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II. Give the corresponding nouns to the following verbs:

a) to transfer, to practice, to exchange, to increase, to decrease, to level, to respond, to control, to service, to market, to effect, to rate, to ration, to base, to function, to message, to supply, to rise, to price, to demand;

b) to restrict, to allocate, to produce, to describe, to govern, to distribute, to attract, to perform, to motivate, to organise.

  1. Fill in the blanks below with the most appropriate terms from

the list:

scarce resources; securities; production; price; amount of money; level of output; services; a commodity; producers; supply and demand.

1. In economics, the term ________ denotes the consideration in cash for the transfer of something valuable. 2. Price may refer either to one unit of _________ or to the amount of money payable for a specified number of units. 3. Prices perform two important economic functions: they ration __________ , and they motivate _________ . 4. Similarly, price decreases drive ________ out of the market. 5. Prices encourage producers to increase or decrease their __________ . 6. Prices may be either free to respond to changes in __________ or controlled by the government. 7. In commercial practice price is normally restricted to the _________ payable for goods, __________ , and __________ .

IV. Say whether these statements are true or false and if they are

false say why:

1. In economics, the term «price» denotes the consideration in cash for the transfer of something valuable. 2. In commercial practice it is restricted to the amount of money payable for goods and services. 3. Interest rate is the price paid for borrowing money for a period of time. 4. Exchange rate is the price of one currency in terms of another. 5. Supply and demand determine prices in a market economy. 6. Price may refer only to one unit of a commodity. 7. Price decreases drive producers out of the market. 8. Prices perform many important functions. 9. In a market system goods and services are allocated, or distributed, based on their price. 10. Prices are always controlled by the government.

V. Define which of the following items best completes the statement:

When an item becomes scarce, its price rises and, as a result, fewer people buy it. This statement illustrates

a. the rationing effect of prices.

b. the production-motivating effect of prices.

c. the law of supply.

d. the effect of a shift in demand.

VI. Complete the following sentences:

1. In economics, the term «price» denotes ... . 2. Interest rate is ... . 3. Exchange rate is ... . 4. Price may refer either to ... . 5. Economists describe that ... . 6. Prices perform two important economic functions ... . 7. As a general rule, the more scarce something is ... . 8. Prices may be either free to respond to changes in supply and demand or ... .

VII. Answer the following questions:

1. What does the term «price» denote in economics? 2. How is the price normally restricted in commercial practice? 3. What is interest rate? 4. What is exchange rate? 5. What may the price refer to? 6. What two important functions do prices perform? 7. What can you say about the rationing effect of prices? 8. What do you know about the production-motivating function of prices? 9. May prices be free to respond to changes in supply and demand?