I. Answer the following questions:

1. What is inflation?

2. How are prices increases measured?

3. Have rising prices always been regarded as a threat to the stability of an economy?

4. Why is inflation now a disadvantage?

5. What might be the consequences of inflation?

6. Are there no explanations for inflation?

7. Is inflation inevitable?

II. Match the terms with their definitions:

1. Inflation	A. the kind of inflation that is caused by rising costs of labour and materials, not by increased demand
2. Inflationary gap	B. the lowering of the quality of products in general in order to prevent, and so to hide, an increase in price
3. Creeping inflation	C. a rise in the general level of prices
4. Demand inflation	D. a slow rise in the level of prices of below 2 or 3 per cent per year
5. Cost inflation	E. inflation that would be much greater if the government were to remove controls on prices and wages
	F. that part of government spending which is not covered by taxes or borrowing from the public, but is met by issuing new paper money
	G. an extreme form of inflation, when the money supply is being increased very rapidly, resulting in an increase of over 20% of the price level annually
	H. the kind of inflation caused by an excess of demand over supply resulting in a decrease in the value of money
	I. a state of inflation that gets worse and worse, because higher prices result in demands for higher wages; and higher wages increase costs and so cause higher prices

III. Explain the following terms:

1. the level of inflation

2. the output per man

3. consumer durables

4. the government’s record

5. inflationary expectations

6. inflation-proof outlets

7. hedges against inflation

IV. Render the text in English:

Одним из типов инфляции является сдерживаемая инфляция. Она связана с ситуацией, когда спрос превышает предложение. Но влияние на цены путем использования таких инструментов, как контроль за ценами и нормирование (rationing), минимально. Необходимо отметить, что контроль за ценами не связан с причинами инфляции. Это просто попытка сгладить (подавить) симптомы. Избыточный спрос все равно существует, и он будет проявляться в виде очередей, списков и, почти неизбежно, в черном рынке.

V. Give a summary of the text. Banking

Banking centers around money and financial services. Virtually any activity involving money or advice about financial matters is undertaken by all the commercial banks. The immediate service offered by the bank is the receipt for deposit of coins, notes and cheques and the cashing of cheques, through current accounts. Coins and notes in circulation have the status of “legal tender” that is to say they must be taken in payment of a debt although the extent to which this applies in the case of coins is deliberately restricted for the sake of convenience.

The most common means of payment, particularly for significant sums of money, is a cheque since it is both safer and more convenient than using cash. However, it is not legal tender and creditors can refuse to accept it if they wish. Normally both national cheques and traveler’s cheques are readily negotiable if the bearer has some means of proving his identity and the creditor can be sure that the cheque will be “honored”. To assist the use of cheques banks now provide their customers with bankers cards which, when used in association with a cheque, will guarantee it up to a stated maximum. If a customer wishes to make payments of large amounts of money by cheque and is not known to the creditor, then he may obtain a “certified cheque” from his bank. Such a cheque is signed by the bank and therefore payment is guaranteed.

Those trading overseas, or in conditions where there may be a significant time lapse between sending out goods and their receipt by the customer, may use a Bill of Exchange as a means of payment. This is really a post-dated cheque which assures the creditor payment but also gives the buyer opportunity to inspect the goods before the transaction is completed. Those whose credit standing is unknown may have to get the Bill “accepted” before a creditor will take it. Such a process guarantees payment and most work of this kind is undertaken by the merchant banks. Because Bills are post dated creditors may have to wait some time for their money. They can overcome this problem by endorsing the Bill and then either discounting it with a Discount House or a bank or passing it on to another trader in settlement of a debt of their own. By the time it comes to maturity a Bill may have passed through several hands and on each occasion it must be endorsed. The commercial banks participate in this activity in two ways: in part by lending money to the discount houses and in part by discounting bills for their own customers.