, let us examine the bank’s liabilities6 and assets7.

Its liabilities are the debts and obligations to others. Its assets are the properties, possessions, and claims on others. These liabilities and assets generally are put together in the form of a balance sheet — condensed statement showing all assets and liabilities at a given point of time.

The balance sheet also reflects net worth — the excess of assets over liabilities8, which is a measure of the value of a business.

Most bank deposits return to the community in the form of loans. The bank, however, might invest some of the cash in bonds. The bonds would be a good investment for two reasons. One is that they earn the interest9 and therefore are more attractive than cash. The other is that they have a high degree of liquidity10, that is they can be converted into cash in a very short period of time. The liquidity adds to the bank’s ability to serve its customers. When the demand for loans increases, the bonds can be sold and the cash loaned to customers.

In time, the bank would grow and prosper diversifying its assets and liabilities in the process. It might use some of its excess funds to buy state or local bonds. It might loan some funds on a short-term basis to other banks. Then, too, a bank might use some of its assets to buy an interest in another business. The bank also might try to attract more depositors by introducing different kinds of accounts. Once the bank attracts more funds, it can make more loans and more profits.

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