SWEDISH INFLATION RATE RISES

(Newspaper item)

Sweden’s annual inflation rate rose to 2.7 per cent in October, adding to market fears that the central bank may delay cutting short-term interest rates. The rise from 2.5 per cent in September came as the central bank governor, Mr. Urban Backstroke, insisted the ten bank’s inflation target was 2 per cent, rather than 3 per cent, which is its upper limit.

Consumer prices rose 0.2 per cent between September and October, partly for housing repairs and partly - because of higher prices for clothes. But for food prices fell 0.2 per cent after a 7.2 per cent drop in fruit and vegetable prices.

Market analysts had been expecting rate, which stands just below 9 per cent before the end of the year, partly because the recent strengthening of the crone has eased inflationary pressures.

NOTES:

to add - добавлять, прибавлять;

to insist - настаивать, утверждать;

partly - частично;

removal - отмена, устранение;

state subsidy - государственная субсидия;

repair - ремонт, ремонтировать;

lending rate - ставка ссудного процента;

consumer price - цена на потребительский товар.

Exercise 2. Point out the sentences about Sweden’s annual inflation rate.

Lesson 10

Text A

MONEY

Money and its functions.

Although the crucial feature of money is its acceptance as the means of payment or medium of exchange, money has other functions. It serves as a standard of value, a unit of account, a store of value and as a standard of deferred payment. We discuss each of the functions of money in turn.

The medium of exchange.

Money, the medium of exchange is used in one-half of almost all exchange. Workers exchange labour services for money. People buy and sell goods in exchange for money. We accept money not to consume directly but because it can subsequently be used to buy things we wish to consume. Money is the medium through which people exchange goods and services. The society benefits from a medium of exchange imagine a barter economy.

A barter economy has no medium of exchange.

Goods are traded directly or swapped for other goods. In a barter economy the seller and the buyer each must want something the other has to offer. Each person is simultaneously a seller and a buyer. In order to see a film you must hand over in exchange a good or service that the cinema manager wants. There has to be a double coincidence of wants. You have to find a cinema where the manager wants what you have to offer in exchange.

Trading is very expensive in a barter economy. People must spend a lot of time and effort finding others with whom they can make mutually satisfactory swaps.

Since time and effort are scarce resources, a barter economy is wasteful. The use of money makes the trading process simpler and more efficient.

Other functions of money.

Money can also serve as a standard of value. Society considers it convenient to use a monetary unit to determine relative costs of different goods and services. In this functions money appears as the unit of account in which prices are quoted and accounts are kept.

In Russia prices are quoted in roubles; in Britain in pounds sterling; in the USA, in US dollars; in France in French francs. It is usually convenient to use the units in which the medium of exchange is measured as the unit of account as well. However there are exceptions. During the rapid German inflation of 1922-1923 when prices in marks were changing very quickly, German shopkeepers found it more convenient to use dollars as the unit of account. Prices were quoted in dollars even though payment was made in marks, the German medium of exchange. The situation in Russia nowadays reminds of that of in Germany.

Money is a store of value because it can be used to make purchases in the future. But money is neither the only nor necessarily the best store of value. Houses, stamp collections and interest-bearing bank accounts all serve as stores of value. Since money pays no interest and its real purchasing power is eroded by inflation, there are almost certainly better ways to store value. Finally, money serves as a standard of deferred payment or a unit of account over time. When you borrow, the amount to be repaid next year is measured in pounds sterling or in some other hard currency. This is not an essential function of money. Thus the key feature of money is its use as a medium of exchange. For this it must act as a store of value as well.

Different kinds of money.

In prisoner-of-war camps, cigarettes served as money. In 19th century money was mainly gold and silver coins. There are examples of commodity money, ordinary goods with industrial uses (gold) and consumption uses (cigarettes), which also serve as a medium of exchange. But there are less expensive ways for society to produce money.

A token money is a means of payment whose value or purchasing power as money greatly exceeds its cost of production or value in uses other than as money. The monetary value of most coins exceeds the amount you would get by melting them and selling off the metals they contain. By collectively agreeing to use token money society economises on the scarce resources required to produce money as a medium of exchange as the manufacturing costs are tiny. The essential condition for the surreal of token money is the restriction of the right to supply it. Private production is illegal. Society enforces the use of token money by making it legal tender. The law says it must be accepted as a means of payment. In modern economies token money is supplemented by IOU moony. «IOU» means – "I owe you".

An IOU money is a medium of exchange based on the debt of a private firm or individual. A bank deposit is IOU money because it is a debt of the bank. When you have a bank deposit the bank owes you money. You can write a cheque to yourself or a third party and the bank is obliged to pay whenever the cheque is presented. Bank deposits are a medium of exchange because they are generally accepted as payment.

NOTES:

the means of payment – средство платежа;

medium of exchange – средство обращения;

a standard of value – мера стоимости;

a unit of account – единица учета;

a store of value – средство сбережения (сохранение стоимости);

a standard of deferred payment – средство погашения долга;

subsequently – впоследствии;

a barter economy – бартерная экономика;

to exchange- обменивать, менять;

to barter -/-/-

to hand over in exchange – передать, вручить в обмен;

a double coincidence of wants – двойное совпадение потребностей;

a monetary unit –денежная единица;

to remind of – напоминать;

an interest-bearing bank account – счет в банке с выплатой процентов;

to pay interest – приносить процентный доход;

to erode – зд. фактически уменьшать;

hard currency – твердая (конвертируемая) валюта;

soft currency – неконвертируемая валюта;

prisoner – of – war camp – лагерь военнопленных;

commodity money – деньги, товар;

token money – символические деньги (дензнаки);

to melt down – расплавить;

tiny costs – мизерные затраты;.

legal tender – законное платежное средство;

to supplement – дополнять;

IOU - I owe you – я вам должен; деньги – долговое обязательство;

a bank deposit - вклад в банке;

COMPREHENSION QUESTIONS:

1. Why do people accept money?
2. What functions is money used in? (perform)
3. What kinds of money exist in the society?
4. What's a barter economy?
5. Why is trading expensive in a barter economy?
6. What currency can be used as the unit of account?
7. Speak on the current situation in Russia.
8. What does IOU mean?

VOCABULARY EXERCISES:

Exercise 1. Suggest the Russian equivalents.

Exchange labour services for money; you must hand over in exchange a good or service; a double coincidence of wants; spend a lot of time and effort; make mutually satisfactory swaps; a barter economy is wasteful; commodity generally accepted in payment for goods; prices are quoted and accounts are kept; the rapid German inflation; its purchasing power is eroded by inflation; exceeds its cost of production; by collectively agreeing; the survival of token money; society enforces the use of token money; token money is supplemented by IOU money; interest-bearing bank accounts.

Exercise 2. Replace the underlined words by synonyms.

Sometimes payment can be putt off till later; the vital feature of money; its purchasing power is worn away; the money is without value; time and effort are rare resources; private production of money is against the law.

Exercise 3. Fill in the gaps with the words and expressions from the text.

1. The crucial feature of money is its acceptance as ____ or ____.
2. People buy and sell goods __________for money.
3. In a barter economy goods are traded directly or _____ other goods.
4. People must spend a lot of ___ finding others with whom they can make mutually ___.
5. The unit of account is the unit in which prices are ___ and ___are kept.
6. During the rapid German inflation German shopkeepers found it ___ to use dollars as ____.
7. Money is a store of value because it can be used ___.
8. Since money ___ and its real ___ power ___ by inflation, there are almost certainly letter ways to store value.
9. When you borrow the amount to be repaid next year is measured in ___.
10. ____ are ordinary goods with __ (gold) and ___ (cigarettes) which also serve as a medium of exchange.
11. A token money is a means of payment whose ___ as money greatly ___ its cost of production or value in uses other ___.
12. By ___ society economises on the scarce resources required to produce money as ___.
13. The essential condition for the survival of token money is to ___ it.
14. An IOU money is a medium of exchange based on ___.
15. _____ is IOU money because it is a debt of the bank.

Exercise 4. Find in the text English equivalents for the following.

Oсновная (ключевая) черта (2 вар); средство платежа; средство обращения; мера стоимости; средство сбережения (средство сохранения стоимости); единица учета; средство погашения долга; в обмен на; может быть впоследствии использовано; обмениваться товарами и услугами; бартерная экономика; измерять(ся); платить проценты; покупательная способность; промышленное использование; потребительское использование; деньги – товар; денежные знаки (символические деньги); денежная стоимость; ограничение права; вклад в банке; банковская ссуда; законное платежное средство; долговое обязательство.

Exercise 5. Translate the sentences into English using all the active possible.

1) Существует несколько функций денег.

2) Во – первых; деньги являются средством платежа или обращения; деньги можно использовать при покупке и продаже товаров и услуг.

3) Деньги выступают также мерой стоимости. Деньги служат средством сбережения.

4) Поскольку деньги являются наиболее ликвидным товаром, то есть таким, который можно без проблем продать (обменять), то они являются очень удобной формой хранения богатства (денег).

5) Во время упадка в экономике, при высокой инфляции население, скорее всего, будет хранить богатства (деньги) в виде недвижимости или других дорогостоящих товаров.

6) Деньги, которые являются долговыми обязательствами государства, коммерческих банков и сберегательных учреждений имеют стоимость благодаря товарам и услугам, которые приобретаются за них на рынке.

Exercise 6. Divide the text into logical parts and make up a plan of your own.

Exercise 7. Give a summary of the text.

Exercise 8. Make up bits of conversation using the formulas expressing talking about plans and intentions.

We’d like to + inf.

We {want, hope, plan, intend } to + inf

We are going to + inf.

- Мы бы хотели + инф.

- Мы надеемся, хотим, планируем, намерены + инф.

- Мы собираемся + инф.

Text B

MONEY

Money has various uses in the modern world: it is a measure of the value of goods and services, a means of exchanging such goods and services and a way to store up buying (purchasing) power so that one can use it later. As a measure of valley it is of the very-greatest use. If I work in an office, how can my employer know what to pay me for my services if there is no generally recognised measure of valley? He may decide to pay me a certain number of loaves of bread each week but then I shall have to exchange some of these loaves for other things that I need: and how am I to know how many loaves of bread I should give for a pair of shoes or for the rent of my house, for example? Money gives us a useful means of measuring such relative values?

Money is also of great use as a means of exchanging goods and services. If, for example, I am a shoe- maker, it will not be at all convenient to me always to have to exchange the shoes I make for other goods or services. A doctor may want to buy a pair of shoes from me, for example, but I may not need medical care, so he will then have to find something else that I want or to look for another shoe-maker who need him. Without money the tax-collector would come back to his office with an extraordinary collection of objects.

Considered as a means of storing up buying (purchasing) power money has good and bad points. It can more easily be kept a long time than such things as food which rots or buildings which slowly fall to pieces, or machines which rust. It takes up very little space and if you put it in a bank, it is as safe as anything in this world can be.

But modern money has some very serious disadvantages as means of storing up buying power. In the old days when money was in the form of gold and silver coins the metal in each was really worth the amount stamped on the coin. But the paper in the modern paper money and even the metal in most modern coins are worth very much less than the amount written on them. As a result, the buying power of modern money can change very greatly in a short time. It is not surprising therefore that some people are doubtful about the wisdom of saving money.

NOTES:

a measure of value - мера стоимости;

a means of exchanging - средство обмена;

to store up - хранить, сохранять;

to be of great use - иметь большое применение;

employer - работодатель;

to recognize - признавать, узнавать;

loaves of bread - булки хлеба;

shoe-maker - сапожник;

to look for - искать;

a tax-collector - налоговый инспектор;

extraordinary - необычный, странный;

to rot - гнить;

to rust - ржаветь;

safe - безопасный;

to be worst - стоить;

stamped in the coin -отштампованный на монете;

to be doubtful about the wisdom of saving money - сомневаться в мудрости сохранения

денег.

Lesson 11

Text A

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