4 Complete each sentence with a word or a phrase from below:

1)The dollar is the … of the USA.

2)When people … goods, they simply exchange one good for another

3)When you make a … , you take money out of your account.

4)An … is a machine that gives customers money when the bank is closed.

5)When we buy things we … money for goods.

6)In our country people usually pay with … in shops.

7)When you make a … , you put money into your account.

8)If money can easily be moved around and used we say it has … .

9)Centuries ago people paid with … , such as gold or silver.

10)The money that people deposit in their … is lent out to someone else.

11)Banks make a living by charging … on loans.

12)A certain percentage of all the savings received from customers is called the … of the bank.

a) cash g) liquidity

b) commodity money h) reserve

c) interest i) swap

d) currency j) ATM

e) deposit k) barter

f) withdrawal l) bank accounts

5 Answer these questions according to the text or from your own life experience:

1)Name as many banks that you know as possible.

2)Name the banks in your city or town which are a) regional, b) federal, c) international.

3)If you had one thousand dollars, would you keep your money at home or in a bank?

4)If you had one thousand dollars, in which bank would you keep your money?

5)If you had a large amount of money would you prefer to have it in dollars, euros or rubles? Which currency do you trust?

6)What other currencies do you know?

6Write a promotional leaflet for a bank. The aim is to attract new customers and to inform existing customers about the services the bank offers. Try to use the words from the texts.

7 Inflation

Inflation is an overall increase in prices over a certain period of time. It’s also a worry for anybody who’s trying to make ends meet, and a headache for many governments. The rate of inflation is often in the headlines. However, inflation isn’t really news. In most of Europe, for example, prices have risen year after year for at least the last 50 years. Deflation (overall decrease in prices) happens occasionally, but the trend is mostly for the cost of living to increase.

There are lots of ways to measure inflation. One of the most popular ways is the retail price index. This is calculated by recording increases in price for a range of goods and services. This is sometimes called a basket of goods. Some of the goods are weighted more heavily than others because they are more important. For example, food will be weighted more than the cost of a cinema ticket, because a 5% increase in food is more important than a 10% increase in the cost of seeing a film. Inflation is worked out from an average of all the price increases in the basket.

Inflation can happen for a number of reasons, but economists say there are two main culprits. These are demand-pull inflation and cost-push inflation. Demand-pull inflation can happen when the economy is growing fast. Aggregate demand begins to grow faster than suppliers can cope with. This causes a shortage, and prices rise. At first, customers may be able to pay the higher prices, and demand grows again. This forces prices up even more, and the cycle continues.

One of the characteristics of demand-pull inflation is that there is often too much money going round the economy. This is explained by the quantity theory of money. This theory uses the following equation: money supply x velocity = average price x transactions. Velocity is the speed that money is passed on from one person to another. Some economists say that velocity and the number of transactions don’t really change. The only things that change in this equation are the money supply and average prices. This means that when the money supply increases, prices will increase too. For this reason, printing money is rarely a solution for economic crises.

Cost-push inflation, on the other hand, occurs when prices rise without an increase in demand. This happens when suppliers’ variable costs increase sharply. For example, workers may demand higher wages or raw materials may become more expensive. Producers then pass these increases on to consumers by raising prices. So, as usual, we are the ones who pay. (2115)

7.1 Find in the text the English equivalents to the following words and word combinations: общее повышение цен, сводить концы с концами, темп инфляции, общее понижение цен, стоимость жизни, индекс розничных цен, потребительская корзина, среднее число всех ценовых повышений, главные виновники, инфляция спроса, инфляция издержек, совокупный спрос, справляться, заставлять, количественная теория денег, количество сделок, денежная масса, переменные издержки, сырье, перекладывать.