UNIT 7. MONEY

1. Consult the dictionary. Transcribe the following words and practice their pronunciation:

society, civilization, adequately, frustrating, surplus, cumbersome, coincidence, merely, disposal, similar, triangular, major, acceptable, medium, amazing, valua­tion, immediately, wealth, deteriorate, purchase, spread, pattern, installment

2. Read and translate the following:

an essential tool of civilization, the direct exchange of goods and services, the great disadvantage of barter, a laborious system of exchange, an amazing variety of goods and services, a piece of furniture, the value of one commodity, a means of making deferred payments, in the case of hire purchase contacts

3. Word list to be memorize:

acceptable (adj.) - прийнятний

adequately (adv.) - адекватно

arrangement (n.) – прилад

article (n.) - виріб, товар

coincidence (n.) - збіг

consider (v.) - розглядати

cumbersome (adj.) - обтяжливий

deferred payment – відстрочка платежу

delivery (n.) - доставка

deteriorate (v.) - гіпсуватися

devote (v.) - присвячувати

exchange rate - курс обміну

face (v.) – стикатися з

frustrating (adj.) - некорисний

hold (v.) - тримати

invention (n.) - винахід

installment (n.) - розстрочка

insure (v.) – гарантувати, страхувати

laborious (adj.) - утруднений

medium (n.) - засіб

merely (adv.) – тільки, просто

need (n.) – необхідність, потреба

payment (n.) - платіж

promise (n.) - обіцянка

rely upon (v.) – покластися на

remove (v.) – видаляти, виводити

seek out (v.) - шукати

similar (adj.) - подібний

spread (v.) – розподіляти, поширювати

stock (n.) - запас

store (v.) – тримати, запасати

surplus (n.) - додаток

trading (adj.) - торгівельний

whereby (adv.) – завдяки чому

4. Ascertain what part of speech.

greatest, invention, indicate, extent, cumbersome, coincidence, merely, laborious, triangular, furniture, adoption, valuation, equal, immediately, convenience, addition

5. Create nouns:

invent, indicate, exchange, serve, require, direct, spe­cialise, increase, vary, satisfy, want, produce, arrange, adopt, measure, solve, act, store, consider, accumulate, distribute, add, explain

Text A

Money

Money is one of man's greatest inventions and the fact that all but the least developed of human societies use money indicates that it is an essential tool of civilization. In the absence of some form of money, exchange may take the form of barter which is the direct exchange of goods and services for goods and services. Barter will serve man's requirements quite adequately when he provides most of his needs directly and relies upon market exchanges for very few of the things he wants. As the extent of specialization increases, the barter system proves very inefficient and frus­trating. In the simplest societies each family will provide by its own efforts most of its needs and perhaps some small sur­pluses. A fanner will exchange any small surplus of food, wool or hides for the surpluses of other producers. But this system of exchange becomes very cumbersome as econom­ic activities become more specialized. A specialist metal worker must seek out a large number of other specialists in order to obtain, by barter, the variety of goods he needs to satisfy his daily wants.

The great disadvantage of barter is the fact that it depends upon a 'double coincidence of wants'. A hunter who wants to exchange his skins for corn must find, not merely a person who wants skins, but someone who wants skin and has a surplus of corn for disposal. The alternative is to exchange his skins for some other article and they carry out a series of similar exchanges until he finally gets his corn. Time and energy which could be devoted to produc­tion is spent on a laborious system of exchange.

Quite early in his history man discovered a much more convenient arrangement. The use of some commodity as a medium of exchange makes exchange triangular and removes the major difficulty of the barter system. If a com­modity is generally acceptable in exchange for goods and services, it is money. A producer now exchanges his goods for money and the money can be exchanged for whatever goods and services he requires.

The functions of money

1. A medium of exchange.

As we have already explained, the use of money as a medium of exchange makes possible a great extenuation of the principle of specialization. In an advanced society the use of money allows us to exchange hours of labour for an amazing variety of goods and services. We can exchange, for example, two weeks' labour for a holiday abroad just as eas­ily as we can exchange it for a piece of furniture or a year's rent on a television set. Such exchanges are taken for grant­ed yet they would be inconvenient without the use of money.

2. A measure of value.

The first step in the use of money was probably the adoption of some commodity as a unit of account or mea­sure of value. Money, most likely, came into use within the barter system as a means whereby the values of different goods could be compared. The direct exchange of goods for goods would raise all sorts of problems regarding valuation. For example 'How many bushels of corn are equal in value to one sheep, if twenty sheep exchange for three cows and one cow exchanges for ten bushels of corn?' The problem of exchange rates is easily solved when all other commodities are valued in terms of a single commodity which then acts as a standard of value. Money now serves as such a standard and when all economic goods are given money values (i.e. prices), we know, immediately, the value of one commodity in terms of any other commodity.

3. A store of value.

Once a commodity becomes universally acceptable in exchange for goods and services, it is possible to store wealth by holding a stock of this commodity. It is a great conve­nience to hold wealth in the form of money. Consider the problems of holding wealth in the form of some other com­modity, say wheat. It may deteriorate, it is costly to store, may be insured, and there will be significant handling costs in accumulating and distributing it. In addition, its m о n е у value may fall when it is being stored. The great disadvan­tage of holding wealth in the form of money has become very apparent in recent years — during periods of inflation its exchange value falls.

4. A means of making deferred payments.

An important function of money in the modern world, where so much business is conducted on the basis of credit, is to serve as a means of deferred payment. When goods are supplied on credit, the buyer has immediate use of them but does not have to make an immediate payment. The goods can be paid for three, or perhaps six, months after delivery. In the case of hire purchase contracts, the buyer takes immediate delivery but pays by means of installments spread over one, two, or three years.

A complex trading organization based upon a system of credit can only operate in a monetary economy. Sellers would be most unlikely to accept promises to pay in the future which were expressed in terms of commodities other than money. They would have no idea how much of the commodities they would need in the future, and if they do not want them, they face the trouble and risks involved in selling them. Sellers will accept promises to pay expressed in terms of money because, whatever the pattern of their future wants, they can be satisfied by using money.

1. Discuss text A.

2. Put the following words in their correct place in the passage bellow:

granted, convenience, monetary, commodity, money, direct, inventions, barter, valuation. 1. Money is one of man's greatest....

2. In the absence of some form of money, exchange may take the form of....

3. If a ... is generally acceptable in exchanging for goods and services, it is....

4. Such exchanges are taken for....

5. The ... of goods for goods would raise all sorts of problems regarding....

6. It is a great... to hold wealth in the form of money.

7. A complex trading organization based upon a system of credit can only operate in a ... economy.

3. Can you find synonyms here?

means, form, tool, frustrating, obtain, useless, need, instrument, shape, get, medium, commodity, general, require, labour, store, common, article, work, stock, deteriorate, significant, spoil, essential, apparent, con­duct, purchase, evident, carry out, buy

4. Try to find antonyms:

absence, increase, major, spread, presence, same, reduce, minor, accumulate, different

5. Give your English equivalents:

прямий обмін товарами та послугами, із зростанням спеціалізації, ряд подібних обмінів, більш зручний засіб, основна складність бартерної системи, в розвинутому суспільстві, предмет меблі, без використання грошей, перший крок, проблема курсів обміну, запас товарів, велика зручність, величезний недолік, під час інфляції.

7. Check yourself: Do you know 3 forms of the verbs?

take, prove, become, seek, need, find, set, spend, make, come, raise, give, store, fall, pay, spread, do

8. Compose the sentences with words:

1. one, money, is, man's, inventions, greatest, of.

2. is, it, tool, essential, of, an, civilization.

3. take, the, exchange, of, may, barter, form.

4. will, barter, requirements, quite, man's, adequately, serve.

5. barter, the, system, very, and, inefficient, proves, frustrating.

6. system, very, becomes, exchange, of, cumbersome, this.

7. upon, a, depends, it, coincidence, wants, of, double.

8. discovered, a, arrangement, man, more, much, con­venient.

9. removes, the, it, of, the, barter, major, system, diffi­culty.

10. exchanges, are, such, for, granted, taken.

11. would, be, they, without, inconvenient, use, of, the, money.

12. is, problem, exchange, the, rates, solved, of, easily.

13. is, to, deferred, it, serve, payment, means, a, as, of.

9. Fill the gaps with preposition:

1. Monetary policy is concerned with the cost... money.

2. Bank-notes and coins are not the most important form ... money ... developed economies.

3. Cheques didn't come ... general use ... the second half of the seventeenth century.

4. A payment from one person ... another merely requires that the banker reduces the amount ... one deposit and increases it... another.

5. The transmission ... payments ... means ... cheques creates problems when the person making the pay­ment has an account... a different bank ... the person receiving the payment.

6. Most countries have a central bank, which is respon­sible ... the operation ... the banking system.

7. Several merchant banks date back ... the nineteenth century.

8. ... recent years there has been a considerable exten­sion ... the range ... financial services offered ... build­ing societies.

10. Put questions to the italicized words:

1. In the absence of some form of money, exchange may take the form of barter.

2. As the extent of specialization increases, the barter sys­tem proves very inefficient.

3. A specialist metal worker must seek out a large num­ber of other specialists in order to obtain, by barter, the variety of goods he needs.

4. The alternative is to change his skins for some other article.

5. The use of money makes possible a great extension of the principle of specialization.

6. The use of money allows us to exchange hours of labour for an amazing variety of goods and services.

7. The direct exchange of goods for goods would raise all sorts of problems regarding valuation.

8. The problem of exchange rates is easily solved when all other commodities are valued in terms of a single commodity.

9. It is a great convenience to hold wealth in the form of money.

10. The money value of wealth may fall when it is being stored.

11. Fill in the blanks with verbs in brackets:

1. Exchange may ... (to take) the form of barter, which ... (to be) to direct exchange of goods and services for goods and services.

2. Barter ... (to serve) man's requirements quite ade­quately when he ... (to provide) most of the needs directly and ... (to rely upon) market exchanges for very few of the things he ... (to want).

3. As the extent of specialization ... (to increase) the barter system ... (to prove) inefficient.

4. In the simplest societies each family ... (to provide) by its own efforts most of its needs.

5. This system of exchange ... (to become) very cum­bersome as economic activities ... (to become) more specialized.

6. A specialist metal worker must... (to seek out) a large number of other specialists in order... (to obtain), by barter, the variety of goods he needs ... (to satisfy) his daily wants.

7. The great disadvantage of barter ... (to be) the fact that it... (to depend upon) a 'double coincidence of wants'.

8. A hunter who ... (to want)... (to exchange) his skins for corn must... (to find), not merely a person who ...

(to want) skins, but someone who ... (to want) skins and ... (to have) a surplus of corn for disposal.

12. Do you know?

1. What is barter?

2. When may exchange take the form of barter?

3. When is barter inefficient and frustrating?

4. What are the main functions of money?

5. Why has it become unprofitable to hold wealth in the form of money in recent years?

6. Why is money a perfect means of deferred payments?

7. How does a complex trading organization operate in a monetary economy?

13. Discuss "Money".

14. Make summary of text B.

Text B