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2622.Grammar for students to understand business English. Ч

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Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
Л.Л. Курченко
О.В. Ермолова
Учебное пособие для экономических специальностей
Часть III
Рекомендовано к изданию Научно-методическим советом института
Липецк 2007
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
ББК 81.2 Англ.я 73
К 93
Рекомендовано к изданию кафедрой
гуманитарно- социальных
Протокол № от
Курченко Лидия Леонидовна, старший преподаватель кафедры
гуманитарно-социальных дисциплин Липецкого кооперативного
Ермолова Ольга Викторовна, к.п.н., старший преподаватель
кооперативного института
Кузовлев Владимир Петрович, к.п.н., профессор, начальник
отдела АСУП издательства «Просвещение»
К 93
Курченко Л.Л., Ермолова О.В.,
English for business communication.
Учебное пособие для экономических
специальностей. Часть 3./ Л.Л.
Курченко, О.В.Ермолова,
- Липецкий кооперативный институт
(филиал) БУПК, Липецк 2007 – с.
Учебное пособие содержит тексты, лексические и функциональносмысловые таблицы, лексико-грамматические упражнения для
самостоятельной работы студентов с текстами, ситуативные
© Липецкий кооперативный институт, 2007
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
Unit 1. Finance and economics
II.Indicators 1
III.Indicators 2
VI.Inflation and deflation
VII.Gross domestic product
VIII.Measuring economic activity
IX.Markets and competitors
XI.Organised markets
XII.The economic environment
XIII.Microeconomics. Macroeconomics.
XIV.The law of demand and supply.
Unit 2.Finance
II.Personal finance
III.Financial centres
IV.Financial institutions
V.Cash cycle
Vi.Sources of finance
VII.Share capital and debt
VIII.Success and failure
IX.Mergers, takeovers and sell-offs
X.Capital, interest and profit
Unit 3.Money and banking system
II.Glimpses of history of money
III.Banking system
IV.Introduction of banking and financial markets
V.Money: real and counterfeit
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VI.Different kinds of money
VII.Various services of banks
VIII.Monetary system and monetary policies
Unit 4. Accounting
II.The bottom line
IV.Bookkeepers, accountants, auditors and controllers
V.Assets, liabilities and the ballance sheet
VI.Accounts and ballance sheet
VII.Government accounting
VIII.Effective government accounting
Unit 5.Foreign Trade
II. Foreign Trade
III.Types of payments in foreign trade
IV.Customs tariffs in Russia
V.International business
Unit 6.World organisations
II.The world trade organisation
III.International monetary fund:objectives and history
IV.The world bank
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1. Increase your vocabulary
a) There is a set of words related to the “economics, produce”. Form
all possible words. Translate them into Russian.
2. Use these words in the suitable blanks in the sentences below:
Put one of the given words in each sentence.
production, economize, productivity, economic, produce, economy,
product, economical, productive, producer, economics
1. The state of the ______________ is very worrying.
2. Larger tubes of toothpaste are more ________________.
3. We are spending too much money – we must ________________.
4. _______________ is well taught at our institute.
5. The government’s _____________ policy is seriously criticized.
6. A fashion house has _______________ well – styled casual clothes.
7. Small – scale egg ______________.
8. The company has launched a new ______________.
9. _______________ of the new aircraft will start next year.
10. It wasn’t a very ________________ meeting.
11. Our ________________ is only about 40% of Japanese levels.
1. Study the main indicators of economics
A. Finance and economics
Finance is:
• money provided or lent for a particular purpose.
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• the management of money by countries, organizations or people.
• the study of money management.
High finance involves large amounts of money used by governments
and large companies. A person's or organization's finances are the money
they have and how it is managed, etc. The related adjective is financial.
Economics is:
• the study of how money works and is used.
• calculations of whether a particular activity will be profitable.
Related adjectives: a profitable activity is economic; an unprofitable
one is uneconomic. If something is economical, it is cheap to buy, to use or
to do. If not, it is uneconomical.
Economic indicators (see В, С and D below) are figures showing how
well a country's economy (economic system) is working.
B. Inflation and unemployment
Inflation is rising prices, and the rate at which they are rising is the
inflation rate. The related adjective is inflationary.
The unemployed are people without jobs in a particular area, country,
etc. The level of unemployment is the number of people without a job.
Unemployed people are out of work, and are also referred to as jobless
(adj.) or the jobless.
C. Trade
The balance of payments is the difference between the money coming
into a country and that going out. The trade balance is the difference
between payments for imports (goods and services from abroad) and
payments for exports (products and services sold abroad). When a country
exports more than it imports, it has a trade surplus. When the opposite is the
case, it has a trade deficit. The amount of this surplus or deficit is the trade
D Growth and GDP
Economic output is the value of goods and services produced in a
country or area. Gross domestic product or GDP is the value of all the
goods and services produced in a particular country.
The size of an economy is also sometimes measured in terms of gross
national product or GNP. This also includes payments from abroad, for
example, from investments.
Growth is when output in the economy increases. The growth rate is the
speed at which a company's economy grows and gets bigger.
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E Deflation
Deflate, means to reduce the amount of money being used in a country
in order to lower prices to keep them steady. The government were forced to
deflate. Deflation is the act or process of deflating or being deflated.
A. Going up
You use a number of verbs to describe amounts or figures going up.
= Shares in 4. UNEMPLOYMENT
= The
number of
ADVANCE IN BT increased
in value.
without work
has gone up
= The value 5. YAHOO! SOARS AS = Shares in
of export
Yahoo! have
over imports
has gone up
greatly in
= Petrol
6. VW PROFITS UP AS = Profits in
prices are
VW have
going to rise
by a lot.
thanks to
rapidly rising
car sales.
B. Going down
You also use a number of verbs to describe amounts or figures going down.
= A defence
= Sales in shops
7. 1,000 JOBS
company has told SEPTEMBER
have fallen a lot
1,000 factory
RETAIL SALES in September.
employees that
they are to lose
their jobs.
= The ECB has
= The
11. GOVERNreduced interest
government has
reduced income
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tax by a large
= Megacorp’s
= The euro
12. EURO
share price has DIVES TO NEW
currency has
gone down
fallen to its than
slightly after they
lowest value ever.
said that profits
would be lower
C. Look at these headlines containing words from A and B opposite
and say whether the statements about them are true or false.
1. Sales have risen by a
2. The British pound has
a lot in value, but the US
dollar has fallen less.
3. The share price has
increased because one of
company’s new drugs will
probably be approved for
4. Shares in AMB have fallen
because it may
be a
5. The difference between
Japanese imports and
has increased a lot.
6. The president has asked the
finance minister to stay in
his job.
7. The Polish government wants
to reduce the difference
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what it spends and what it
8. Prices in Paradise have
risen sharply.
D. Peaks and troughs.
If a figure rises to a level and then stops rising, remaining at that level, it
levels off and remains steady or stable.
If a figure reaches its highest level - a peak - and then goes down, it
peaks at that level. If it reaches its lowest level - a trough - and then bottoms
out, it falls to that level and then starts rising again.
E. Boom and bust.
Demand is the amount of goods and services that people want in a
particular period. A boom is when there is rising demand, and other
indicators are strong.
Stagnation is when the economy is growing slowly, or not at all.
Stagflation is when slow growth is combined with prices that are
increasing fast. Recession is a period when there is negative growth, a
period when the economy is producing less. A slump is a very bad recession.
A depression is a very bad slump.
F. Complete the crossword with expressions from C and D opposite.
1. The worst possible economic situation.
5. Inflation …….. when it reaches its
highest level. (5)
9. When unemployment stays as its
highest it ……………. . (6,3)
11. When output starts rising from its
lowest level it …………. . (7,3)
2. A period when the economy is not
healthy. (9)
3. Worse than 2 down, but not as bad as 1
across. (5)
4. During a recession, there is ……….
growth. (8)
6. Rising prices without rising growth.
7. A very slow economy. (10)
8. If inflation doesn’t change, it remains
………… .(6)
10. A very positive economic situation.
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1. Read and say what the text is about. Consult a dictionary.
We say that unemployment exists where people capable and willing to
work are unable to find suitable paid employment. But where an economy is
adapting to changing conditions, there will always be some persons
unemployed as they change jobs or as seasonal work comes to an end.
Unemployment may occur for many different reasons. There will always
be some people changing jobs. In certain occupations, e.g. unskilled labour
in the construction industry, workers are not employed regularly by one
employer. When a contract is completed labour is not required. Occasionally
workers are discharged when a factory is being reorganized.
Unemployed workers usually register at the local employment exchange
from which employers can hire them. The unemployed are paid certain
Employment in some industries, e.g. building, fruit picking, is seasonal
in character. Seasonal employment can be reduced out of «season» and
admit such persons as students and housewives during the busy period.
Sometimes there are unemployed workers of a particular occupation in one
part of the country but a shortage of the same type of work in other parts.
Thus today there is a surplus of unskilled and manual labourers in the north
of England, whereas firms in the London area have vacancies unfilled. Two
main reasons can be suggested for this type of unemployment — ignorance
of opportunities, and immobility of labour.
Workers may be in «between jobs». Some of them are looking for better
jobs, others are seeking better salaries. Young people search for their first
jobs. This is called «frictional unemployment». This type is usually shortterm and regarded as inevitable.
Unemployment may also by caused by important changes in the
structure of consumer demand and in technology. As a result some workers
find that their skills and experience are unwanted by these changes. This type
of employment is more long-term and regarded as more serious. It is known
as structural unemployment.
2. Read the text again and answer the questions on it. For questions 15 choose the best answer from A, B, C or D.
1) Does seasonal employment cover…
a) workers and the unemployment?
c) students and housewives?
b) employers?
d) manual labourers?
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2) What does “frictional unemployment” mean?
a) important changes in technology and consumer demand
b) completed labour
c) better jobs, first jobs, better salaries
d) changing jobs
3) Structural unemployment emplies …
a) unfilled vacancies
b) adapting to changing conditions
c) unwanted skills and experience d) ignorance of opportunities
4) Why does unemployment exist?
a) due to changes in economy
b) workers are not employed regularly by one employer
c) because of immobility in labour
d) young people search for their first job
5) Is unemployment also caused by…
a) seasonal employment?
b) changes in technology?
c) unskilled workers?
d) certain benefits?
3. Write the words from this text which have the following meanings.
1. the process of gaining knowledge or skill over a period of time
through seeing and doing things rather than through studying
2. a person who does hard physical work that is not skilled
3. people who do not have a job but available to work
4. the number of people without a paid job
5. a job or profession
6. a paid position of regular employment
7. the ability to do smth well
4. Match the preposition with the expressions. Some prepositions may
be used more than once:
the local employment
changing conditions
one part of the country
out of
many different reasons
these changes
the London area
certain occupations
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the North of England
5. Choose a word (a-g) that suits best a sentence (1-7).
1. Employment may occur for many different …
2. Employment in some industries is … in character.
3. When a contract is completed labour is not …
4. Unemployment workers usually … at the local
employment exchange.
5. Young people … for their first job.
6. The … are paid certain benefits.
7. There will always be some people … jobs.
a) needed
b) workless
c) altering
d) look for
e) causes
f) temporal
g) enrolled
6. Look through the list of phrases below. Arrange them into three
groups according to parts of speech (participle, adjective, adverb).
7. Find in the text and translate:
- 2 sentences having modal verbs;
- 2 sentences having Participle II.
1. Read the text and say what inflation is and what types of inflation
there are.
1. Inflation is generally defined as a persistent rise in the general price
level with no corresponding rise in output, which leads to a corresponding
fall in the purchasing power of money. We shall look briefly at the problems
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that inflation causes for business and consider whether there are any
potential benefits for an enterprise from an inflationary period. Inflation
varies considerably in its extent and severity. Hence, the consequences for
the business community differ according to circumstances. Mild inflation of a
few per cent each year may pose few difficulties for business.
2. However, hyperinflation, which entails enormously high rates of
inflation, can create almost insurmountable problems for the government,
business, consumers and workers. In post-war Hungary, the cost of living
was published each day and workers were paid daily so as to avoid the value
of their earnings falling. Businesses would have experienced great difficulty
in costing and pricing their production while the incentive for people to save
would have been removed. Economists argue at length about the causes of,
and “cure” for inflation. They would, however, recognize that two general
types of inflation exist: demand-pull inflation and cost-push inflation.
3. Demand-pull inflation occurs when demand for nation’s goods and
services outstrips that nation’s ability to supply these goods and services.
This causes prices to rise generally as a means of limiting demand to the
available supply. An alternative way that we can look at this type of inflation
is to say that it occurs when injections exceed withdrawals and the economy
is already stretched (i.e. little available labour or factory space) and there is
little scope to increase further its level of activity.
4. Alternatively, inflation can be of the cost-push variety. This takes
place when firms face increasing costs. This could be caused by an increase
in wages owing to trade union militancy, the rising costs of imported raw
materials and components or companies pushing up prices in order to
improve their profit margins.
2. Read the words
from the text. Which is the odd word out in each
3. Read the word in bold to complete the second sentence so that it has
a similar meaning to the first.
a) Mild inflation of a few percent each year may pose few difficulties for
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be posed
Few difficulties ________________________________ each year for
b) Economists argue at length about the causes and “cure” for inflation.
are said
Economists ___________________________________ about the
causes and “cure” for inflation.
c) Inflation varies considerably in its extent and severity.
is changed
Inflation ________________________________________ in its extent
and severity.
d) In post – war Hungary the cost of living was published each day.
Post – war ____________________________________ each day.
e) We shall look briefly at the problems that inflation causes for
are certain
We ________________________________________ that the inflation
causes for business.
f) The consequences for the business community differ according to
must have
The consequences __________________________________ according
to circumstances.
1. Study these notions:
1) deflate – to reduce the amount of money being used in a country in
order to lower prices or keep them steady
2) consequence – a result or an effect of sth else; importance
3) stagnate – to stop developing or progressing
4) reduce – to make smth smaller in size, quantity, number, degree, price
5) development – an action or process of developing or being developed
6) growth – the process of growing, development
7) rate – a measurement of how fast or how many times sth happens in
relation to sth else
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2. Make up a story. Match the sentences in A with their endings in B.
1. An inflationary
a) when economic growth decreases or comes to a
halt, but inflation continues to rise.
2. The rising prices
3. The causes of
b) is characterized by rising prices within a certain
period of time.
c) represents a reduction in the supply of money in
comparison with the supply of goods.
4. The consequences of
d) are generally complex and can arise either from
the goods or from the monetary side.
5. Inflation becomes
e) is a consequence of an uneven development in
the quantity of goods on offer and the quantity of
money available which itself determines the
demand and is the inflation rate.
6. If the state does not
take measures to
combat stagnation,
f) this leads to stagflation.
7. Deflation, the
g) are extremely damaging for the economy.
opposite development to
Read the text and make up a graph or chart to compare GDP in the USA
and UK.
Gross Domestic Product or GDP is the amount of money a country
makes from goods and services inside the country for a certain period of
time, usually for a year.
When GDP is calculated different sectors of economy are analysed.
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In the United Kingdom the following sectors of economy are usually
analysed: manufacturing, services (financial, professional and scientific
services, leisure and tourism), energy (oil, natural gas, coal) and agriculture.
In the United States the following sectors of economy are usually analysed
when the GDP is defined: construction and manufacturing, trade and
finance, transport, communication and services, agriculture and mining.
Speaking, as an example, about one of the recent year’s GDP figures, the
following can be quoted:
In the UK the services sector accounted for roughly 60 per cent of Gross
Domestic Product. Manufacturing sector accounted for a small percentage
of Gross Domestic Product. Energy production sector accounted for about 8
per cent of GDP. Agriculture - only for 4 percent of GDP. But the
agricultural sector satisfies two-thirds of the country's needs. And only a
small fraction of the total population, about 2 percent, are engaged in
In the USA the construction and manufacturing sector accounted for 40
percent of GDP; trade and finance earned 25 per cent of GDP; transport,
communication and services sector earned 20 percent of GDP; agriculture
and mining earned 5 percent of GDP. By the way 10 percent of the employed
population of the United States is engaged in agriculture.
1. Read the text, understand the contents and do exercises on it.
1. There are a large number of statistics produced regularly on the
operation of the world's major economies. The UK's economy is no
exception in this respect. You will probably have noticed that often the
headlines in newspapers or important items on television news programmers
relate to economic data and the implications for individuals and businesses.
A prime example of this occurs when interest rates are increased: the media
responds by highlighting the adverse effects on businesses with debts and
householders with mortgages.
Data is provided on a wide range of aspects of the economy's operation.
Statistics are available to show:
the level of unemployment
the level of inflation
a country's trade balance with the rest of the world
production volumes in key industries and the economy as a whole
the level of wages
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raw material prices, and so forth.
2. The main statistics illustrating the economy's behaviour relate to the
level of activity in the economy. That is, they tell us whether the economy is
working at full capacity using all or nearly all, available resources of labour,
machinery and other factors of production or whether these resources are
being under-utilized.
3. The unemployment figures for the economy give an indicator of the
level of activity. As the economy moves towards a recession and a lower level
of prosperity it is likely that unemployment figures will rise: An alternative
measure of the level of activity is national income statistics, which show' the
value of a nation's output during a year. Economists use the term Gross
National Product to describe this data. Changes in the level or trends of such
key data have great significance for businesses, as we shall see later.
4. There are numerous sources of data on the economy of which we can
make use. The government publishes much through the Treasury, Department
of Trade and Industry, the Bank of England and the Department of
Employment. The Central Statistical Office, which was established during
the Second World War, publishes about half of the government's economic
5. Much of this is contained in its annual publication, "The Annual
Abstract of Statistics". It also publishes the equally valuable "Social Trends"
annually. Additionally, private organizations, such as the banks, building
societies and universities, publish figures on various aspects of the
economy's performance.
6. Economic statistics are presented in many forms, the most common
being graphs and tables. Although these statistics can be valuable in
assisting managers, they should be treated with some caution when
predicting the future trend of the economy and thus .helping the business to
take, effective decisions.
2. Match the words to their meanings.
1. statistics
2. data
3. balance
4. wage
a) the amount of something that a person, a machine or
an organization produces
b) money received over a certain period especially as
payment for work or an interest on investments
c) the total value of goods and services produced in a
country’s economy, not including income from abroad
d) facts or information used in deciding or discussing
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5. indicator
e) the condition that exists when two opposites are equal
or in correct proportions
6. income
f) a collection of information shown in numbers
7. Gross
g) a regular, usually weekly payment made or received for
National Product work or services
8. output
h) a fixed regular payment usually made every month to
employees especially professional or office work
9. salary
i) a sign of something; a thing that shows the state or
health of something else
3. Decide which noun has a singular or plural form?
4. Look at the list of headings A-F and then read the text more slowly.
After each paragraph look down the list and choose the heading that fits
best. There is one extra heading you don’t need.
A Unemployment figures ----1
B Forms of statistics
C Sources of data
D Data
E Level of activity
F Output
G Media
5. Match the following questions (1-5) with their answers (a-e).
1. Why are statistics important for economy?
2. What does the level of activity in the economy show?
3. How are the economic statistics presented?
4. What are the sources of data?
5. Who gives an indicator of the level of activity for the economy?
a) The government publishes a lot through the Treasury, Department of
Trade and industry, The Bank of England, the Department of Employment,
The Central Statistical Office.
b) The unemployment figures show the level of economic activity.
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c) Economic statistics include the most common forms as graphs and
d) The level of the activity in the economy shows available resources,
machinery and other factors of production.
e) Data comprises the most important items: the level of unemployment,
the level of inflation, a country’s trade balance with the rest of the world,
production volumes in key industries and the economy as a whole, the level
of wages, raw material prices.
6. Use the word in bold to complete the second sentence so that it has a
similar meaning to the first.
a) You will probably have noticed that often the headlines in newspapers
relate to economic data.
are likely
You ___________________relate to economic data.
b) Data is provided on a wide range of aspects of the economy’s
is said
Data ______________________of the economy’s operation.
c) The Central Statistical Office, which was established during the
Second World War, publishes about half of the government’s economic data.
Half of the governments economic data _____________________
during the second world war.
d) Economists use the term Gross National Product to describe this
is used
It is __________________________to describe this data.
e) Changes in the level of activity in the economy have great significance
for business.
are certain
Changes _____________________________great significance for
7. Make questions using the prompts in (a-e).
a) measured/ economic/ is/ what/ activity?
b) statistics/ what/ main/ illustrate/ the/ do?
c) Gross/ economists/ the/ Product/ use/ do/ term/ date/ this/ describe/
national/ to
d) are/ the/ sources/ what/ numerous/ data/ of?
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e) forms/ statistics/ what/ are/ economic/ presented?
* 8. Spot the mistakes. Correct each of the sentence.
a) There exist a great number of statistics.
b) The unemployed is an indicator of the level of activity in the economy.
c) Television news relate to economic data.
d) That is, they tell to us whether the economy is working at full
e) Economic statistics is presented in many forms.
Study word combinations connected with the word “market”.
Market is the state of trade in a particular type of goods.
1. Companies and markets.
You can talk about the people or organizations who buy particular goods
or services as the market for them, as in the ‘car market’, ‘the market for
financial services’, etc. Buyers and sellers of particular goods or services in
a place, or those that might buy them, form a market.
If a company:
gets out of
drives another
company out of
it starts selling there for the first time.
it stops selling there.
a market
it is the most important company selling there.
it is the only company selling there.
it makes the other company leave the market,
perhaps because it can no longer compete.
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2. More word combinations with ‘market’.
‘Market’ is often used in these combinations:
Market growth
Market share
In the late 1990s, Internet use was
doubling every 100 days. Market
growth was incredible.
Women are a particularly interesting
target for the Volvo V70. They are an
important market segment for Volvo.
The Softco software company divides
the software market into large
companies, small companies, home
office users, and leisure users. This is
its market segmentation.
Among UK supermarkets, Tesco sells
more than any
of the other chains. It has the
highest market share.
Tesco is the market leader among UK
supermarkets as it sells more than any
of the other chains.
3. Competitors and competition.
Companies or products in the same market are competitors or rivals.
Competitors compete with each other to sell more, be more successful, etc.
The most important companies in a particular market are often referred to as
key players.
Competition describes the activity of trying to sell more and be more
successful. When competition is strong, you can say that it is intense, stiff,
fierce or tough. If not, it may be described as low-key.
The competition refers to all the products, businesses, etc. competing in
a particular situation, seen as a group.
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1. Read and say what market is.
A market is defined as people with unsatisfied wants and needs who
have both the resources and the willingness to buy.
There are two major markets in marketing: the consumer market
and the industrial market. The consumer market consists of all the
individuals or households who want goods and services for personal
consumption or use.
The industrial market consist of all the individuals and
organizations that want goods and services to produce other goods and
services or to sell, rent, or supply the goods to other. Cash registers,
office desks, public accounting audits, ect. аre examples of industrial
goods and services (products).
2. Types of Markets
Read the text and make up a chart or table to represent types of
markets in the best way.
1. Markets are institutional arrangements that enable buyers and
sellers to exchange goods and services. There are two types of markets
according to the character of concluded contracts: spot markets (the
buying and selling of goods, currency or securities that are available for
immediate delivery) and futures markets (the buying and selling of
goods, currency or securities for delivery at a future date for a price
fixed in advance).
2. There are three types of markets according to their function:
commodity markets\exchanges, stock markets\exchanges, foreign
exchange markets. Commodity markets\exchanges are the places where
raw materials and some manufactured goods are bought and sold for
immediate or future delivery. Main terminal markets are situated in
London and New York. Terminal markets are the markets dealing mainly
with commodities that will be available in the future rather than goods
that are available immediately. Most terminal markets are outside the
countries that produce the goods.
3. Stock markets\exchanges are the markets where stocks and
shares are bought and sold under fixed rules, but at prices controlled by
supply and demand. The main idea of stock exchanges is to enable
public companies, the state and local authorities to attract capital by
way of selling securities to investors. Foreign exchange markets are the
markets where foreign currencies are traded.
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4. There is also a market known as securities market. Securities
markets, such as New York Stock Exchange, enable businesses and
individuals to buy and sell securities such as stocks and bonds.
Businesses benefit from securities markets by obtaining the capital they
need to begin operations, expand, and buy goods and services.
Securities markets also offer businesses a way to earn additional funds
with their income by investing in other firms. Investors benefit from the
securities market because it gives them a convenient place to buy and
sell stocks and bonds.
Read the text and say which answer A, B, C or D fits best each
Organised markets are usually 1______ in premises where business
is transacted 2__________ to a prescribed set of rules. Sometimes only
members are 3_____________ to the market.
Organized markets or produce exchanges have been
4________________ for cotton, wool, tea, coffee, wheat, rubber, timber,
tin, copper and 5________ other commodities. Thus there are
6________ commodity exchanges as Sugar Exchange, Metal Exchange,
Wheat Exchange and others.
There are two types of organised markets:
 sport market
 forward or futures market
Spot market 7______ in actuals, the actual physical product, for
immediate delivery.
In forward or futures markets the commodity 8____ be bought or
sold for delivery at some time in the future. Forward prices can be
9________ or lower than the spot prices. In a forward or futures market
traders take an option 10________ or sell the product in the future.
Traders know 11______ prices can change, so they hedge by
balancing their buying and selling of actuals and futures to protect
themselves against 12_______.
Organised markets 13_________ financial markets, which in their
turn include the stock exchange, and foreign exchange market or Forex.
1. being held
2. according
at a time
to hold
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3. admit
4. exchanged
5. some
6. so
7. deals
8. may
9. higher
10. buying
11. what
12. waste
13. is including
ought to
more higher
to buy
to have bought
have admitted
4. Securities Market to be Modernized
1) Read the text and say what a new payments system is like?
A new payments
Union will be put in
force as early as
Moscow News
Credit Union (ICU)
is a club of leading
creditors, set up to
create an effective
payments system in
the money market,
founded by nine leading Russian banks:
Imperial, Inkombank,
Mosbizncsbank, MfK,
Rossiisky Credit have
readiness to join the
The creation of a
depositoryclearing system is
based on the need to
improve the securities
market. Today, not a
single company has
been able to assess of
the dynamics of their
grant loans with
securities, or process
mortgage and trust
operations All of that
will be granted by the
ICU are not new. The
leading international
clearing centers such
(Brussels) and Cedel
(Luxemburg) already
provide them.
At the end of each
day accounting is
which the system
announces the sum of
between banks and
the Central Bank. On
the one hand, it will
contribute to a faster
movement of money
because it eliminates
several links in the
payments chain. On
the other hand, in
order for the system
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balance must be zero
each morning and
evening. If there is a
non-payment, it is
impossible to find
who is guilty by the
Hence it is impossible
to close the trading
day. To avoid this
outcome, an ICU
guarantee fund has
constituent, entrance,
and annual fees from
money received by
the guarantee fund is
used to buy highlyliquid securities.
Mikhail Lilyavsky,
Union, believes that
the ICU will not only
bring the securities
market up to a new
level, but will also
ensure that payments
are made within one
day, which has so far
only been a dream for
Russian bankers.
account the influence
of founder-banks on
the state securities
market, the ICU can
very well claim to be
a national dealing
system. If so, its
positive contribution
may soon become a
The Payment Scheme in the ICU System
2) Imperial and Menatep became bankrupt. Why?
5. Foreign exchange markets and exchange rates.
Read the (§1). Some of the lines are correct and some have a word
which should not be there. Tick (v) the lines which are correct and
underline the unnecessary word. The first one is done for you.
1. All the foreign exchange transactions resulting from
international trade in goods and services, and international
demand for, and financial assets are converge on the foreign
exchange market where national currencies are exchanged for a
one another. Since banks conduct the foreign exchange
conversions associated with the said transactions on the behalf of
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domestic and foreign customers, the banks are the main players
on at the foreign exchange market. The volume of actual foreign
exchange transactions is dominated by those between of the banks
themselves, so that greater part of the foreign exchange market is
an interbank market. The leading foreign exchange markets are
London, New York and Tokyo. The foreign exchange departments
of banks to maintain continuous contact with one another and
with these foreign exchange markets.
Read the §2 and use the words at the end of each line to Form a
word that fits in the space in the same line.
2. The price at which one currency is _________for
another is called the «exchange rate». This is the ratio
(relative price) which ________ how much domestic currency
has to be paid for one unit of _________ currency, e.g. the
value to a Dutch person of a dollar _________ in guilders is
the current exchange rate of the dollar. ________ trade in
goods and services and financial transactions are shown on
the balance of ______ of the countries in question. Although
the balance of payments entries can give an __________ of
this, they cannot provide the definitive answer. One reason
why this is so is that transactions in which the foreign
exchange acquired is replaced by a ________ foreign currency
are not ________ on the final balance of payments summary
because equal debit and ________ items cancel one another
3. Foreigner
4. Expression
5. Nation
6. Pay
7. Indication
8. Provision
9. differ
10. Enterance
11. Creditor
Translate §3 into your language but not word for word.
3. Moreover, the speed of dealing and the large number of operators on
the foreign exchange markets make it virtually impossible to keep an
accurate record. That is why monetary authorities use occasional surveys of
international banks involved in foreign exchange transactions to try to
ascertain the total volume of business on international foreign markets.
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1. Before reading the text study vocabulary notes below it. Then read
the text again and do exercises on it.
The economy comprises millions of people and thousands of firms as
well as the government and local authorities, all taking decisions about
prices and wages, what to buy, sell, produce, export, import and many other
matters. All these organizations and the decisions they take play a prominent
part in shaping the business environment in which forms exist and operate.
The economy is complicated and difficult to control and predict, but it is
certainly important to all businesses. You should be aware that there are
times when businesses and individuals have plenty of funds to spend and
there are times when they have to cut back on their spending. This can have
enormous implications for business as a whole.
When the economy is enjoying a boom, firms experience high sales and
general prosperity. At such times, unemployment is low and many firms will
be investing funds to enable them to produce more. They do this because
consumers have plenty of money to spend and firms expect high sales. It
naturally follows that the state of the economy is a major factor in the
success of firms.
However, during periods when people have less to spend many firms
face hard times as their sales fall. Thus, the economic environment alters as
the economy moves into a recession. At that time, total spending declines as
income falls and unemployment rises. Consumers will purchase cheaper
items and cut expenditure on luxury items such as television and cars.
Changes in the state of the economy affect all types of business, though
the extent to which they are affected varies. In the recession of the early
1990s the high street banks suffered badly. Profits declined and, in some
cases, losses were incurred. This was because fewer people borrowed money
from banks, thus denying them the opportunity to earn interest on loans, and
a rising proportion of those who did borrow defaulted on repayment. These
so-called “bad debts” cut profit margins substantially. Various forecasters
reckoned that the National Westminster Bank’s losses in the case of Robert
Maxwell’s collapsing business empire amounted to over £ 100 million.
No individual firm has the ability to control this aspect of its
environment. Rather, it is the outcome of the actions of all the groups who
make up society as well as being influenced by the actions of foreigners with
whom the nation has dealings.
Vocabulary Notes:
to comprise – включать в себя, составлять
local authorities – местные органы власти
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to take decisions – принимать решения
to play a prominent part – играть заметную (значительную) роль
to shape the environment – формировать обстановку, среду,
to predict - предсказывать
to be aware – осознавать, знать
to cut back on spending – сокращать расходы
enormous implications – большое значение, смысл, влияние
general prosperity – всеобщее процветание
to enable smb to do smth – делать возможным для кого-то,
позволять кому-либо делать
consumers - потребители
to alter - изменяться
a recession - упадок
total spending – общие, суммарные расходы
to decline - снижаться
income - доход
unemployment - безработица
to purchase - покупать
to cut expenditure – сокращать расходы
luxury items – предметы роскоши
to affect - влиять
the extent - степень
to some extent – в некоторой степени
the high street banks – центральные банки
to suffer badly – сильно пострадать
profits - прибыль
to incur losses – нести убытки, потери
to borrow from – занимать, брать взаймы
to deny the opportunity – лишать возможности
to deny - отрицать
to earn interest получать процентный доход
loans – ссуды, займы
to default on repayment – не выполнять обязательств по выплате
(долгов, процентов и т.п.)
a debt - долг
profit margins – размеры прибыли
the outcome of the actions – результат действий
to make up society – составлять общество
to have dealings – иметь торговые (деловые) связи
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2. Answer the questions.
1) What does the economy comprise?
2) What’s a boom in the economy? What characterizes the state of the
economy at that time?
3) What happens when the economy moves into a recession?
4) What is “bad debts”?
5) What happened to some banks in the early 1990s and why?
3. Replace parts in italics by synonyms.
а) take decisions, purchase cheaper items, the economy is difficult to
predict, cover, suffer, business, influence, lower;
б) the economy comprises millions of people; losses were incurred; the
nation has dealings; losses amounted to over £ 100 million.
4. Fill in gaps with the words and expressions from the text.
1. The economy is complicated and difficult to ___.
2. When the economy ___, firms experience high sales and ___.
3. The economic environment ___ as the economy moves into ___.
4. Changes in the state of the economy ___ all types of business.
5. During a ___ fewer people borrowed money from banks, thus ___ to
earn interest on ___.
6. So-called “bad debts” cut ___ substantially.
7. The economic ___ is ___ of all the groups who make up society as
well as ___ of the actions of foreigners with whom the nation ___.
5. Find in the text English equivalents for the following:
играть заметную роль; формировать среду; сокращать расходы
на… (2 вар.); сократить размеры прибыли; переживать подъём;
переживать тяжёлые времена; прийти в упадок; доходы падают (2
вар.); нести убытки; состояние экономики; иметь большое значение
для бизнеса в целом; отсюда, естественно,
следует; лишать
возможности; результат действий; не выполнять обязательств по
6. Translate §2, 6 into Russian.
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1. Read the text and say what the text is about. First study vocabulary
notes below the text.
The word macroeconomics means economics in the large. The
macroeconomics concerns with such global questions as total production,
total employment, the rate of change of overall prices, the rate of economic
growth and so on. The questions asked by the macroeconomists are in terms
of broad aggregates — what determines the spending of all consumers as
opposed to the microeconomic question of how the spending decisions of
individual households are made; what determines the capital spending of all
firms combined as opposed to the decision to build a new factory by a single
firm; what determines total unemployment in the economy as opposed to why
there have been layoffs in a specific industry.
Macroeconomists measure overall economic activity; analyze the
determinants of such activity by the use of macroeconomic theory: forecast
future economic activity; and an attempt to formulate policy responses
designed to reconcile forecasts with target values of production, employment
and prices.
An important task of macroeconomics is to develop ways of aggregating
the values of the economic activities of individuals and firms into meaningful
Macroeconomics is concerned with the attainment and maintenance of
full employment, and price stability.
Microeconomics means economics in the small. The optimizing behavior
of individual units such as households and firms provides the foundation for
Microeconomics may investigate individual markets or even the
economy as a whole, but their analyses are derived from the aggregation of
the behavior of individual units. Microeconomic theory is used in industrial
organization, labour economics, international trade, labour cost - benefit
analysis and so on.
The microeconomists are interested in the determination of individual
prices and relative prices (i.e., exchange ratios between goods), whereas the
macroeconomist is interested more in the general price level and its change
over time.
Optimization plays a key role in microeconomics. The consumer is
assumed to maximize utility or satisfaction subject to the constraints imposed
by income or income earning power. The producer is assumed to maximize
profit or minimize cost subject to the technological constraints under which
the firm operates.
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Opportunity cost is an important concept in microeconomics. Many
courses of action are valued in terms of what is sacrificed so that they might
be undertaken.
Vocabulary notes:
list – список, перечень
vertical – вертикальный
horizontal – горизонтальный
demand curve – кривая спроса
to slope down – спускаться
downward – направленный вниз
shift – движение
to fluctuate – биржевой спрос
stock demand – биржевой спрос
flow demand – текущий спрос
aggregate supply – совокупное
forthcoming – предстоящий
opportunity costs –
альтернативные издержки
accountant – бухгалтер
explicit – явный
implicit – подразумевающийся
to calculate – подсчитывать
to convert – преобразовывать
shape – форма
sufficiently – достаточно
rightward movement – движение
entire – целый
to augment – увеличивать
volume – обмен
to substitute – заменять
complement – дополнение
inflationary – инфляционный
to a fleet – влиять
2. Read the text again and say what questions macroeconomics and
microeconomics deal with. Use these words if necessary.
… means …
… deals with …
… is engaged in …
… provide … for …
… is concerned with …
… investigate …
… measure …
… is used in …
… are interested in …
… plays a key role …
… is an important concept …
3. Some of these words could be used to describe macroeconomics.
Decide which words can be used in macroeconomics. Why?
· price stability
· individual markets
· households and firms
· individual price
· total employment
· the rate of economic growth
· forecast future economic activity
· optimization
· opportunity cost
· total production
1. Before reading the text study what demand-and-supply is.
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Supply-and-demand – the amount of goods available and the amount
wanted by people. The relationship between these is often regarded as
controlling economic activity and prices.
2. Now you are going to read the text about the law of demand and the
law of supply. After reading answer these questions. Use vocabulary notes
below the text.
What questions does demand comprise?
What questions does supply rest on?
Demand is a key concept in both macroeconomics and microeconomics.
Demand is primarily, but not exclusively, a function of price. 1_______. With
price on the vertical axis and quantity on the horizontal axis, the demand
curve slopes downward from left to right, signifying that smaller quantities
are bought at higher price and larger quantities are bought at lower prices.
The inverse relation between price and quantity is usually called the law of
demand. The law rests on two foundations.2_____________. The other
foundation is empirical, with innumerable studies of demand in actual
markets having demonstrated the existence of downward - sloping demand
3_____________. In macroeconomic theory, aggregate supply is mainly
a function of expected sales to consumers, businesses and governments. In
microanalysis supply is manly a function of prices and costs of production A
more complex view of the supply curve for a commodity is its relation
between quantities forthcoming and the possible current prices of that
commodity, its expected future prices, the prices of alternative goods and
services, the costs of the producer and time.
Incorporated in the supply curve of goods and services are opportunity
costs. Economists differ from accountants and from the Internal Revenue
Service by including both explicit and implicit costs, or opportunity costs.
In competitive markets the shape or elasticity of supply reflects time in
the production process such as the immediate or market period, the short
run, and the long run. Elasticity of supply is the relative change in price that
induces a relative change in quantity supplied.
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The supply curve in the short run is less inelastic or more elastic than in
the immediate period. The long run permits sufficient time for the producer
to increase plant and equipment. 5_______________.
3. Complete sentences in (A) using words in (B).
1. In macroeconomic theory, aggregate supply – is mainly
a function of … sales to consumers, business and
2. The law rests on two …
3. The supply curve in the short run is less in - elastic or
more elastic than in the immediate …
4. Incorporated in the supply curve of … and services are
opportunity costs.
5. Demand is considered as a list of … quantities.
6. The long run permits sufficient time for the producer to
… plant and equipment.
7. In microanalysis supply is mainly a function of prices
and costs of …
8. Economists differ from accountants and from the
Internal Revenue Service by … opportunity costs.
a. time
b. merchandise
c. enlarge
e. bases
f. costs
g. containing
h. anticipated
4. Now read the missing sentences A-E and choose the one which
fits best each gap (1-5). There is one extra sentence which you do not
A. Supply is the fundermental concept in both macro – and
microeconomic analysis.
B. The longer time, the greater elasticity supply.
C. Implicit costs are mainly business costs for wages, rents, interest.
D. One of the theory of the consumer the logic of which shows that
the consumer responds to lower prices by buying more.
E. Macroeconomics is concerned with the attainment and
maintenance of full employment and price policy.
F. Demand is considered as a list of prices and quantities with one
quantity for each possible price.
1. Three basic types of economic systems
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perfective microeconomics
feel various elect methods distribute
resultant rely on mores tried-and-true slow undertake status quo
centralize means limitation choice conflict determine
czar prune authority emphasize profit motive price thesis
encourage outcome incentives
Read and do exercises on the text in writing.
Pre-reading. Check the meaning of the following words in
your dictionary.
To develop some perfection for a study of microeconomics, it
helps to begin with a feeling for what an economic system is and
how it works.
Various countries have elected to use different methods both in
organizing resources in the production process and in distributing
the resultant goods and services. Three basic types of economic
systems stand out.
A traditional economic system relies upon custom, habit, social
mores, and tried-and-true methods for achieving economic goals;
technology is primitive; changes are slow and production is
undertaken in the same way as last year and the year before.
Tradition and the status quo are perpetuated.
A command economic system relies on public ownership and
centralized control of the basic means of production; severe
limitations are placed upon individual choice when such choices
conflict with government-determined economic priorities, economic
plans and activities are under the control of an economic
commander-in-chief (a king, czar, prime minister or central
planning authority).
A capitalistic or market economic system emphasizes private
ownership, individual economic freedom, competition, the profit
motive, and the price system in the achievement of economic goals.
Each economic unit decides what choices and policies are best for
it, the thesis being that in encouraging the drive for individual
economic self-interest the outcome proves also to be in the overall
best interests of society because of the strong incentives
efficiency, productivity; and satisfaction of consumers.
After reading. Find true and false sentences.
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а) Various countries have elected to use different methods in
organizing recourses in the production process and in distributing
goods and services.
б) A traditional economic system relies upon public ownership
and centralized control of the basic means of production.
с) A market economic system is based on custom, habit, social
mores, tried-and-trae methods of achieving goals.
д) A command economic system implies limitations of
individual choice and priorities of government - determined
е) A capitalistic economic system relies on different forms of
businesses, economic freedom, profit, productivity and satisfaction
of consumers.
1.2 Match a line in a with A line in В to make a phrase.
a) emphasizes 1. production process and distribution of
goods and services.
b) are
2. strong incentives for
c) have decided
efficiency, productivity
to use
and satisfaction of
d) relies upon
e) proves to be
3. under control of an
economic commanderin - chief
4. different methods in
organizing, production
5. private ownership, individual
economic freedom, competition, profit
motive, price system.
Match a word in A with its opposite in B.
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 satisfaction
 individual economic freedom
 best
 different methods of production
 private ownership
 individual choice
 worst
 the
same way of production
 inefficiency
 public ownership
 severe limitations
 dissatisfaction
 central planning
1.4 Spot the mistakes.
a) three basic types of economic system stands out.
b) various countries have decided use different methods.
c) economic plans and activities is under the control.
d) each economic unit decides what choices and policies
is best.
1.5 Put one of the given words in each of the sentences.
decide, emphasize, be,
a) Various countries _____ to use different methods in
organizing, production process, distributing goods;
b) Tradition and the status quo________________________;
c) A market economy ________________ price system in
achieving the economic goals;
d) Each economic unit what
policies____________ best;
e) Slow changes and production_____________ in the same
way as last year and the year before.
1.6 For statements A-D choose the best answer from A, B, C
or D.
A. command economic system seems to have
1. primitive technology 3. strong incentives
2. profit motive
4. achievements
B. Severe limitations are placed upon
1. achieving economic goals
2. distributing the goods
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3. conflicts
4. individual choice
C. ________ is based on private ownership, individual
economic freedom, competition, the profit motive.
1. a command economic system
2. a traditional economic system
3. a market economic system
4. an individual economic system
D. A traditional economic system is based on for achieving
economic goals.
1. tried-and-true methods
2. primitive methods
3. individual methods
4. command methods
1.7 Say what you have learned about basic types of economic
systems. Use the table.
A market
 the drive for individual economic selfinterest
 upon custom, habit, social mores,
tried-and-true methods
 what choices and policies are best
 on public ownership and centralized
A traditional
control of the basic means of production
 primitive technology, slow changes and
emphasizes production
 under control of an economic
Each economic
 private ownership, individual economic
A command
seems to
freedom, competition, the profit motive,
price system for achieving economic
are placed  to be best because of strong incentives
for efficiency, productivity and
encourages satisfaction of consumers
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controlled economic plans
2. Mixed Economics
Read the text and do the translation. Translate into your language
not word for word.
1. Command and market economies both have significant faults.
Partly because of this, an intermediate system has developed, known as
mixed economies. A mixed economy means very much what it says as it
contains elements of both market and planned economies. At one
extreme we have a command economy, which does not allow individuals
to make economic decisions, at the other extreme we have a free market,
where individuals exercise considerable economic freedom of choice
without any government restrictions. Between these two extremes lies a
mixed economy. In mixed economies some resources are controlled by
the government whilst others are used in response to the demand of
2. Technically, all the economies of the world are mixed: it is just the
balance elements between market and planned elements that alter. Some
countries are nearer to command economies, while others are closer to
free market economies. So, for example, Hong Kong has some statecontrolled industries, while Cuba has some privately owned and
controlled firms.
3. The aim of mixed economies is to avoid the disadvantages of both
systems while enjoying the benefits that they both offer. So, in a mixed
economy the government and the private sector interact in solving
economic problems. The state controls the share of the output through
taxation and transfer payments and intervenes to supply essential items
such as health, education and defence, while private firms produce cars,
furniture, electrical items and similar, less essential products.
4. The UK is a mixed economy: some services are provided by the
state (for example, health care and defence) whilst a range of privately
owned businesses offer other goods and services. The Conservative
government switched many businesses from being state-owned and
controlled to being privately owned as part of its privatization
programme. This has taken the UK economy further away from the
planned system.
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3. Markets and competitors
1) Choose the best word to fill each gap. Put a circle around the
letter, A, B or C of the answer you choose.
1. We are well known in America, but now we want to …………….
the European market.
A compete
B entrance
C penetrate
2. The world’s soft drinks market is …………..................... by Pepsi
and Coca-Cola.
A dominated
B segmented
C shared
3. We were …………………….. out of business by the large
supermarket chains.
A left
B driven
C abandoned
4. We bought out our only competitor so we could ……………… the
market in coffee.
A corner
B front
C edge
5. Our most important market ……………………… is men aged from
18 to 30.
A place
B share
C segment
6. Competition is ……………………. In the fast food business.
2) Complete each sentence by writing in the gap the correct form
of the verb given in brackets ( ).
1. In the late 1990s, market …………………….. in the field of
computers was incredible. (grow)
2. Our company is the market …………………….. in financial
software in the UK. (lead)
3. Today our market …………………….. is about 60% and it is still
growing. (share)
4. We investigated market ……………………… and found that there
are two main types of user for our product – small to medium companies
and private individuals. (segment)
5. We can’t relax because we face stiff ………………………. .
6. Our next target is to become a key ……………………….. in the US
market. (play)
3) Find the answer to each clue to complete the crossword. Some
letters have been given to help you.
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1. Enter a market
3. Abandon a market
6. To be the only seller
2. Competitor
4. Intense
5. Not tough: ___ -key
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4. Major economic problems
Read about major problems that facing developing countries. Say
how matters stand in Russia.
Major problems facing developing countries are as follows;
 Low-productivity agriculture
In low-income countries, 70 per cent or more of the labour force
works on the land. Tractors and other types of mechanical farm
equipment are very scarce. The output per worker in agriculture is
extremely low compared with that in Europe and North America.
 Poor natural resources
Many developing countries have very poor supplies of natural
resources. Many of them have soil lacking in fertility, large desert areas
and climates which are not favourable to high productivity because they
are too dry or too hot. Some developing countries though have been
fortunate enough to possess valuable mineral deposits such as oil.
 A shortage of capital
Most developing countries lack electricity supplies, water supplies,
transport and farming equipment, good roads and railways, port
facilities and other capital goods. They have very little modern technology.
 Large-scale unemployment
In developing countries, the rapid growth of population has been
accompanied by a large-scale movement of people from the rural areas
to the towns and cities. This has created serious unemployment
problems, especially among the younger age groups. Underemployment
is also a serious problem, For example, ten people may be employed in a
job for which only six are needed.
Population growth
In the great majority of developing countries, the rate of population
growth is very much higher than it is in developed countries. This means
that it is difficult for them to achieve increases in GNP per head. The
graphs below show why population growth rates are high in developing
countries and low in developed countries.
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Developing countries
1960 I960 1970 1980 1990 2000
1960 I960 1970 1980 1990 2000
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5. Imports flood Russian markets
Read the text and pick up reasons why imports flood Russian
Today 45 machines,
According to the million Russians have cleaners,
figures published by incomes below the extractors, motor units
the Institute of the subsistence minimum, and motor cultivators.
Market which is 1.2-fold more The following products
and Marketing, the than the corresponding experienced a fall in
shifts indicator last year. The production by a factor
pronounced lately in money received in of two: tape recorders
country's April-May
in and VCRs, mixers and
economic situation connection with the rise mincing machines, and
have not brought in average pensions, as steel
any well as one-lump aide tableware.
considerable changes to veterans for Victory production of sewing
in the market of Day, has been mainly machines and Hi Fi
spent on the acquisition stoves declined by
________________ of basic needs (above three-fourths.
_ all food products), as Moreover,
Marine Leonidova, well as the purchase of comparison with April
Special to Moscow seasonal
goods, 1994, the rates of
News including
building production
even increased on
The development of
of some
commodities production
of This
market for Cultural commodities
for refrigerators
and everyday needs cultural and everyday freezers,
and household goods needs and household and sewing machines.
is being held back by goods have continued However, there has
the continuing rise in to remain below last been an increase in the
prices (which the year's level.
production of some
Institute found in
In April 1995, the household
May to be 12 following
products electronic goods.
percent), as well as experienced a one-third Among
the population's low drop in production: commodity
purchasing capacity refrigerators
and being
owing to widespread freezers,
washing imported articles have
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come to play an
increasing role in
trade. This especially
concerns household
share of foreign
articles in individual
commodities is high
and comes to 58
cassettes, 67 percent for
portable color TV sets,
71 percent for video
cassette recorders, and
89 percent for video
In the opinion of
experts, unless Russian
producers can soon
products, they will
cease to exist. And
Russia will become a
unique example of a
large-scale consumer
domestic production.
6 Small Firms Still Face Serious Troubles
1) Read the text and express the main idea of it.
Over half a million premier of Moscow, Russia producing 10citizens will become called the development 15 percent of the
unemployed this year, of small business a task GNP. This ratio is
the of
concern. still far from Western
Region People
were practice but this kind
employment office said deprived of their usual of activity has only
jobs will be able to find officially existed in
new Russia for seven or
Marina themselves
eight years. It had to
Seventy percent of the force
Moscow News
population is involved through. Although its
These figures were in small business in share in the credit
announced at the developed countries. side of the Moscow
entitled And the share of small budget is 50 percent,
"Small Business in the enterprises in Russia's now, it still faces a
Moscow Region." It is GNP accounts for 60 lot of problems.
no wonder, therefore, percent. Fifteen million Several state organs
that Ernest Bakirov, people are working for are supervising small
vice- small businesses in business: from the
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Finance Ministry to
the Moscow Chamber
of Commerce, The
Moscow Association of
Enterprise and finally
even the Russian State
Committee for the
Development of Small
However, things do
not go smoothly. The
speakers cited the
uncertainty of legislation
shortsightedness of the
policy. The bulky
system of accounting
bureaucratic obstacles
licensing and tax
relations that pose the
Moscow fund for small
enterprise, says that it
is very difficult to start
a new business now.
At least five million
rubles are required to
questions. And this
equipment, rent and
renovation. How can a
received a miserable
salary during recent
months cope? Thus the
inevitably committed to
illegal activities to
capital. Here they fall
under the power of
The situation became
even worse after the
president's decree on
small business was
issued. The document
prescribed a very high
threshold of statutory
capital for a limited
partnership. It was
money would secure
the responsibility of
before their clients. In
fact, however, the one
who wanted to cheat
his prospective clients
can easily find the
necessary sum, as
opposed to the honest
one who really decided
to start his own modest
legislation is not very
quick to foresee its
This also applies to
legislation in the
field of small business.
are snowed under
appear to the laws
enterprise often consisting of 3-4 people
qualified audit. That
is why they are the
first to be caught by
the tax police.
Today they talk
about facilitating the
tax system for small
expected to pay in
accordance with the
However, it goes
without saying that if
the divergence is in
enterprise the state
will get the difference
plus the Central
Bank's rate. On the
other hand, if the
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divergence happens to
be in favor of the state
it will hardly return
enterprise's account.
Nevertheless, some
positive changes in
small business took
place, said Alexander
Ioffe. The fund for
maintains that aid for
become the basic way
of support. Consulting
firms have begun to
appear in Moscow but
their services cost a lot
and many beginners
cannot afford them.
That is why the Agency
for the-Support of
Small Business was
will open in every
prefecture over the
rest of the year.
developed a draft law
on supporting small
document passed in
the State Duma. Its
authors consider the
increase in support
of small business at
municipal budgets as
a key factor.
2) A newspaper asked its readers a simple question. Look through
some of the answer they received and answer questions below after
reading the text again.
1) Why do small firms still
face a lot of serious problems?
2) What does the government
do to support small business?
•to face a lot of problems
• to stifle small businesses
• to pose the greatest hurdles
• to provide with equipment
• to be caught by the tax police
• to find themselves in a new
• to become the basic way of
• to afford a quality audit
• to be involved in small business
in developed countries
• to be existed for seven or eight
• to cite the uncertainty of
legislation and the
shortsightedness of the
government’s tax policy
• to facilitate tax system
• to be committed do illegal
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• to pay in accordance with the
proposed profits
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3) Read the text again. For statements 1-5 choose the answer A, B, C or
D which you think fits best the text.
1. Small businesses in Russian produce 10-15% of the GNP because:
a) things do not go smoothly
b) it is difficult to start a new business now
c) it is required to settle all formal questions
d) they are still very young
2. The beginners inevitably fall under the power of crime because:
a) licensing and tax relations pose the greatest hurdles
b) the state will get the difference plus the Central Bank's rate
c) our legislation is not very quick to forsee its consequences
d) several state organs are supervising small business
3. The government intends to support small business:
a) to facilitate the tax system
b) to supply with equipment, rent
c) to provide with qualified audit
d) all the three statements
4. Consulting firms have begun to appear in Moscow to:
a) stifle small business
b) educate small business
c) secure responsibility in small business
d) force its way through
5. It is difficult to start a new business now because of:
a) its usual jobs
b) the system of accounting and a lot of bureaucratic obstacles
c) amendments and explanations of the law
d) municipal budgets
7 Car giant sends in the spy girls
1) Read the text paying no attention to gaps and say what it is about.
--------------------By DAVID BENSON Motoring Editor
--------------------1. Ford has set up a female spy team 1_____ dealers and make sure they
treat women car buyers seriously and with respect.
The company 2_____ women now buy four out of every 10 new cars sold
in Britan.
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3. This is the 3________ proportion in Europe where the women buyers
share averages three in ten.
4. And Ford says the proportion of women buyers 4____________ to
increase in the next decade.
5. The company’s International women’s Marketing Panel will ensure
that 5______ products and service meet the needs of female customers and
that they get a fair deal.
it claims to be 6_____ only European car maker to have such a panel.
7. The team is made up 7_____ British women Ford workers and others
from nine European countries. It has 16 permanent members 8__________
by a sub-committee of 40. “It’s views are keenly 9_________ in research and
vehicle appraisal programmers.” said a Ford spokesman.
8. The panel’s members also participate in 10____________ clinics and
go on mystery shops’ during which they visit dealerships posing as
prospective buyers.”
9. “Reports are then fed back to senior management so that
recommendations 11_______ be considered in future plans.”
2) Read the text again and say which answer A, B, C or D fits best
each space.
to visit
to have visited
is saying
3. most highest
shall continue
will continue
it is
being supported
to support
to seek
to be sought
being advertised
10. to advertise
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Starting – up.
1) Match the words with their definitions. There is one extra word that
you don’t need.
1. creditor
2. goods
3. loans
4. stock
5. debtor
6. overdraft
7. tax
8. share-holder
9. store
10. share
11. lease
12. dividend
a) quantity or supply of something kept for use as
b) a store of goods available for sale, distribution
or use
c) a person or company to whom money is owed
d) a person who owes money to
e) a sum of money lent to somebody by a bank,
allowing them to spend more money than is in
their account
f) a thing that is lent, especially a sum of money
g) a part or portion of a larger amount which is
divided among several or many people
h) money that has to be paid to the government
i) an owner of shares in a business company
j) a share of profits paid to people who own parts
of a company
l) to permit or obtain the use of something in
2. The following sentences contain phrases connected with the word
“finance”. Put one of the given words in each of the sentences.
overdraft, capital, cash in, creditor, stock, loan, tax, share, cash and carry,
dividend, lease.
May I have________ your bicycle.
Everyone who helped got________ in the profits.
The shop had a good _______ of camping equipment.
_______is also often paid on goods and services.
Japan is one of the world’s leading _________ countries.
I took out an ______ to pay for my new car.
They buy food in bulk at the local __________
The shops are ___________on temporary shortages by rising prices.
The company has announced a ____________of 3, 5 pence per share.
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10. He set up a business with a starting __________ of $ 100000.
11. He _________out some of the land (to other members of his family).
Read and study the notions.
A. Traditional banking
I’m Lisa. I have an account at my local branch of one of the big highstreet banks. I have a current account for writing cheques, paying by debit
card and paying bills. It's a joint account with my husband. Normally, we're
in the black, but sometimes we spend more money than we have in the
account and we go into the red. This overdraft is agreed by the bank up to a
maximum of £500, but we pay quite a high interest rate on it.
I also have a deposit account or savings account for keeping money
longer term. This account pays us interest (but not very much, especiallyafter tax!).
We have a credit card with the same bank too. Buying with plastic is very
convenient. We pay off what we spend each month, so we don't pay interest.
The interest rate is even higher than for overdrafts!
Like many British people, we have a mortgage, a loan to buy our house.
BrE :current account, cheque account
AmE: checking account
B. New ways of banking
'My name's Kevin. I wasn't happy with my bank. There was always a
queue, and on the bank statement that they sent each month they took money
out of my account for banking charges that they never explained. So I moved
to a bank that offers telephone banking. I can phone them any time to check
my account balance (the amount I have in my account), transfer money to
other accounts and pay bills.
Now they also offer Internet banking. I can manage my account sitting
at my computer at home.
C. Personal investing
Lisa again:
'We have a savings account at a building society which is going to be
demutualized and turned into a bank with shareholders. All the members will
get a windfall, a special once-only payment of some of the society's assets to
its members.
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We have some unit trusts, shares in investment companies that put
money from small investors like me into different companies. My cousin in
the US calls unit trusts mutual funds.
I also pay contributions into a private pension, which will give me a
regular income when I stop working. I’ve never joined a company pension
scheme and the government state pension is very small!'
1. Read and study the notions.
A. Financial centres
Financial centres are places where there are main-banks and other
financial institutions. London as a financial centre is called the City or the
Square Mile, and New York is Wall Street.
Financial centres bring together investors and the businesses that need
their investment. A speculator is an investor who wants to make a quick
profit, rather than invest over a longer period of time.
Brokers, dealers and traders buy and sell for investors and in some
cases, for themselves or the organizations they work for.
B. Stock markets
Heather Macdonald of Advanced Components:
'We needed more capital to expand, so we decided to float the company
(sell shares for the first time) in a flotation. Our shares were issued, and
listed (BrE and AmE) or quoted (BrE only) for the first time on the stock
market. Because we are a UK-based company we are listed on the London
stock exchange.
Stock markets in other countries are also called bourses. Maybe when
our company is really big, we'll issue more shares on one of the European
Note: You can write stock market or stockmarket;
one or two words.
BrE: shares/ stocks (countable) and shares
AmE: stock (uncountable)
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C. Other financial markets
Other financial products include:
• commercial paper: short-term lending to businesses.
• bonds: longer-term lending to businesses and the government.
• currencies (foreign exchange or forex): buying and selling the money
of particular countries.
• commodities: metals and farm products.
These are traded directly between dealers by phone and computer.
Commodities are also traded in a commodities exchange. Shares, bonds and
commercial paper are securities, and the financial institutions that deal in
them are securities houses.
D. Derivatives
A futures contract is an agreement giving an obligation to sell a fixed
amount of a security or commodity at a particular price on a particular
future date.
An options contract is an agreement giving the right, but not the
obligation, to buy or sell a security or commodity at a particular price at a
particular future nine, or in a period of future time.
These contracts are derivatives. Dealers guess how the price of the
underlying security or commodity will change in the future, and use
derivatives to try to buy them more cheaply.
2. a) Correct eight mistakes in italics in this article, using expressions
from A opposite.
Now that a lot of buying and selling can be done over computer
networks, (1) breakers and (2) tradesmen do not need to be in one place, and
(3) speculists can make money dealing from a computer in their living room.
In New York, the area around (4) the South Bronx is traditionally home
to many financial institutions, such as the New York Stock Exchange. But
many of them have now moved some or all of their offices outside this
expensive area.
London is one of Europe's most important financial (5) towns: over 500
foreign banks have offices in' London, and its stock exchange is the largest in
Europe. But more and more financial (6) institutes are not actually based in
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the traditional area of the (7) Citadel or (8) Mile Square. As in New York,
they are moving to areas where property is cheaper.
So, will financial centres continue to be as important in the future as they
are now?
b) Look at В opposite and say if these statements are true or false.
1 'Stocks’ is another name for shares.
2 "Stock market' means the same as 'stock exchange”.
3 Bourses are only found in France.
4 An American would normally talk about shares “quoted” on the New
York Stock Exchange.
5 Shares in Company X are being sold for the first time. This is a
c) Use expressions from С and D opposite to describe:
1 a bank that makes companies’ shares available.
2 a contract to buy 500 tons of wheat for delivery in three months.
3 coffee and copper.
4 dollars, euros and yen.
5 lending to a company for less than a year.
6 lending to a local government authority in the form of 10-year
investment certificates.
7 shares and bonds, but not currencies or commodities.
8 the London Metals Exchange.
9 the right to buy shares in a company in one month, at 150 pence per
3. a) Decide which of the alternatives (A-H) each speaker is talking
about. Write the letter of your answer in the box at the end of the sentence.
There are two alternarives that you don't have to use,
1 ‘This is New York's financial centre.’
2 'We bought euros at $ 0.94 and sold at $ 0.98.’
3 'If I want, 1 can buy 10,000 shares at $2 in 12 months' time.'
4 ‘The government has borrowed £50 billion over a ten-year period.'
5 'Our contract is to buy 500 ounces of gold at $420 in 30 days, so
we hope the price rises.'
6 The traders here deal in metals, wheat, rice, orange juice - things
like that.'
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A. Square Mile В. forex
E. Wall Street F. commodities
С. bourse D. futures contract
G. bonds H. options contract
b) Complete each sentence by writing in the gap a word formed from
the verb given in brackets
1 This bank is one of London's oldest............................. institutions,
2 We deal mainly in commodities and.............................. (derive)
3 We have about 60.............................buying and selling stocks, (deal)
4 The............................. of the company raised £1.4 million,
6 I invest in,............................- mainly stocks and bonds,
c) Choose the best word to fill each gap from the alternatives given
below. Put a circle around the letter А, В or C of the word you choose.
Pegasus Software looks like a good buy. The company was
(1)...............last year and its shares are (2)............... on the London stock
(3)................When they were (4) ..............., they were valuec at 60 pence.
Lots of (5)............... were attracted by the company's strong sales figures.
Now the (6) worth 92 pence.
B floated
B signad
B city
B started
B creditors
B stock
C raised
C noted
C exchange
C distributed
C investors
C deal
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1) Read the text and say what you have learned about financial
There are many important financial institutions which provide finance
for companies. These institutions provide money in different ways.
 Banks
Although banks specialize in supplying short-term loans, they are
prepared to make loans for longer periods-up to 20 years in certain
 Insurance companies
The regular premiums paid by policyholders are invested in government
securities, company shares, land, and property of all kinds. The income from
these investments makes it possible for insurance companies to pay out
interests which are greater than the total payments made by policyholders.
 Pension funds
Although in many countries there is a state pension scheme to which all
workers contribute, a large number of employed and self-employed people
also belong to private pension schemes. The money which accumulates in
these pension funds is invested and works in a very similar manner to the
funds of insurance companies.
 Investment trusts
These are limited companies buying shares in other companies which
they believe will be the most successful ones. People who then buy shares in
investment trusts are paid dividends and investment funds obtain a profit too.
 Unit trusts
These operate in a very similar manner to investment trusts. But they are
not limited companies-they do not issue shares, they issue units. These units
cannot be re-sold on the open market, but they can be sold back to the unit
trust at any time.
 Finance houses
These institutions provide the loans which finance hire-purchase
schemes and leasing arrangements. Firms which sell goods on hire-purchase
or who lease goods do not have to wait two or three years before their goods
are fully paid for. They receive immediate payment from a finance house, and
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it is the finance house which collects the regular instalments paid by the
1. Study phrases connected with the word “cash”. If necessary use the
1. Cash
2. Cash and
3. Cash crop
4. Cash desk
5. Cash
6. Cash flow
7. Cash register
8. Cash card
9. Cashier
money in cons or notes
a system in which goods are sold in large quantities
at lower prices in ordinary shops
A crop grown for selling rather than for use by the
person who grows it
a cash or counter in a shop where payments are
A machine (in or outside a bank) from which cash
can be obtained when a special plastic card is put in
and a personal number is used
The movement of money into and out of a business as
goods bought and sold
A machine used in shops that has a drawer for
keeping money in displays and records the price of
each thing that is sold
A plastic card given by a bank to its customers for
use in a cash dispenser
A person whose job is to receive and pay out money
in a bank, shop, hotel
A system of paying for goods when they are delivered
10. Cash on
11. Cash in hand The paying for goods and services in cash
2. Study how cash cycle works. Say what these terms mean using the
Cash cycle
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Raw materials
Your suppliers are
called creditors; you
pay for supplies by
paying their invoices
Wages and
Finished goods
Your customers are called
debtors; they pay for goods
by paying your invoices
Stock, debtors and cash are
working capital; cash is
more liquid than stock
Dividends to
Share issues
3. Match the English words with their Russian equivalents.
1. raw materials
2. finished goods
3. stock
4. wages
5. salary
6. taxes
7. loans
8. overdraft
9. cash
10. share issues
11. share-holder
a) выпуск акций
b) акционер
c) заработная плата(рабочих)
d) заработная плата (служащих)
e) кредиты
f) налоги
g) сумма, получаемая сверх остатка на счете
h) замороженные материальные средства
i) готовая продукция
j) сырье
k) денежные средства
1. Read the text and say what sources of finance there are.
For the well-established firm, the most obvious source of finance is its
own profits. 1_______ . Using retained profits in the business is described as
“ploughing back the profits”. It is an important source of finance for the
larger firm.
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In the case of a very small firm, the necessary money will be provided by
the proprietor and his family and friends with, perhaps, a loan from the local
Loans can be short-term and long-term ones. Short-term loans are
usually repayable within three years. 2______ .The sources of loans are as
 Overdrafts
 bills of exchange
 trade credits
 hire purchases
 leasing.
A bank overdraft is the most widely used type of short-term
finance.3______ . Interest is charged by the bank only on the amount
overdrawn. It is one of the cheaper forms of borrowing.
Bills of exchange enable the company to obtain short-term finance from
a bank or discount house where they send bills of exchange for discounting.
Trade credits are quite normal in business. They are often granted by the
sellers allowing the buyers to pay in some time, say in three months.
A firm may acquire some equipment such as cars, lorries, office
equipment and some type of machinery on hire-purchase terms. 4______.
Ownership passes to the buyer when the final instalment is paid.
In case of leasing the firm will also pay the outstanding amount by
instalments over two or three years. When the final instalment is paid
ownership does not pass to the buyer.
5_______ .In these cases they try to obtain long-term credits though they
are rather expensive, which means a high interest to be paid.
2. Read the text about sources of finance again. Five sentences have
been removed from it. Choose from the sentences (a-f) the one which fits
each gap (1-5). There is one extra sentence which you don’t need to use.
a) Instead of paying out all its profits to its shareholders, the firm can
retain some within the business.
b) Many such loans are for periods of one year or less.
c) It makes a deposit and pays the outstanding amount by instalments
over two or three years.
d) The bank allows the company to overdraw its account by some agreed
e) Sometimes companies prefer or have to obtain loans and buy the
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f) Some companies produce goods others produce services.
3. Complete sentences not changing the contents of questions.
1. Are short-term loans usually repayable within three years?
Could you tell me _______________.
2. What enables the company to obtain short-term finance from a bank?
I wonder _______________________.
3. What may a firm acquire?
Do you know ___________________.
4. When does ownership pass to the buyer?
I’d like to find out ___________________.
5. Will the firm also pay the outstanding amount by instalments over two
or three years in case of leasing?
I doubt ________________________.
1. Study these notions.
A. Capital
Capital is the money that a company uses to operate and develop. There
are two main ways in which a company can raise capital, that is find the
money it needs: it can use share capital or loan capital, from investors.
These are people or organizations who invest in the company; they put
money in hoping to make more money. (See Unit 36)
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Share capital
B. Share capital
Share capital is contributed by shareholders who put up money and
hold shares in the company. Each share represents ownership of a small
proportion of the company. Shareholders receive periodic payments called
dividends, usually based on the company's profit during the relevant period.
Capital in the form of shares is also called equity.
A venture capitalist is someone who puts up money for a lot of new
C. Loan capital
Investors can also lend money, but then they do not own a small part of
the company. This is loan capital, and an investor or a financial institution
lending money in this way is a lender. The company borrowing it is the
borrower and may refer to the money as borrowing or debt, The total amount
of debt that a company has is its indebtedness.
The sum of money borrowed is the principal. The company has to pay
interest, a percentage of the principal, to the borrower, whether it has made
a profit in the relevant period or not.
D. Security
Lending to companies is often in the form of bonds or debentures, loans
with special conditions. One condition is that the borrower must have
collateral or security: that is, if the borrower cannot repay the loan, the
lender can take equipment or property, and sell it in order to get their money
back. "This may be an asset which was bought with the loan.
E. Leverage
Many companies have both loan and share capital. The amount of loan
capital that a company has in relation to its share capital is its leverage.
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Leverage is also called gearing in BrE. A company with a lot of borrowing in
relation to its share capital is highly leveraged or highly geared. A company
that has difficult in making payments on its debt is overleveraged.
2. a) Choose the correct expressions in brackets from A, B and С
opposite to complete the text.
I started 15 years ago with (1 capital/dividends) of $A50, 000. We had
one small restaurant in Sydney and now we have twenty throughout
Australia. My (2 borrowers/shareholders) were members of my family: my
parents, brothers and sisters all put up money. They didn't receive any (3
dividends/shares) for the first five years: we put all our profits back into the
company! Now we want to increase the amount of (4 equity/dividends), so we
are looking for outside (5 borrowers/lenders). (6 Lenders/Shareholders)
have been very helpful. We obtained $A50, 000 of (7 loan capital/share
capital) from a bank when we started. Now we have paid off all the (8
dividends/principal) and (9 interest/ shares) after seven years. We have
taken out other loans recently, but our (10 lending/indebtedness) is not bad
in relation to the size of the business.
b) Answer these questions, using expressions from C, D and E
1. You want to raise money for your company, but you do not want to sell
shares. What can you use instead? (2 expressions)
2. You want to raise money and you want to reassure lenders that they
will get their money back if your company cannot repay. What would you
offer them? (2 expressions)
3. You are interviewed by a financial journalist who wants to know why
you are borrowing money. What do you tell them that you want to increase?
(2 words)
4. The journalist writes an article saying that your company has a lot of
debt in relation to its share capital. Which two expressions might she use in
her article?
5. A few months later the journalist writes an article saying that your
company has too much debt in relation to its ability to pay. Which expression
might she use in her article?
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1. Study these notions.
A. Cash mountains and surpluses
Predaco is a successful company. Over the years, it has distributed some
profits or earnings to shareholders, but it has also kept profits in the form of
retained earnings and built up its cash reserves; it is sitting on a cash pile or
cash mountain. These reserves may be used for investment or to make
acquisitions: to buy other companies.
B. Debt and debt problems
Here are some expressions that can be used to talk about a company's
debts, or a country's foreign debts:
when a company repays its debt and/or interest on it;
‘debt repayment’ describes a particular amount
a company’s debt, especially when considered as a
debt crisis
when a company has serious difficulty repaying its
rescheduling when a company persuades lenders to change
restructuring repayment dates and terms
when a company fails to make a debt repayment
a debt
default on
a debt
C. Turnarounds and bailouts
Doomco is in financial trouble and it is being described as sick, ailing
and troubled, They've called in a company doctor, Susan James, an expert in
turning round companies. There may be a turnaround and Doomco may
recover. But if there is no recovery, the company may collapse completely.
Ms James is currently looking for another company to bail out Doomco by
buying it. This would be a bailout.
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D. Bankruptcy
If a company is in serious financial difficulty, it has to take certain legal
In the US, it may ask a court to give it time to reorganize by filing for
bankruptcy protection from creditors, the people it owes money to.
In Britain, a company that is insolvent, i.e. unable to pay its debts, may
go into administration, under the management of an outside specialist called
an administrator.
If the company cannot be saved, it goes into liquidation or into
receivership. Receivers are specialists who sell the company's assets and pay
out what they can to creditors. When this happens, a company is wound up,
and it ceases trading,
A company in difficulty that cannot be saved goes bankrupt.
2.1 Match the sentence beginnings (1-6) with the correct endings (a-f).
The sentences all contain expressions from A opposite.
1 For a group sitting on a cash mountain of £2 billion, GEC's sale of
2 The group had a cash pile of nearly £300 million at the end of March
3 The airline has built its cash reserves
4 MCA's earnings for the fourth quarter rose 26 per cent to $21.8
5 Raytheon has announced the $2.9 billion acquisition
6 The UK tax system encourages the distribution of earnings
a because of higher revenue from home video and pay TV.
b to finance plans for global expansion.
с to shareholders, rather than encouraging companies to invest.
d of Texas Instruments' defence electronics business.
e - plenty of money for acquisitions.
f Satchwell to Siebe for £80 million will make little difference.
2.2 Complete the sentences with expressions from В and С opposite.
There may be more than one answer.
1 Our economy could..................... under its huge debt ....................- we
owe $100 billion to foreign investors and banks alone.
2 The railway company made a profit of 140 billion yen, even after
paying out 300 billion yen in debt..................... .
3 MidWest bank has made a strong.................from the dark days of the
farm debt crisis.
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4 The IMF's......................might not be enough to pull the country back
from debt........ .
5 Mr Owen, chairman of Energis, is to receive a bonus of nearly
£900,000 for his work in ......................round
2.3 Rachel is an accountant. Correct the mistakes in italics, using
expressions from D opposite.
I work in the corporate recovery department of a London accountancy
firm, with companies that are in financial difficulty. They may be in (1)
administer, and we try to find ways of keeping them in operation. We may sell
parts of the company and this, of course, means laying people off.
Our US office works with a system where a company in difficulty can get
(2) protectors from (3) credit, giving it time to reorganize, and pay off debts.
If the company can't continue as a going concern, it (4) goes into
receivers: we (5) wind off the company and it (6) ends business. We sell the
assets and divide the money up among the creditors in a process of (7)
Study these notions.
A. Stakes and joint ventures
a stake
an interest
In a company
the shares that one investor has in a
a holding
when more that 50 per cent of the shares of a
a majority interest
company are owned by one investor, giving
them control over how it is run
a minority interest
when an investor owns less than 50 per cent
of the shares of a company
Two companies may work together in a particular area by forming an
alliance or joint venture; they may remain separate companies, or form a
new company in which they both have a stake.
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B. Mergers and takeovers
General Oil and PP have announced
they are going to merge. It will be the
biggest ever merger in the oil industry.
Blighty Telecom is to split into two, and demerge its fixed-line and
mobile businesses as part of on-doing restructuring. The aim of the demerger
is to cut debt by £10 billion,
Ciments de France, the French building group, is to acquire Red Square
the UK for 3.1 billion euros. This is a friendly bid, as RSI are likely to
welcome it and agree to it. But the takeover comes only a year after RSI
rejected a hostile bid, an unwanted one.
Abbot Bank is doing badly, and may become the victim of a
predator.There were rumours of a possible takeover by Bullion, but it says it
won't play the white knight for Abbot by coming to its defence. This leaves
Abbot exposed to acquisition, and it may be prey to a big international bank.
Abbot does have a poison pill however, in the form of a special class of
shares that will be very expensive for a predator to buy.
C. Conglomerates
Cotton makes a series of acquisitions of retail and non-retail businesses,
and becomes the parent company in a conglomerate or combine, with the
other businesses as its subsidiaries.
Low-price general retail Cotton Stores acquires Bestco supermarkets
and diversifies into food retailing.
Shareholders complain that Cotton Group is unfocused. They demand
that its CEO should dispose of non-retail companies, which they describe as
non-core assets, and reinvest the money in its main, core activity: retailing.
Thev sav that this divestment and restructuring is necessary for future
growth and profitability.
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1. Read the text and understand the contents.
1. A third factor of production is capital, produced goods that are used in
further production. Some capital goods might last a few years while others
might last for a century or more. There are three major categories of capital
goods: structures (such as factories and homes), equipment (consumer
durable goods like automobiles and producer durable equipment like
machine tools), and inventories (such as cars in dealers’ lots).
2. One of the most important tasks of an economy is to allocate capital
across different possible investments. In deciding upon the best investment
one needs a measure for the return on capital. One important measure is the
rate of return on capital which is the annual net return per dollar of invested
capital. It is a pure number-percent per year.
3. The resources needed to produce capital come from saving. When
people save they expect a return. This is the interest rate. The yield you get
when you put your money in a time deposit at a commercial bank is an
example of an interest rate. Payments for the temporary use of capital goods
are called rentals. One of the important functions of interest rates is to
allocate the supply of loanable funds.
4. Another important type of property income is profits. Profits are
defined as the difference between total revenues and total costs. Reported
business profits are chiefly corporate earnings. The most important source is
profits as an implicit return. Firms generally own many of their own nonlabour factors of production - capital, natural resources, and parents. In
these cases, the implicit return on unpaid or owned inputs is a part of
profits. A second source of profits is uncertainly associated with the return
to cover uninsurable risks, and the profits earned by enterpreneurs who
introduce new products or innovations. Finally, profits may result from firms
exercising monopoly power on their patents, from special privileges, or due
to regulation.
2. Read the text again and match A, B, C or D to fit best each sentence.
1) The text deals with ______________
a) capital, interest, investments.
b) deposits, capital, products.
c) property, profit, entrepreneurs.
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d) capital, profit, interest.
2) The problem under discussion concerns _______________
a) a commercial bank
b) the most important tasks of economy.
c) profits of enterpreneurs
d) possible investments.
3) It should be stressed that there are three main categories of
a) consumer durable goods
b) interest rate
c) capital goods
d) corporate earnings.
4) It is common knowledge that investment ______________
a) is one of the most important tasks of an economy.
b) might last a few years.
c) needs an interest rate
d) Is a part of profit
5) It is clear from the text that when people save they ___________
a) decide upon the best investment
b) expect an interest rate.
c) own property.
d) Introduce new products.
6). What are three major categories of capital goods?
a) land, capital and investment
b) structures, equipment and inventories
c) equipment, land and capital
d) inventories, savings and interest
2. Capital
1) Read the text, understand the contents. Then read it again and make
a chart to see what capital is.
The capital of a business consists of those funds used to start and run a
business. The funds may be either the owner's (equity capital) or creditor's
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(debt capital). Capital is also classified, depending on its use, as fixed or
Fixed capital refers to items bought once and used for a long period of
time. These items include real estate, fixtures, and equipment.
Working capital refers to the funds used to keep a business working or
operating. It pays for merchandise, inventory and operating expenses such as
rent, utilities (light and heat), taxes and wages. Cash on hand and accounts
receivable are also considered working capital. Therefore, working capital is
cash or anything that can be easily and quickly turned into cash.
No firm should ever be started without a clear and positive
understanding of where its total capital needs are coming from. The various
types of financing available to business firms are usually classified as: 1.
Short-term capital. This is borrowed capital that is to be repaid within one
year. 2. Intermediate capital. This is borrowed capital that is to be repaid in
one to five years. 3. Long-term capital. This is capital which repayment is
arranged for more than five years in the future.
Sources of funds for small firms: Equity capital. Personal funds - saved
or inherited. Loans from relatives and friends. Commercial bank loans.
Mortgage loans. The Small Business Administration. Venture capitalists.
Equity capital consists of those funds provided to the business by the
owners. These funds come from the personal savings of the small business
entrepreneur. If the entrepreneur decides to obtain more funds through
equity sources, it can be done by having partners or selling stock. When these
sources are used, however, the small business entrepreneur gives up some
ownership control of the business and shares the profits.
Personal funds. Whenever potential creditors, partners or stockholders
are invited to invest in or lend financial assistance to a new firm, their first
question is, "How much has the owner invested?" Every business contains
an element of risk, and outsiders who invest in a new firm wish to be sure
that such risk is shared by the owner. It is important that the would-be
owners have assets of their own to invest in the firm. The closer they are to
50 percent of the total capital needs that can be provided, the greater will be
their independence and share of net profits.
Loans from relatives and friends. Many new owners are encouraged in
their enterprise by parents, relatives or friends who offer to supply loans to
the firm to get it started. The best way to avoid subsequent problems is to
make sure that loans are made on a businesslike basis. They should be
viewed as business dealings. The right of the owner to make decisions should
be respected by all parties involved.
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Commercial bank loans. The commercial bank is one of the main
sources of short-term loans. Commercial bank loans are usually for short
periods of time (less than one year), but many banks lend money for longer
periods. The interest on a commercial bank loan is higher than many other
sources. The business owner should establish a credit line with a commercial
bank. A credit line means that the bank agrees to lend the business owner an
amount of money, to a stated maximum, at any time.
Mortgage loans. If the new firm planners own a commercial building,
they can usually secure a mortgage on it with payments over as many as 30
years. It may be the building in which the new firm operates. In that case, the
planners will be making mortgage payments instead of rental payments to a
The small business administration is a US government agency organised
to aid small business in many ways. This agency offers small businesses
financial aid in the form of guaranteed loans and advice about where
financial aid can be obtained. The SBA also offers educational aids and
consulting services.
Venture capitalists. This is a term used to refer to individuals or
corporations which invest long-term equity and debt capital in promising
start-up and growing businesses. Venture capitalists usually take some equity
(ownership) in the firms for which they provide funding. Many venture
capitalists only invest in firms that need $100,000 or more financing.
2). Translate into English.
1. капитал в форме акций 2. привлеченный капитал 3. основной
капитал 4. счета дебиторов дебиторы по расчетам дебиторская
задолженность 5. заемный капитал 6. источник 7. наследовать 8.
ссуда коммерческого банка 9. ссуда под недвижимость 10. рисковать
рискованное предприятие или начинание 11. сбережения накопления 12.
предполагаемый владелец 13. поддерживать, поощрять 14.
последующий 15. коммерческие сделки
Russian Budget Holding Out
1. Read the article, understand the contents. Then make up a short
review of it.”What was the economic situation of Russia from 1990 to
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Russia's Finance Minister Vladimir Panskov and Chairman of the State
Duma Committee for budget, taxes, banks and finances Mikhail Zadornov
are questioned about the difficulties of the current budget process by senior
researcher of the US and Canadian Studies Institute of the Russian Academy
of Sciences, Alexandr Deikin.
1) Russia's finances are in serious condition but the situation is far from
hopeless. The theoretical and strategic groundwork for taxation and budget
structure is in process; the personnel potential of the Finance Ministry is not
yet exhausted; the legislature is inclined to uphold professional rather than
political or populist priorities. Joint efforts may help avoid many political
and economic traps.
It is now obvious that financial means could play a certain role in
settling the crisis in the North Caucasus.
2) The conflict around Grozny has unexpectedly marked a turning point
in the current budget process. Amended after it was adopted in the first
reading, the draft Federal budget for the current year, submitted to
Parliament, does not differ much from the original version. It still shows an
extremely difficult economic situation in Russia. The budget deficit is estimated at R71.6 trillion, i.e. nearly 31 percent of expenditures. Financing of
the social sector is unsatisfactory and the schedule of revenues is very tense.
The notion, which has developed in recent years, that official budget
forecasts have little to do with real life in Russia, makes one cautious about
financial plans of the executive power. The government has demonstrated its
lack of responsibility for its budget promises and their consequences.
Nevertheless, Russia's budget is not hopeless and can be returned to normal,
Finance Minister Vladimir Panskov says, especially since the Finance
Ministry still has enough competent executives.
3) Mikhail Zadornov, Head of the Duma Budget Committee, is more
sceptical. He believes that the state budget will remain very weak until the
inflation rate is brought down to 60, to 70 percent a year and the political
system in Russia becomes stable. However, even in present conditions it is
possible and even necessary at each stage, to bring the budget closer to
reality and current economic policy.
The gap between government forecasts and real life is manifested most
often in taxation. According to M. Zadornov, gradual changes in this area
are the principal pre-condition for success. The taxation system set up
hurriedly in 1991, is obviously outdated but our tendency to "change
everything at once" will yield no positive results. The taxation structure is
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always charged with significant political content because it is a type of public
agreement between the state and its citizens: the level of paid taxes should
correspond to the level of paid services expected by citizens, and must be
agreed upon with them.
At the same time, V. Panskov realizes the need to rapidly resolve some
concrete tax problems, and urges quick development of theoretical
groundwork and the concept of taxation in Russia.
4) The interference of political factors in purely budget issues is a
common occurrence today. V. Panskov believes that the Finance Ministers
role should be, that of a pragmatic civil servant , not involved in any political
games; although, he admits, it is extremely difficult to avoid politics.
There are many examples to that effect, the Chechen crisis being one of
them. The Minister believes that a rather tough budget construction (with all
its parts closely interlinked), is a major achievement of joint efforts with the
Parliament in December of last year. Changing any element in this
construction could cause its collapse or serious alteration. In the Minister's
opinion, the possible cost of the Chechen crises cannot be properly estimated
until the conflict is resolved. He cited, though, all of the factors that keep
pressuring the budget: the cost of the destruction of the statehood and
economy in Chechnya under Dudaev's "peaceful" rule, alone, amounts to 1
trillion rubles. One should also add the cost of military operations;
reconstruction of houses, industrial projects and transport destroyed during
the hostilities; virtually free maintenance of thousands of people deprived of
shelter and work, including refugees, for apparently many months to come;
the possible upkeep of a temporary contingent of armed forces in Chechnya
after completing military operations; the upkeep of the administration;
organizational expenses, etc. The budget is sure to collapse if all of these
expenses cannot be "squeezed" into the approved budgetary expenditures of
the relevant departments.
M. Zadornov gave a similar evaluation of the major factors affecting the
total cost of the Chechen conflict. He stressed that additional military
expenditures, linked with military operations, total 20 to 25 billion rubles a
day. The duration of active hostilities plays a key role in estimating the total
sum of "Chechen expenditures." However, even now one can assert that the
conflict will hardly cost less than 5 trillion rubles. The government pledges to
settle the Chechen expenditures at the expense of internal reserves of each
debit item without raising the total sum of budgetary expenditures. This
means, however, that debit items that can provide additional sums of such
dimensions, were devised with great reserves.
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5) The idea of a thorough stock-taking of expenditure applications by
departments, was advanced long ago. There have been successful examples
of using these tactics on a limited scale. Last year, for instance, MPs
succeeded in "finding" 8 trillion rubles "hidden" in the approved budget for
1994. This has not become a system, though. The current reconciliatory
commission on the budget has not actually touched major expenditure items
either. This can be attributed to drawbacks in constitutional legislation.
There is no mechanism for implementing the budget; relations between the
President and the budget are rather curious - the Head of State gets the draft
budget only after it has been submitted to the State Duma and has no
opportunity to give his input before that. Hence, supplementary instructions
to the Finance Ministry from top governmental executives, regarding the
financial plan and its execution would eventually undermines the economic
situation in Russia.
According to Chairman of the Duma Budget Committee, changes in
monitoring budget execution are imminent and should be urgently
Embezzlement, inefficient use of funds or their use for other purposes
will not cease until Parliament begins to monitor the execution of the Federal
budget, which is the principal means of public control over the government
6) The Finance Ministry acknowledges the existence of "air-cushions" in
budget applications by governmental institutions. However, allocation of
scanty sums for some budget items is the opposite side of this matter. For
instance, the Finance Minister will not likely fulfill the request by the
Director of the AZLK automobile plant for granting a relatively small credit
of R100 billion needed for reconstruction, for one simple reason -the 1995
budget earmarks only R140 billion for this kind of expenses (for all Russian
There are even more serious reasons for anxiety, since the initial draft
budget has not provided for the indexation of expenses for all those
depending on the budget. Although the reconciliatory commission has found
funds to raise pensions and allowances as of 1 March 1995, salaries of
budget workers will be frozen until 1 October 1995 despite the current price
increase. The Finance Minister firmly supports this resolution although he
understands its drawbacks. Otherwise, he contends, "the entire budget
construction will collapse." Unfortunately, the current situation proves the
accuracy of his statement.
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M. Zadornov was very outspoken on this matter. He pointed out that the
problem of postponed indexation was caused by different factors, in
particular the absence of social policy in Russia where millions of people
already live in appalling conditions. The Head of the Budget Committee who
signed the document on deferring indexation believes that all possible
measures should be taken along with social institutions to change the
situation for the better.
Naturally, the problems of Chechnya and indexation do not exhaust
possible threats to Russia's budget. The fact that the Duma lacks power
regarding the budget, should not be played down either. The only thing that
instils optimism is that, in recent months, cooperation between the State
Duma and the Finance Ministry has been growing steadily.
3. Read §3 again and do the translation of it. Translate into your
language not word for word.
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1. Do the quiz individually. Then compare answers with a partner.
1. How much cash do you
have with you at the moment?
Do you:
a) know exactly?
b) know approximately?
c) not know at all?
2. Do you normally check:
a) your change?
b) your bank statements and
credit card bills?
c) restaurant bills?
d) your receipts when
e) prices in several shops
before you buy something?
3. Do you:
a) give money to beggars?
b) give money to charities?
c) give away used items such
as clothing?
4. If you go for a meal with
someone you don’t know well, do
a) offer to pay the whole bill?
b) suggest dividing the bill into
equal parts?
c) offer to pay the whole bill but
expect them to pay next time?
d) try to avoid paying anything?
5. What do you think about people
who do not pay the correct amount
of tax? Is this:
a) a serious crime?
b) morally wrong but not a crime?
c) excellent business practice?
6. If you lend a colleague a small
amount of money and they forget
to pay it back, do you:
a) say nothing?
b) remind them that they owe you
c) arrange to go for a drink with
them and say you’ve forgotten
your wallet or purse?
Read and say what Marni and Dan think about money. Whom do
you agree with? What do you think about money?
Use the
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Lerwick, Shetland, Scotlad
 I have not yet realized the importance
of money as Shetland is generally a
wealthy area and we do not want for
 1 have a Saturday job in a local shoe
shop which pays $2.00 an hour, which
is very low compared to what my
friends get. However, I usually have
enough money to buy clothes,
jewellery and other accessories.
 Money doesn't really affect what I do.
Although facilities such as our local
sports centre can be expensive, but as
1 hate all types of sport it doesn't
matter to me.
 Most of money I earn, I spent on
Saturday night: on taxis, alcohol and
getting into discos and nightclubs.
Right now. I am trying to save money
for a shopping holiday, but it is
proving difficult. Once i have money,
I always end up spending it on
unnecessary items which I could easily
do without!
Riverside, lllinois, USA
 "Money makes the world go
around". At least that's how it
seems to me. Sometimes I get the
feeling that people's only goal in
life is to make money. I could be
wrong but some athletes making
more than $6 million a year, and
movie stars making $8 million. I
think that I am justified in feeling
this way. It seems to me that these
people might be just a little too
materialistic. How could
someone not be materialistic if
they demand that much money? I
wouldn't even know how to spend
that much money.
 Money has tendency to fall through
my fingers as if it was water. The
only ways I make money are by
babysitting for my sister and from
relatives who give me money on
my birthday and Christmas
because they didn't know what
else to give me. I've always
considered getting a job, but I
guess I don't think 1 need one
 I think that Britain is quite a wealth
 Overall, I really wish money wasn't
country, but the money tends to be
necessary, because then I
unevenly spread. There are many
wouldn't have to get a job. But
families living in poverty. No one in
there doesn't seem to be better
Shetland is really poor. The majority
way to do things so, 1 will just
of people life comfortably due to the
have to make the best of it.
money we receive from the oil and
fishing industries.
* 3. Situation : What will you do if you have a lot of money ?
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Example : If I have a lot of money I will buy a computer centre.
If I buy a computer
centre I will….
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4. Match the words (1-13) with their definitions (a-m).
1 money
2 coin
3 banknote
4 deposit
5 credit
6 account
7 loan
8 invest
9 cheqeu
10 securities
11 share
12 bank
13 transaction
a) an organization or a place that provides a financial service, customers keep their money in it.
b) a sum of money paid into a bank
с) a wrritten statement of money paid or owed for goods and services
d) a thing that is lent esp. a sum of money
e) a piece of metal used as money
f) a document or certificate showing who owns shares
g) a piece of paper money issued by a bank
h) a means of payment esp. coins and paper notes given and accepted in buying and selling
i) the conducting of business ; a piece of business done
j) permission to delay payment for goods and services until after they have been received
k) to use money to buy eg. shares or property, develop a business enterprise in order
to earn interest, bring profit
l) a special printed form on which one writes an order to a bank to pay a sum
of money from ones account to other person
m) any of equal parts into which the money of a business company is divided,
giving the holder a right to a portion of the profits
5. Complete sentences with one of the given words.
transactions, cheque, loan, credit, notes, coins, money, bank, deposit,
invested, deposit account, shares, accounts
How much _________ is there in my account?
He had some _________ in his pocket.
My salary is paid directly into my _______ .
He only exchanges _________ and traveler’s cheques.
The money is being kept on _________ or in a ________ ________.
I bought if on ________.
The _________ show a profit of $ 9000.
I’m only asking for a ________ - I’ll hay you back.
The government has _________ heavily in oil exploration.
Are you paying in cash or by ________.
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11. ________ valued at $ 60 each.
12. Legal commercial property_________.
Read the text and understand the contents.
Read the text about the history of money again and match
paragraphs A-E with the objects below (1-5).
А. At different periods of time and in different parts of the
world many different commodities have served as money.
These commodities were: cattle, sheep, furs, leather, fish,
tobacco, tea, salt, shells etc. The illustration shows shells
which were threaded into strings or belts called wampum.
The experts underline that to serve effectively as money a
commodity should be fairly durable, easily divisible, and
B. None of the above-mentioned commodities possessed
all these qualities and in time they were superseded by
precious metals. First they were superseded by silver and
later by gold. When a payment was made the metal was
first weighed out.
C. The next stage was the cutting of the metal into pieces
of the metal into pieces of definite weight and so coins
came into use.
D. Paper money first came into use in the form of receipts
given by goldsmiths in exchange for deposits of silver and
gold coins. After goldsmiths became bankers their receipts
became banknotes. That’s how the first banknotes came
into existence.
E. At first coins were worth their face value as metal. But
later token coins of limited value as legal tender were
issued. Now smaller denomination coins are made from
bronze and are often referred to as coppers. Bigger
denomination coins are made from cupronickel and are
usually called silver.
3. Find words in the text which mean the same as the following:
duration, efficiently, have, valuable, being, offer.
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4. Arrange these nouns into two columns: singular and plural.
cattle, sheep, leather, fish, tobacco, tea, salt, shells, furs, commodities,
money, silver, gold, coins, deposits, banknotes, bronze, coppers, cupronickel
5. Form different parts of speech with the help of suffixes from these
words. Consult a dictionary.
different, divisible, portable, denomination, payment, fairly, easily,
effectively, settler
1. Study the table “Banking System” and say what types of banks
there are. What is the role of money?
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promotes, stabilizes, regulates,
exercises, facilitates, provides
 international monetary cooperation
 the expansion and balanced growth of
international trade
 foreign currency exchange markets
 balance of payments
 with technical assistance
 surveillance over exchange rate of
member countries
there are, are called, are known as
…Investing Institutions
Discount Houses
Financial Markets
National Savings
Industrial Banks
Merchant Banks
Special Financing Institutions
Commercial Banks
Issuing Banks
Retail Banks
Building Societies
Joint Stock Clearing Banks
controls, issues, mints, lends, and borrows,
manages, provides, exercises, supplies
banking system
nation’s gold reserves
the national debt
economic information
surveillance over exchange rate
various banker’s cards
is considered
(believed, thought, said) to be
a means of payments
a medium of exchange
a standard of value
a unit of value
a store of value
a standard of deferred payment
a monetary unit
…еxists in the form of…
 coins, securities (shares, banknotes,
obligations, bills)
pays attention to, is concerned with,
provides, must have, is engaged in
 external financing of the economic
growth of developing counties
 financing to creditworthy countries
The borrowing … … increased prospects
for repayments.
 education and human services
 environment
 modification of governmental policies
 evaluating of previous lending
are involved in, include, offer, issue, grant,
discount, provide
current account services
deposit account services
savings account services
foreign exchange transactions
services in foreign trade payments
bills of exchange
loans to their customers
cash dispensers
safe custody
investment management services
cheques and cheque cards
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2. Bank Accounts.
Put each word or phrase in the group below in its correct place
in the following passages:
a) Opening an account
1. formalities 2. overdraft 3. open
4. branch
5. account
6. fill in
7. bank charges
It’s very simple to (a)______ a bank (b) _______ in Britain. There
are very few (c) ________ . Just go to your local (d) ______ . (e)______
a few forms, and that’s it. You will probably only have to pay (f) ______
if there is no money in your account or if you borrow money from the
bank, in other words if you have an (g) ______ .
b) Current and deposit accounts
1. notice
2. current
4. withdraw
5. deposit
3. cheque
6. interest
For regular everyday use most people prefer a (a) ______ account.
This normally earns no (b) _____ but you are given a (c) _____ book,
which makes shopping and paying bills very easy. A (d) _____ account
earns interest but it’s not so easy to (e) ______ your money You
sometimes have to give a week’s (f) _____.
c) Using your account
1. balance
2. deposit
3. withdrawal
4. standing order
5. statement
At regular intervals, perhaps monthly, you will receive a (a) ______
from the bank, giving details of each (b) ______ (money you put in) and
(c) ______ (money you take out). If you’re not sure how much money
you have in your account, you can just go to your bank and ask what
your (d) ______ is. If you have to make a regular payment like rent you
can ask the bank to pay this amount for you automatically. This
arrangement is called a (e) ______.
3. Words connected with money
A. Match the phrases in the box with verbs below. The phrases can
be used more that once. The first one has been done for you.
a good salary
the bill
someone back
a new car
a fortune
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someone £5
£ 5 from someone
money, a fortune, a new car
1. Read the text and understand the contents. Consult a
1. A commercial bank borrows money from the public, crediting
them with a deposit. The deposit is a liability of the bank. It is the money
owed to depositors. In turn the bank lends money to firms, households or
governments wishing to borrow.
Commercial banks are financial intermediaries with a government
license to make loans and issue deposits, including deposits against
which cheques can be written.
Major important banks in most countries are included in the clearing
system in which debts between banks are settled by adding up all the
transactions in a given period and paying only the net amounts needed to
balance inter-bank accounts.
2. The balance sheet of a bank includes assets and liabilities. We
begin by discussing the asset side of the balance sheet.
Cash assets are notes and coins kept in their vaults and deposited
with the Central Bank. The balance sheet also shows money lent out or
used to purchase short-term interest-earning assets such as loans and
bills. Bills are financial assets to be repurchased by the original borrowed
within a year or less. Loans refer to lending to households and firms and
are to be repaid by a certain date. Loans appear to be the major share of
bank lending. Securities show bank purchases of interest-bearing longterm financial assets. These can be government bonds or industrial
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shares. Since these assets are traded daily on the Stock Exchange, these
securities seem to be easy to cash whenever the bank wishes, though
their price fluctuates from day to day.
3. We now examine the liability side of the balance sheet which
includes, mainly, deposits. The two most important kinds of deposits are
sure to be sight deposits and time deposits. Sight deposits can be
withdrawn on sight whenever the depositor wishes. These are the
accounts which we write cheques, thus withdrawing money without
giving the bank any warning. Therefore, most banks do not pay interest
on sight deposits, or chequing accounts.
Before time deposits can be withdrawn, a minimum period of
notification must be given within which banks can sell off some of their
high-interest securities or call in some of their high-interest loans in order
to have the money to pay out depositors. Therefore, banks usually pay
interest on time deposits. Apart from deposits banks usually have some
other liabilities as, for instance, deposits in foreign currency, cheques in
the process of clearance and others.
2. These expressions are all connected with Banking System. Can
you complete them?
1. t_ _ _s_ _ _ _ _ _s
2. s_ _ _ r_ _ _ _ s
3. l_ _ b_ _ _ _ _ _s
4. f_ n_ _ _ _ _l a_ _ _ _s
5. s_ _ _ k E_ _ h _ _ _e
6. d_ _ _s_ _ _r
3. Make a word pair (there is one extra verb that you don’t have
to use).
sight deposits interest
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4. In each sentence there is one word which is wrong. Find and
correct the word at the end of the line.
1. A commercial Bank lends money from the public. _______
2. The financial sheet of the bank includes assets and liabilities.
3. Loans appear to be the major token of bank lending. _______
4. Therefore, banks usually impose interest on time
5. Commercial banks are financial intermediaries with a government
document to make loans and issue deposits._______
5. Read the article again. For statements 1-7, choose the correct
answer a, b, c, or d.
5.1. Cash assets are deposited with
a) major important banks
c) the Central Bank
b) financial markets
d) financial intermediates
5.2. The balance sheet of a bank possesses
a) coins
b) loans
c) cheques
d) assets and liabilities
5.3. Loans seem to be an important share of bank
a) notification
b) deposits
c) lending
d) accounts
5.4. There exists two major types of deposits
a) securities and money
b) sight deposits
c) transactions and bonds
d) loans and bills
5.5. Bonds and industrial shares are traded daily
a) in commercial banks
b) by depositors
c) on the stock Exchange
d) by the government
5.6. A lot of banks do not pay interest on
a) time deposits
b) balance sheet
c) debts
d) none of these
5.7. The balance sheet shows money used to buy
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
a) loans and bills
c) chequing accounts
b) sight deposits
d)foreign currency
3. Make a word pair (there is one extra verb that you don’t have
to use).
sight deposits interest
4. In each sentence there is one word which is wrong.
Find and correct the word at the end of the line.
1. A commercial Bank lends money from the public. _______
2. The financial sheet of the bank includes assets and liabilities.
3. Loans appear to be the major token of bank lending. _______
4. Therefore, banks usually impose interest on time
5. Commercial banks are financial intermediaries with a government
document to make loans and issue deposits._______
5. Read the article again. For statements 1-7, choose the correct
answer a, b, c, or d.
5.1. Cash assets are deposited with
a) major important banks
c) the Central Bank
b) financial markets
d) financial intermediates
5.2. The balance sheet of a bank possesses
a) coins
b) loans
c) cheques
d) assets and liabilities
5.3. Loans seem to be an important share of bank
a) notification
b) deposits
c) lending
d) accounts
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5.4. There exists two major types of deposits
a) securities and money
b) sight deposits and time
c) transactions and bonds
d) loans and bills
5.5. Bonds and industrial shares are traded daily
a) in commercial banks
b) by depositors
c) on the stock Exchange
d) by the government
5.6. A lot of banks do not pay interest on
a) time deposits
b) balance sheet
c) debts
d) none of these
5.7. The balance sheet shows money used to buy
a) loans and bills
d) foreign currency
c) chequing accounts
b) sight deposits
1. For statements (1-5 )choose the best answer from A,B,C,D.
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1 Read this part of the text. Tick (v) the lines which are correct and
underline the unnecessary words. The first sentence done for you.
1) Money has four functions: a medium of exchange or 1 the
means of the payment, a store of value, a unit of account and 2_______
a standard of de ferred payment. When used to as a medium 3_______
of exchange, money is considered to be distinguished from 4_______
other assets. Money as the medium of exchange is believed 5_______
to be used in one a half of almost all exchange. Workers 6_______
exchange labour for money, people buy or sell goods in 7_______
exchange for money as well.
People do not accept money to consume it directly but 9_______
because it can subsequently be used to buy things, they 10_______
wish to consume. To see the such advantages of a medium 11_______
of exchange, imagine a barter economy, that is, an economy 12_______
having no medium of exchange. Goods are to traded directly
or swapped for other goods. The seller and the buyer each
other must want something the other has to offer. Trading is
very to expensive. People spend a lot of time and effort
finding others with whom they can make swaps. Nowadays,
there exists actually no purely any barter economies, but
economies nearer to or farther from the barter type. The
closer is the economy to the barter type, the more of
wasteful it is.
Serving as a medium of exchange money is presumed to
have been so an essential function for centuries.
2. Read the next part of the text .
Use the words given in capitals (13-21) at the end of each line to
form a word that fits in the same line.
2) The unit of account is the unit in which prices are 13. Accounting
quoted and accounts are kept. In Britain, for instance, 14. InConvenient
prices are quoted in pounds sterling; in France, in 15. Expect
French francs. It is usually ________ to use the same 16. Inflate
unit to measure the medium of exchange as well as to 17. Quick
quote prices and keep accounts in. However, there 18. Pay
may be _______. During the rapid German ________ 19. Economics
of 1922-23 when prices in marks were changing very 20. Nation
______, German shopkeepers found it more 21. Great
convenient to use US dollars as the unit of account. 22. Existence
Prices were quoted in dollars though _______ was
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made in marks. The same goes for Russia and other
post-communist _______ that used the US dollar as
the unit of account, keeping their ________
currencies as means of actual payment. The higher is
the inflation rate, the ______ is the probability of
introducing a temporary unit of account alongside the
_______ units for measuring medium of exchange.
3. Read the third part of the text and complete the following
sentences (1-11) with the necessary word (a-k) that fits the sentence.
3) Money is a store of value, for it can be used to a) Value
make 1… in future. For money to be accepted in 2…, it b) Exchange
has to be a store of value. Unless suitable for buying c) Currency
goods with tomorrow, money will not be accepted as d) Loans
payments for the goods supplied today. But 3… is neither e) Convenient
the only nor necessarily the best store of 4…. Houses, f) Means
stamp collections, and interest- bearing bank accounts all g) Purchases
serve as stores of value.
h) Account
Finally, money serves as a5… of deferred payment or a i) Standard
unit of account over time. When money is borrowed, the j) Medium
amount to be repaid next year is measured in units of k) Money
national 6…, pounds of sterling for the United Kingdom,
for example. Although 7…, this not an essential function
of money. UK citizens can get bank 8… specifying in
dollars the amount that must be repaid next year. Thus,
the key feature of money is its use as a 9… of exchange.
For money to be used successfully as a 10… of exchange,
it must be a store of value as well. And it is usually,
though not always, convenient to make money the unit of
11… and standard of deferred payment.
1. Read the text and answer question below it.
1. In the 19th century 1… was mainly gold and silver coins. These are
examples of commodity money, ordinary 2… with industrial uses (gold) and
3… uses (cigarettes), which also serve 4… a medium of exchange. To use a
commodity money, society must either 5…back on other uses of that
commodity or devote scarce resources to producing additional quantities of
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the commodity. But there are less expensive ways for society to produce
2. A token money 6… a means of payment whose value or purchasing
power as money greatly exceeds its cost 7… production or value in uses
others than as money. A $10 note is worth far more as money than as 3 x 6
inch piece of high-quality paper. Similarly, the monetary value of 8… coins
exceeds the amount you would get by 9… them down and selling off the
metals they contain. By collectively agreeing to use token money, society
economizes on the scarce resources 10… to produce money as a medium of
exchange. Since the manufacturing costs are tiny, why 11… everyone make
$10 notes? The essential condition for the survival of token money is the
restriction of the right to 12… it. Private production is illegal. Society
enforces the use of token money by making it13… tender. The law says it
must be accepted as a means of payment.
3. In modern economies, token money is supplemented by IOU money.
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 part 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 a payment.
What kinds of money have you read about?
What does commodity money mean?
What does token money mean?
What does IOU money mean?
2. Read the text again and choose a, b, с or d that fits best each
a money
the most
to supply
item of money
a goods
the same as
to cut
a most
to melt
having required
some money
a lot goods
so as
being required
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3. a) Find words in the text that have the following meanings.
1) an article, a product or a material that is bought and sold .
2) a sum of money paid in to a bank .
3) the action or process of buying .
4) money made of metal .
5) a round piece of metal or plastic used to operate certain machines or a
form of payment .
6) a sum of money owed to smb .
Read the text and say what services Banks offer.
Banker’s services cover an enormous range of activities today. A full
list would include:
 Current account services
They are extended to anyone whom banks regard as reliable. A new
depositor should be recommended by his employer or should present a
reference. If this proves satisfactory the bank will accept a deposit from him
which will be entered in his current account.
A cheque book will then be issued free of charge. Once the customer has
received his cheque book he may use the cheques to order the banker to pay
out sums of money from his current account. Money is being paid into and
paid out of the account as often as the customer finds convenient.
 Deposit account services
Companies and individuals can deposit cash resources that are not
needed at present. They can withdraw the money either any day they need it
or after a certain period in case of time deposits.
 Savings account services
It enables small savers to put money away for particular purposes, for
example for holidays.
 Other services:
o foreign exchange
o foreign exchange transactions
o services in foreign trade payments
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discounting bills of exchange
granting loans
investment management services
cash dispensers and automated teller machines
safe custody
economic information
banker’s credit cards
and many others
1. Read the text and find out:
a) how the Central Bank acts;
b) if the Central Bank can impose reserve requirements on commercial
c) if the Central Bank is responsible for the governments monetary
d) what bonds depend on.
Today every country has a Central Bank. It acts as a lender to
commercial banks and it acts as a banker to the government, taking
responsibility for the funding of the government’s budget deficit and the
control of the money supply which includes currency outside the banking
system plus the sight deposits of the commercial banks against which the
private sector can write cheques.
Thus, money supply is partly a liability of the Central Bank (currency in
private circulation) and partly a liability of commercial banks (chequing
accounts of the general public).
1_______ . In addition, the Central Bank can impose reserve
requirements on commercial banks, that is, it can impose the minimum ratio
of cash reserves to deposits that banks must hold. The Central Bank also sets
discount rate which is the interest rate commercial banks have to pay when
they want to borrow money.2________ .
Thus, the Central Bank is responsible for the government’s monetary
policy. Monetary policy is the control by the government of a country’s
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currency and its system for lending and borrowing money through money
supply in order to control the level of spending in the economy.
3________ .
Hence, when the price level doubles, other things equal, we expect the
demand for nominal balances to double, leaving the demand for real money
balances unaltered.
4________. The quantity of real balances demanded falls as on the other
hand, when interest-on bearing assets are risky, people prefer to hold some of
the safe asset, money. When there is no immediate need to make
transactions, this leads to a demand for holding interest-bearing time deposits
rather than non-interest-bearing sight deposits. The demand for time deposits
will be larger with an increase in the total wealth to be invested.
5_________ . Being sold and purchased by the Central Bank, bonds
depend on the latter for their supply and price.
Interest rates affect household wealth and consumption. Consumption is
believed to depend both on interest rates and taxes. Higher interest rates
reduce consumer demand. Temporary tax changes are likely to have less
effect on consumer demand than tax changes that are expected to be
6__________ . With a given money supply, higher income must be
accompanied by higher interest rates to keep money demand unchanged.
A given income level can be maintained by an easy monetary policy and
a tight fiscal policy or by the converse.
2. Read the missing sentences A-G below and then read the text
again. Choose the sentence that best fits each gap (1-6). There is one
extra sentence that you don’t need to use.
A. The Central Bank controls the quantity of currency in private
circulation and the one held by the banks through purchases and sales of
government securities.
B. People want money because of its purchasing power in term of the
goods they will buy.
C. The demand for money is a demand for real money, that is, nominal
money deflated by the price level to undertake a given quantity of
D. There also exists a close relationship between interest rates and
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E. Companies are involved in many activities: banking, marketing,
selling, buying, and production.
F. Having set discount rate, the Central Bank controls the money market.
G. Interests are a tool to regulate the market for bonds.
3. Complete the following sentences with words in listed which have
the same meaning as the underlined words.
1. The Central Bank acts as a lender to commercial Banks.
2. The Central Bank can impose reserve requirements on commercial
3. The Central Bank is responsible for governments monetary policy.
4. When interest-bearing assets are risky, people prefer to hold some of
the safe asset, money.
5. Being sold and purchased by the Central Bank, bonds depend on the
latter for their supply and price.
6. A given income level can be maintained by an easy monetary policy
and a tight fiscal policy or by the converse.
1. Study this table and say what objectives and functions of the
Central Bank are.
Цели деятельности и функции
Центрального банка Российской Федерации
Государственной Думе
Члены назначаются
и освобождаются ГД
и освобождается ГД
Банк России
Совет директоров
Председатель Банка России
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Защита и
устойчивости рубля,
в том числе его
способности и курса
по отношению к
Разрабатывает и
проводит единую
направленную на
защиту обеспечения
устойчивости рубля
включая операции
по покупкепродаже
Организует и
валютный контроль
так и через
Принимает участие
в разработке
платёжного баланса
РФ, организует
платёжного баланса
Развитие и
системы РФ
эффективного и
системы расчётов
эмиссию наличных
денег и организует
их обращение
надзор за
расчётов в РФ
эмиссию ценных
бумаг кредитных
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Проводит анализ и
экономики РФ в
целом и по
регионам, прежде
всего валютнофинансовых и
материалы и
учёта и
отчётности для
1.1. Role play:
A.You are a foreign journalist who takes great interest in the activity of
the Central Bank. Ask questions you are interested in the activity of the
Bank of Russia.
B. You are a member of the board of directors of the Central Bank.
Answer all questions a foreign journalist is going to ask you.
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3. Read the text below and answer these questions. Pay no attention
to the gaps.
1) Which way of making money appeals to you the most?
2) Can you think of any other ways of getting rich?
You could win the lottery or inherit a fortune at (0) the age of 50. But
most of us dream about getting rich as soon as (1) _______ can. So, if you
want to find out how to make a fortune, read on.
Be a supermodel
Follow the example of Linda Evangelista, (2) _______ won’t consider
getting out of bed for less (3)_____£10,000. That’s the minimum fee the
supermodel (4) _______ Canada charges for a day’s work, and she (5)
________ thought to earn $2 million a year. But a model, don’t give (6)
_______ hope. There are other ways (7) _________ getting money.
Write a brilliant book
If you are a best seller, you probably wouldn’t have to work again. The
author Peter Mayle, who had previously (8) ________ in advertising, wrote
two amusing books about his home (9) ________ the South of France. The
books were very successful, (10) ________ he also made a fortune from the
TV series. If he makes a film, he will no doubt make even more money.
Have a bright idea
Bette Nesmith invented something (11) ________ make every
secretery’s life a little easier – she invented Liquid Paper, the original
typewriter correction fluid. She came up with idea (12) _______ day while
she was working (13) ________ a typist. By (14) ________ so, she changes
office life forever and earned herself a fortune (15) ________ the same time.
3.1. Read the text again and think of one word which best fits each
Example: (0) the
4. Who wants to be a millionaire?
A. In pairs or small groups, discuss these questions.
1. Do you think people with money should do more to help those
without money? How?
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2. Have you even given any money to a charity or to someone who really
needed it? Why? Why not?
B. Read the text about a man called Charles Gray. As you read, look
out for the answers to these question. Take no notice of the gaps.
1. In what way is Charles Gray different from most people?
2. How does he feel about his way of life now?
3. What do you think of what he did?
Sixteen years ago, Charles Gray was a millionaire. He worked as a
university professor and had a huge six- bedroomed mansion in the centre of
Eugene, Oregon. Today he has nothing. But this is no sob story- there have
been no Stock Market crashes or terrible illnesses or gambling debts. Charles
Gray is poor on purpose. (0) H And this, he says, has brought him happiness.
Charles Gray was born into a poor family where he developed, as he
puts it, a kind of working-class dislike of the rich. However, he became very
successful, in the traditional American dream fashion. (1) _____ He married
for love but later inherited both a large mansion and a small fortune- a little
over $2 million.
(2) ______ The enormous amount of money that he had inherited began
to make him feel guilty and uncomfortable. It bothered me that people all
over the world were starving and didn’t have a fair chance.
The solution came when his wife Leslie announced over breakfast one
morning that she thought they should give away half of their money. Instead
of choking on his cornflakes, Charles reaction was “What an excellent idea”
(3) ______ Soon afterwards, they moved out of their big house into a smaller
But in spite of giving away more money that most people make in their
lifetime, Charles still wasn’t happy. Although he was a lot poorer than he
had been the year before, he wasn’t poor enough. Then he thought up the
idea of dividing the world’s wealth by its total population, and working out
how much each person should have. (4) ______ So he gave away everything
he still owned, and decided to try and live on his fair share. At this point his
wife decided to leave.
Now, sixteen years later, he lives in a small rented caravan in the
backyard of someone else’s house. He does not need to buy much, so he only
has to work for a few hours a week. He grows his own vegetables and in the
summer he collects the fruit that most people can’t be bothered too hard and
being over-ambitious is a major cause of unhappiness, a view which many
people would agree with.” We have grown richer, because the consumer
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goods that are put before us are so appealing. (5) _____ It doesn’t contribute
to happiness- in fact many people are more miserable. They would be much
happier if they wanted less and worked less”.
He believes that most people try to escape from the rat race by earning
so much money that they will be free from everyday worries, but most
people never succeed. (6) ______ He is no longer guilty about his
undeserved wealth, and says “I’m much happier now – I wouldn’t go back to
being rich for anything – no way”
C. Seven sentences have been removed from the text. Choose from
the sentences A-H the which fits each gap (1-6). There is one an extra
sentence that you do not need. There is an example at the beginning.
A. He has found an easier way of getting out of it, and has discovered
that choosing to be poor makes you free.
B. Most people would be very happy with this, but Charles Gray was
C. He worked out that this came to about $100 a month.
D. She always used to say that Charles was the most unselfish person in
the world.
E. So the Grays set up a small charity and gave away half of their money
to their favorite causes.
F. But in order to pay for a bigger house or better car you have to put in
an enormous amount of work.
G. He passed his exams, got a car, credit cards and a good job as a
university professor.
H. Tired of being a “have” in a word of “have-nots”, he made the
deliberate choice to get rid of his wealth.
D. Now answer these questions.
1. Which answers depend mainly on reference devices?
2. Which answers depend mainly on the context?
E. Match the words and phrases from the article 1-5 with their
meanings in a-e.
1 sob story
a products bought and used by
2 over-ambitious
b competitive society
3 consumer goods
с sad tale to make you cry
4 the rat race
d wealthy and poor people
5 the “haves” and “have-nots”
e wanting to succeed too much
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F. Think of four different ways of finishing these sentences.
If Charles Gray were my father…
… I would be angry with him for giving all the family’s money away.
… I would try to make him see a psychiatrist.
… I would feel proud of him.
… I would be worried about his health.
1 If my parents gave all their money away, …
2 If I were a millionaire, …
3 If I lived a long way from my family, …
4 If I had a year’s holiday, …
1. Form all possible words with the help of the following suffexes.
Translate the words.
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2. Fill each of the gaps below with one appropriate form.
accountancy, accountable, accounting, accountant, accountability.
1) Who are you ________ to in this organization.
2) ________ of local government to Parliament is great.
3) ________ usually specialize in making the most important financial
4) The_______ of our company is on the second floor.
5) _________ is said to be the main language of accountants.
3. Match the words (1-13) connected with “accounting” with their
definitions (a-m). Study them.
a) a written statement of money paid or owed for goods or
1) auditor
b) to give a satisfactory record of money in one’s care
2) withdraw
c) required or expected to give an explanation of one’s
3) report
actions, expenditure
4) communicate d) a person whose profession is to keep or check financial
e) money gained in business esp the differences between the
5) entity
amount earned and the amount spent
f) a person who officially examines the accounts of a
6) transaction
g) a spoken or written account of smth heard, seen, done,
7) accountable
h) a person whose job is keeping records of the financial
8) account for
affairs of a business
i) to obtain gradually or gather together an increasing
9) accountant
number or quantity of smth
j) a piece of business done /cheque /credit /cash transactions
10) bookkeeper
k) a thing with distinct and independent existence
11) profit
l) to move or take sb/smth back or away
12) accumulate
m) to make smth known
13) account
4. Getting paid
1) Study these notions.
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A) Shipping and billing
When you ask to buy something, you order it, or place an order for it.
When the goods are ready, they are dispatched or shipped to you.
An invoice is a document asking for payment and showing the amount
to pay. The activity of producing and sending invoices is invoicing or
B) Trade credit
Vaclav is talking about his furniture business:
'Of course, we don't expect our business customers to pay immediately.
They are given trade credit, a period of time before they have to pay,
usually 30 or 60 days. If a customer orders a large quantity or pays within
a particular time, we give them a discount, a reduction in the amount they
have to pay.
But with some customers, especially ones we haven't dealt with before,
we ask them to pay upfront, before they receive the goods.
Like all businesses, we have a credit policy, with payment terms: rules
on when and how customers should pay. This is a part of controlling cash
flow, the timing of payments coming into and going out of a business.'
C) Accounts
Jennifer and Kathleen are businesswomen. Jennifer has her own
company in Britain and Kathleen owns one in the US.
I'm waiting to be paid by some
of my customers. These are my
debtors. They owe me money.
The people and organizations
we sell to are our customers or
accounts. The most important
ones are key accounts.
The customers that I'm
waiting to be paid by are my
accounts receivable or
The suppliers and other
organizations that I owe
money to are my creditors.
I must remember to pay
tax to the Inland Revenue
on time!
There are some companies that owe
me money, but I get the feeling I'm
never going to get paid: they're bad
debts and I've written them off.
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2) A) Put these events in the correct order
1. Messco dispatched the goods to Superinc.
2. Superinc ordered goods from Messco.
3. Superinc eventually settled the invoice.
4. Superinc did not pay the invoice on time.
5. Two weeks later, Superinc had still not received an invoice, making
them think. Messco's invoicing was not very efficient.
6. Someone in accounts at Messco chased the invoice by phoning the
accounts department at Superinc.
7. When the goods arrived, Superinc noticed there was no invoice and
asked Messco to issue one.
8. Messco's accounts department raised an invoice and sent it to
B) Complete these sentences using expressions from В opposite.
1. a constant problem. I get materials from suppliers on a
30-day payment basis, bur I'm supplying large companies who pay me on
a 60-day payment term.
2. With some types of new wine, you can pay a special price ........and
wait for it to be delivered in about ten months’ time.
3. Small businesses complain that larger companies abuse………….by
paying invoices too slowly.
4. We offer a two per cent .......................for payment within ten days.
5. We have a very strict……………: our ... are that everyone pays
within 30 days.
C) Replace the underlined words with expressions from С
opposite, using British English.
My name's Saleem and I own a clothing company. Our (1) most
important customers are department stores. Getting paid on time is very
important and we have an employee whose job is to chase (2) people who
owe us money. Of course, we pay (3) suppliers and other people we owe
money ro as late as possible, except the (4) tax authorities, who we pay
right on time! Luckily, I haven't had much of a problem with (5) people
who don't pay at all, so we haven't had to (6) decide not to chase them
any more.
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1. Study these notions.
A) Accounts
Hi, I’m Fiona and I’m an accountant. I work in Edinburgh for one of
the big accountancy firms. We look at the financial records or accounts of a
lot of companies. We work with the accountants of those companies, and the
people who work under them: the bookkeepers. I like my profession:
Sometimes we act as auditors: specialist outside accountants who audit
a company’s accounts, that is, we check them at the end of a particular
period to see if they give a true and fair view (an accurate and complete
picture). An audit can take several days, even for a fairly small company.
When a company’s results are presented in a way that makes them look
better than they really are, even if it follows the rules, it may be accused of
creative accounting or window dressing. Of course, I never do this!
The profession is called accountancy (BrE) or accounting (AmE). The
activity is called accounting (BrE and AmE).
B) Results
‘A firm reports its perfomance in a particluar period in its results.
Results for a particular year are shown in the company’s annual report.
This contains, among other things, a profit and loss account.
In theory, if a company makes more money than it spends, it makes a
profit. If not, it makes a loss. But it’s possible for a company to show a
profit for a particular period because of the way it presents its activities
under the rules of another. My firm operates in many countries and we are
very aware of this!
A pre-tax profit or pre-tax loss is one before tax is calculated. An
exceptional profit or loss is for something that is not normally repeated, for
example the sale of a subsidiary company or the costs of restructing. A
company’s gross profit is before charges like these are taken away; its net
profit is afterwards. The final figure for profit or loss is what people call
informally the bottom line. This is what they really worry about!
If a company is making a loss, commentators may say that it is in the
red. They may also use expressions with red ink, saying, for example, that
a company is bleeding red ink or haemorrhaving red ink.
BrE: profit and loss account
AmE: income statement
1. Read the text, understand the contents.
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Accounting can be defined as the measuring and recording of all
relevant financial data concerning a particular entity, that is business,
government organization, etc.
Financial reporting is the communicating of such information in an
appropriately summarized form. In the UK such a summarized form is
called «Accounts». In the USA it is called «Financial statements». These
accounts or statements are communicated to interested parties both within
and outside the organization.
Financial reporting provides information that is useful to present
potential investors, creditors and other users in making rational investment,
credit and other economic decisions.
Accounting is often referred to as the «language of business», and, as a
direct result of the work of accountants and auditors. A wide range of
different users of financial reporting are able to answer questions such as:
How much profit did the company make last year?
How much should I lend to the company?
Is this company more successful than its competitors?
How much can I withdraw from the company?
Was last year improvement over the year before?
Accountants are therefore those individuals specialized in the «art» of
capturing the correct data and preparing the most meaningful financial
reports from that data. They are «producers» of financial information, which
is then made available to «consumers» such as owners and lenders.
Accountants are assisted in their work by bookkeepers, who operate
some form of accounting system, usually computerized, to help capture,
accumulate categories, summaries and report many thousands of
transactions that affect an economic entity every year.
2. Use the word in bold to complete the second sentence so that it
has a similar meaning to the first.
2.1 Accounting can be defined as the measuring and recording of all
is sure
Accounting __________ as the measuring and recording of all financial
2.2 Financial reporting provides information that is useful to present
potential investors, creditors, other users in making economic decisions.
Information ____________________ to present potential investors,
creditors, other users in making economic decisions.
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2.3 Accounting is often referred to as the “language of business”.
is said
Accounting __________________ to as the “language of business”.
2.4 Accountants are therefore those individuals specialized in the «art»
of capturing the correct data and preparing the most meaningful financial
reports from that data.
Accountants ____________ in the «art»of capturing the correct data and
preparing the most meaningful financial reports from that data.
2.5 Accountants are assisted in their work by bookkeepers.
Bookkeepers _________ accountants in their work.
You are going to read the article about bookkeepers, accountants
and controllers. Eight sentences have been removed from the article.
1. First read the text and understand the contents. Pay no attention
to gaps.
Bookkeepers deal in taxes, cash flow, which include cash receipts and
cash disbursements, sales, purchases and differend business transactions of
the company. 1________________. At the end of a period, usually a month,
the totals of each book of original entry are posted into the proper page of
the Ledger.2_________________. On the basis of all the totals of each
account in the Ledger, the bookkeepers prepare a Trial Balance. Trial
Balance is usually drawn up every quarter.
The accountant’s responsibility is to analyse and interpret the data in
the Ledger and the Trial Balance.
reorganization is planned without the help of the accountant. New product
and advertising campaigns are also prepared with the help of the accountant.
The work of accountants is rather sophisticated.
4________________________________. Certified accountants in
England are called chartered accountants. In the USA the certified
5___________________. Junior employees in large companies, for
example, offer practice accounting and then take the examination.
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The chief accounting officer of a large company is the Controller, or
Comptroller. Controllers are responsible for measuring the company’s
performance. 6____________________________. This position is very
close to the top executives of the company.
2. Then choose from the text sentences (A-G) the one which fits best
each gap (1-6).
A. The Ledger shows all the expenditures and all the earnings of the
B. Many accountants have special certificates after they pass
examinations to the institute of accountants.
C. The accountant is to determine the ways in which the business may
grow in the future.
D. They interpret the results of the operations, plan and recommend
future actions.
E. These auditors are internal auditors.
F. But it is not necessary to have a certificate to practice accounting.
G. Bookkeepers first record all the appropriate figures-in the books of
original entry or journals.
3. Answer the following questions in a written form. Say what these
professions are involved in.
— What do bookkeepers deal in?
— What is an accountant responsible for?
— What are controllers engaged in?
4.Make up questions beginning with the given words, not changing
the contents of the first one.
— What does Ledger show?
Could you tell me __________.
— How does the bookkeeper prepare a Trial Balance?
Could you let me know _________.
— Is expansion or reorganization planned without the help of the
Can you find out _________.
— Do accountants always take the examination?
I’d like to know _________.
— Is the position of a controller very close to the top executives of the
Do you think _________.
— What way do auditors review financial records?
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I wonder _________.
1. Study these notions.
A) Assets
An asset is something that has value, or the power to earn money. These
current assets: money in the bank, investments that can easily be
turned into money,money that customers owe, stocks of goods that are going
to be sold.
fixed assets: equipment, machinery, buildings and land.
intangible assets: things which you cannot see. For example, goodwill:
a company’s good reputation with existing customers, and brands:
established brands have the power to earn money.
If a company is sold as a going concern, it has value as a profitmaking operation, or one that could make a profit.
B) Depreciation
Joana Cassidy is head of IT (Information Technology) in a publishing
‘Assets such as machinery and equipment lose value over time because
they wear out, or are no longer up-to-date. This is called depreciation or
amortization. For example, when we buy new computers, we depreciate
them or amortize them over a very short period, usually three years, and a
charge for this is shown in the financial records: the value of the equipment
is written down each year and written off completely at the end.
The value of assets at any one time is its book value. This isn’t
necessarily the amount that is could be sold for at that time. For example,
land or buildings may be worth more than shown it the accounts, because
they have increased in value. But computers could only be sold for less than
book value.’
C) Liabilities
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Liabilities are a company’s debts to suppliers, lenders, the tax
authorities, etc. Debts that have to be paid within a year are current
liabilities, and those payable in more than a year are long-term liabilities,
for example bank loans.
D) Balance sheet
A company’s balance sheet gives a picture of its assets at the end of a
particular period, usually the 12-month period of its financial year. This is
not necessarily from January to December.
2. Chose the best word from the brackets ( ) to fill the gap in each
1. Newsagent’s shop for sale as a going
(buseness/ concern/
.................. .
2. ............... assets include shop, fittings and a
new delivery van.
3. The estimated ............... value of these assets
is £ 120,000.
4. ................. assets include stock worth £
5. The most important ............... asset is our
good reputation.
6. The .................. of our customers is included
in the asking price.
(Permanent/ Firm/ Fixed)
(book/ invoice/ paper)
(Current/ Present/ Actual)
(invisible/ invaluable/
(goodness/ goodwill/
3. Complete each of the numbered sentences (1-5) by writing one
word in the gap. The first letter has been given to help you.
Over time the equipment that a company owns loses value.
1. For example, computers and other IT equipment _d_ _ _ _ _ _ _ very
2. When we do our accounts, we _a_ _ _ _ _ them over three years.
3. So the value of a $6,000 PC is _w_ _ _ _ _ _ down by a third in the
first year.
4. The depreciation of $2,000 is shown as a _c_ _ _ _ _ in our financial
5. Depreciation of all assets is shown on the _b_ _ _ _ _ sheet at the end
of the year.
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4. Choose the best word from the brackets ( ) to fill the gap.
1. Our .................... include a € 12,000 tax bill and the € 8,000 we owe
our suppliers.
(assets/ debtors/ liabilities)
2. Our .................... are valuable because they have good customer
(brands/ types/ makes)
3. Company cars depreciate quickly. We write them .................
completely after five years.
(up/ out/ off)
4. Our ..................... year runs from the 1st of June to the 31st of May.
(financial/ revenue/ capital)
5. Our only ...................... liability is a € 10,000 bank loan to be paid off
over five years.
(current/ long-term/ fixed)
1. Read the text and understand the contents.
From the Trial Balance, prepared by the bookkeeper, the accountant
creates a Profit and Loss Statement and Balance Sheet.
A Profit and Loss Statement or a Profit and Loss Account, shows the
income or loss of the company for the period. The Profit and Loss Statement
is made only on the basis of those accounts of the Ledger which affect the
profit and loss of the company. The profit and Loss Statement may contain
the following items:
 Sales
 Trading profit
 Depreciation
 Rent received
 Interest paid
 Profit before tax
 Tax
Profit after tax
Profit retained
Earnings per share
The other accounts of the Ledger which reflect the assets, liabilities, and
capital of the firm make up a Balance Sheet. This shows the net worth or
book value of the company.
A Balance Sheet made up for Johnson and Co., a specimen company,
may appear as follows:
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Johnson and Co.
31 December, 199x
Petty cash fund
Accounts Receivable
Notes Receivable
Merchandise on hand
Furniture and Fixtures
Total Assets
Accounts payable
Notes payable
Total liabilities
Johnson Capital at the beginning 8000
Profit for the period
Total capital
Total capital and liabilities
The two sides of the Balance Sheet that is Total Assets and Total
Capital and Liabilities are always to be equal.
2. Read the text again about accounts and balance sheets. For
statements 1-7 choose the correct answer A, B, C or D.
2.1 It is quite clear from the text
a) profit and balance sheet
b) statements and total assets
c) liabilities and capital
d) profit and loss statement and balance sheet
2.2 The accountant will never forget to include____________ into
Profit and Loss statement.
a) merchandise on hand
b) tax
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c) total capital
d) two sides of the balance sheet
2.3 A Profit or Loss Account shows___________.
a) inventory
b) petty cash fund
c) dividends
d) income and loss
2.4 On the basis of all the totals of each account the bookkeeper
prepares_________ .
a) accountant’s report
b) trial balance
c) auditor’s report
d) balance sheet
2.5 ________ is said to be the most important thing in work of a book
a) account
b) Ledger
c) Balance sheet
d) capital of the firm
3. Find in the text and write down words which have the following
a) a debt, financial obligation
b) a thing, esp. property owned by a person, company, that has value
and can be used or sold to debts
c) wealth and property that can be used to produce more wealth
d) a regular payment made for the use of land, buildings, machinery
e) a part or portion of a larger amount which is divided among several
or many people
f) the condition that exists when two opposites are equal or in correct
g) advantage, benefit
h) a book in which a bank, a business firm records its financial
4. Fill each of the gaps below with the words listed in an
appropriate form.
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ledger, capital, balance, interests, rents, assets, liabilities, share.
1. His __________ included shares in the company and a house in
2. A business is in need of a substantional injection of new __________
3. _________ are going up again.
4. They have to minimize his tax __________ .
5. We each pay an equal _________ in the profits.
6. This newspaper maintains a good ____________ .
7. Deside what is in the ____________ of shareholders.
8. He was asked to inspect the sales ______________.
1. Read the text and understand the contents.
1. A number of concrete events have contributed to the change in
attitude that permitted this transformation of government accounting.
First, over the years, the size and complexity of government operations
have increased as the government has become engaged in procuring
complex machinery and using it for a variety of purposes. This development
created the need for a system that would facilitate the maintenance of
records of assets as well as data for the computation of fixed and variable
2. Second, economic management has begun to make more demands on
the type and timely supply of accounting information. In particular, changes
in the domestic economy, such as inflation, hyperinflation, or recession,
require adjustments in historical data for analytical purposes.
3. Third, accounting data became necessary to measure the performance
of organizations so as to serve the immediate purpose of policy formulation
and the broader purpose of accountability. Accountability has evolved from
being limited to the observance of laws and the regulations to being
concerned with the use of allotted resources and the effectiveness with
which those resources are used. Fourth, accounting has to address not only
immediate liabilities but also those that would be redeemed at a later stage.
It became imperative to strengthen accounting system so that they would be
able to measure and disclose these liabilities.
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4. Fifth, the role of external aid and related conditionally required the
adoption of internationally accepted government standards for maintenance
of accounts. As most of the aid was used for specific commercial or quasicommercial purposes, it required the introduction of the commercial type of
accounting in those areas of government that were funded by foreign aid.
Similar insistence on standards by regional organizations, such as the
European Union, also contributed to major changes in the accounting
practices of member countries as well as those aspiring to become members.
2. Match the following questions (1-5) with answers (a-e).
2.1 Why has the government become engaged in procuring complex
machinery and using it for a variety of purposes?
2.2 What do changes in the domestic economy require?
2.3 Is accounting data necessary for government accounting?
2.4 Does accounting have to address only immediate liabilities?
2.5 What did external aid require from the government accounting?
a) they require adjustments in historical data for analytical purposes.
b) it has also to adress those liabilities that would be at a later stage.
c) the size and complexity of government operations have increased.
d) it required the introduction of commercial type of accounting.
e) accounting data became necessary to measure the performance of
3. Match the words in italic with words that could replace them
from (a-e).
1) A number of concrete events have contributed to the
change in attitude that permitted this transformation of a) requirements
government accounting.
2) This development created the need for a system that
would facilitate the maintenance of records of assets as b) brought into
well as data for the computation of fixed and variable
3) Economic management has begun to make more
demands on the type and timely supply of accounting
c) reinforce
4) It became imperative to strengthen accounting
systems so that they would be able to measure and
d) donated
disclose these liabilities.
5) Similar insistence on standards by regional
e) affair
organizations, such as the European Union, also
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contributed to major changes in the accounting
practices of member countries as well as those aspiring
to become members.
4. Write down sentences containing: a) gerund (§ 1, 3); b) infinitive
(§2) with “to”. Translate them into Russian.
Read the text and think of one word that best fits each space.
Performed, account, data, standards, balance, differences, accounting,
control, entities, flow, benefits, levels, latter.
The need of central agencies tend to be different from those of the
spending agencies or the legislature. Essentially, these 1___________
reflect basic distinctions between macro and micromanagement.
2_________ is the common instrument of both. Standards may thus not
always be uniform and may, in certain cases, take into 3___________ the
unique features of an agency.
The standards must represent a 4____________ between what is needed
and what is practicable. If the 5_____________ is substantially different
from the former, a phased implementation program may be appropriate. In
some cases, the existing 6___________may need to be replaced or
modified, and the need as well as the utility of the proposed standards
should be dearly demonstrable. The standards should be dear and viable.
Above all, there should be a balance between the costs incurred in
developing the standards and the expected 7_____________ . The standards
are not substitutes for operations, nor do they consist of forms designed for
the purpose of recording 8_________ . They provide the rationale, the
philosophy, and the objective as well as the meaning for the regular
accounting activity in a public entity.
The applicability of the standards to government and its
9____________ raises two issues. These standards may not necessarily
apply to all 10______________of government. The increasing
decentralization of responsibilities implies that most of the talks that were
hitherto 11_____________ by the central government would be performed
at the provincial, regional, state, and local levels. But a Major part of the
funding for these tasks may continue to 12__________from the central
government in the form of either shared revenues or block grants. In either
event, the lack of congruence between resources and responsibilities make it
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imperative to establish standards for operational 13____________and
accounting system at all levels.
1. What do you Know About Money?
1. Why do public companies publish annual reports?
2. Who uses the information in a profit and loss account?
3. A balance sheet shows total assets and total liabilities: Which term
refers to what the company owns and which refers to the company’s debts?
4. Do the directors or the shareholders own the company?
5. A dividend is the share of the ______________ that the shareholders
6. Which word means the total sum of money which is coming into the
7. Profit minus the costs associated with preparing the goods for sale is
called gross/net profit.
8. The total profit without subtracting costs and overheads is called
gross/net profit.
2. Bookkeeping as Part of Accounting Cycle
Read the text and do a written translation.
For management of any company to be efficient, extensive and accurate
information concerning receipts and payments, assets and liabilities,
depreciation of assets and other data about company status are required.
Such information being obtained mainly from different records, additional
funds and time should be invested in bookkeeping and accounting system.
In general, accounting and bookkeeping mean identifying, measuring,
recording economic information about any business, bookkeeping being
considered the preliminary stage and pan of the larger field of accounting.
The task of bookkeeping is to ensure the record-keeping aspect of
accounting and therefore to provide the data to which accounting principles
are applied in the preparation of financial statements. Bookkeeping provides
the basic accounting data by systematical recording such day-to-day
financial information as income from the sale of products or services,
expenses of business operations such as the cost of the goods sold and
overhead expenses’ such as a rent, wages, salaries.
Accounting principles determine which financial events and
transactions should be recorded in the bookkeeper’s books. The analysis and
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interpretation of these records is the primary function of accounting. The
various financial statements produced by accountants then provide managers
with the basis for future financial planning and control, and provide other
interested parties (investors, the government) with useful information about
the company.
Modern accounting system is considered to be a seven-step cycle. The
first three steps fall the bookkeeping function, such as: 1) the systematic
recording of financial transactions; 2) the transferring of the amounts from
various journals to general ledger (also called “posting step”); 3) the
drawing up of the trial balance.
Record keeping of companies is based on a double-entry system, due to
which each transaction is recorded on the basis of its dual impact on the
company’s financial position. To make a complete bookkeeping record of
every transaction in a journal, one should consider interrelated aspect of
every transaction, and entries must be made in different accounts to keep the
ins (receipts) and outs (payments) balanced.
A typical account is known to have two sides: the items on the left side
are called debits, while the items on the right side are credits.
Thus, double-entry bookkeeping doesn’t mean that the same transaction
is entered twice, it means that the same amount of money is always debited
to one account and credited to another account, each record having its own
effect on the whole financial structure of the company. Certain accounts are
increased with debits and decreased with credits, while other accounts are
increased with credits and decreased with debits.
In the second step of the accounting cycle, the amounts from the various
journals are usually monthly transferred to the company’s general Ledger –
a procedure called posting. Posting data to the ledgers is followed by listing
the balances of all the accounts and calculating whether the sum of all the
debit balances agrees with the sum of all the credit balances. This procedure
known as the drawing up of a trial balance and those that follow it usually
take place at the end of the fiscal year. By making a trial balance, the recordkeeping accuracy can be checked. The trial balance having been
successfully prepared, the bookkeeping portion of the accounting cycle is
The double-entry system of bookkeeping enables every company to
determine at any time the value of each item that is owned, how much of
this value belongs to creditors, the total profit and how much belongs to the
business clear of debt. Thus, one advantage of the double-entry system is
that its information is complete enough to be used as the basis for making
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business decisions. Another advantage is that errors are readily detected,
since the system is based on equations that must always be in balance.
3. Test 1
3.1 For each sentence, choose the best word to fill the gap from the
alternatives given. Put a circle around the letter, A, B or C, of the word you
1. This company was set up as a small family …………… in 1977.
A. empire
B. corporation
C. business
2. Sally Green is on the board of ……………… .
A. directors
B. founders
C. managers
3. Tom East is the ……………….. executive in charge of Marketing.
A. chief
B. head
C. Senior
4. Last year we made ……………. of £ 1.5 million.
A. liabilities
B. profits
C. finances
5. The corporate …………… we try to present is of a business that truly
values its customers.
A. image
B. logo
C. ladder
6. We …………. about 20 people in our London office and most have
been with us for years.
A. hire
B. employ
C. appoint
7. Each year, we …………….. two or three graduates as trainee
A. recruit
B. qualify
C. situate
8. We pay reasonable salaries and offer excellent fringe ............... .
A. perks
B. tips
C. benefits
9. Next month we are going to .................. two new products.
A. forecast
B. innovate
C. launch
10. We have carried out a lot of market .................. over the past year.
A. focus
B. research
C. development
3.2 Write the abbreviations below in words. One word has been given in
each case to help you.
1. HR H _ _ _ _ _ Resources
2. IT
I _ _ _ _ _ _ Technology
3. CEO Chief E _ _ _ _ O _ _ _ _
4. CAD C _ _ _ _ Assisted D _ _ _ _ _
5. RSI Repetitive S _ _ _ _ I _ _ _ _ _
6. PLS P _ _ _ _ _ L _ _ _ _ _ _ _ Company
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3.3 Match each sentence beginning (1-5) with the correct ending. Write
the letter (a-f) of the ending you choose in the box below. There is one extra
ending that you don’t have to use.
1) The company has equal
a) I was offered early retirement
2) Please send your application
b) with a covering letter, by Monday
9th May.
3) The health and safety inspection c) policy to fight discrimination.
4) Last month, I achieved my sales d) candidates had to do psychometric
5) When the firm downsized,
e) that the fire extinguisher was
f) so I got a performance-related
4. Test 2
4.1 For each sentence, choose the best word to fill the gap from the
alternatives given. Put a circle around the letter, A, B or C, of the word you
1. We do our printing in-house but we .................. delivery to a small,
local company.
A. supply
B. source
C. subcontract
2. We have set up quality ....................... as part of our TQM system.
A. circles
B. lines
C. corners
3. We need a ................... market economy where the government
doesn’t try to control prices.
A. base
B. low
C. free
4. Until last year they .................. the market but now they face some
stiff competition.
A. penetrated
B. dominated
C. segmented
5. Our new .................. protects our eggs on the way to the shops and it
looks good on the shelves.
A. production
B. packaging
C. promotion
6. If you want to save some money buy ................ products rather the
top brands.
A. generic
B. durable
C. consumer
7. If you pay cash for this TV we will give you a 5% ................... .
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A. hike
B. sale
C. discount
8. Our prices are low because we cut out the ................ and sell directly
from the factory.
A. middleman
B. marketer
9. Customers who use our .................. card get one point for every
pound they spend.
A. franchise
B. sponsorship
C. loyalty
10. We had nearly 5,000 ................... to our website last week.
A. hits
B. visitors
C. views
11. We can increase our profit ................. by reducing our overheads.
A. account
B. margin
C. costs
12. We’ve made a loss for the past three years but we should break
..................... this year.
A. even
B. up
C. Our
4.2 Match each sentence beginning (1-5) with the correct ending. Write
the letter (a-f) of the ending you choose in the box below. There is one extra
ending that you don’t have to use.
1) Our only long-term liability is
a) profit of $ 1.2 million for last year.
2) Syntectic PLS reported a pre- b) the learning curve has been very
3) We fell behind with our c) we can sell the stock in our
repayments so
4) Next time I’m going to trade up d) they started undercutting us.
5) Now we’ve got the product e) a £ 5,000 bank loan over three years.
right, but
6) We’ll solve our cash flow f) they sold the house we’d put up as
g) Something at the hign end or the
5. Succes and failure
A) Cash mountains and surpluses
Predaco is a successful company. Over the years, it has distributed
some profits or earnings to shareholders, but it has also kept profits in the
form of retained earnings and built up its cash reserves; it is sitting on a
cash pile or cash mountain. These reserves may be used for investment or
to make acquisitions: to buy other companies.
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B) Debt and debt problems
Here are some expressions that can be used to talk about company's
debts, or country's foreign debts:
when a company repays its debt and/or interest
on it; 'debt repayment’ describes a particular
amount repaid
a company’s debt, especially when considered as a
when a company has serious difficulty repaying
rescheduling when a company persuades ledgers to change
restructuring repayments dates and terms
when a company fails to make a debt repayment
a debt
to default on
a debt
C) Turnarounds and bailouts
Doomco is in financial trouble and it is being described as sick, ailing
and troubled. They've called in a company doctor, Susan James, an expert in
turning round companies. There may be a turnaround and Doomco may
recover. But if there is no recovery, the company may collapse completely.
Ms James is currently looking for another company to bail out Doomco by
buying it. This would be a bailout.
D) Bankruptcy
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If a company is in serious financial difficulty, it has to take certain legal
In the US, it may ask a court to give it time to reorganize by filing for
bankruptcy-protection from creditors, the people it owes money to.
In Britain, a company that is insolvent, i.e. unable to pay its debts,
may go into administration, under the management of an outside
specialist called an administrator.
If the company cannot be saved, it goes into liquidation or into
receivership. Receivers are specialists who sell the company's assets and
pay out what they can to creditors. When this happens, a company is
wound up, and it ceases trading.
A company in difficulty that cannot be saved goes bankrupt.
1) Match the words with their definitions. There is one extra word
(1 - 16 ) that you don’t need.
1 Competition
a) to test the ability of smb; to stimulate
2 Leader
b) to try to win sth by defeating others who are trying to do
the same
3 Follower
c) a supply of smth that a company, an organization or an
individual has and can use to increase wealth
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4 Niche
5 Challenge
6 Advantage
7 Compete
8 Specialize
9 Relations
l0 Consumption
11 Export
12 Import
13 Labour
14 Resources
d) a condition or circumstance that puts one in a favourable
position compared to other people
e) a person or thing that leads
f) work, especially hard physical work
g) an opportunity in business
h) to bring goods, services, ideas from a foreign country
into one’s own country
i) activity in which people compete
j) a supporter of a particular person, cause, belief
k) links, contacts or dealings between people, group or
1) the using up of food, energy, resources
m) to become an expert in a particular subject branch; to
give a particular attention to a product
n) to sell and transport goods to a foreign country
2) The following sentences contain phrases connected with the word
"competition" Put one of the given words in each of the sentences.
relations, import, niche, leader, advantage, challenge, competition,
consumption, competing, resources, labour, specializing, exported.
1. We are in
with several other companies for the contract.
2. Gas and oil
always increases in cold weather.
3. The job doesn't really
4. Several companies are
with each other to gain the contract.
5. He has the
of a steady job.
6. The company lacks the financial
to invest in new
7. This country is a world
in wealth care.
relations between workers and employers leave much to
be desired.
9. A company should find a
in the market.
10. There is a shop in this district
in hand-made chocolate.
11. The country has to
most of its raw materials.
12. Currently only 5% of their output is
13. Friendly
exist between our two countries.
1) Read the text and understand contents.
What is now called international trade has existed for thousands of
years. Long before there were nations with specific boundaries. Foreign trade
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means the exchange of goods and services between nations, but speaking
strictly in economic terms, international trade today is not between nations. It
is between producers and consumers or between producers in different parts
of the globe. Nations do not trade, only economic units such as agricultural,
industrial, and service enterprises can participate in trade.
Goods can be defined as finished products, as intermediate goods used
in producing other goods, or as agricultural products and foodstuffs.
International trade enables a nation to specialize in those goods it can
produce most cheaply and efficiently and it is one of the greatest advantages
of trade. On the other hand, trade also enables a country to consume more
than it can produce if it depends only on its own resources. Finally, trade
expands the potential market for the goods of a particular economy. Trade
has always been the major force behind the economic relations among
Different aspects of international trade and its role in the domestic
economy are known to have been developed by many famous economists.
International trade began to assume' its present form with the establishment
of nation-states in the 17th and 18th centuries, new theories of economics, in
particular of international trade, having appeared during this period.
In 1776 the Scottish economist Adam Smith, in “The Wealth of
Nations”, proposed that specialization in production leads to increased output
and in order to meet a constantly growing demand for goods it is necessary
that a country's scarce resources be allocated efficiently. According to
Smith's theory, it is essential that a country trading internationally should
specialize in those goods in which it has an absolute advantage — that is, the
ones it can produce more cheaply and efficiently than its trading partners
can. Exporting a portion of those goods, the country can in turn import those
that its trading partners produce more cheaply. To prove his theory Adam
Smith used the example of Portuguese wine in contrast to English wool.
Half a century later, having been modified by the English economist
David Ricardo, the theory of international trade is still accepted by most
modern economists. In line with the principle of comparative advantage it is
important that a country should gain from trading certain goods even though
its trading partners can produce those goods more cheaply. The comparative
advantage is supposed to be realized if each trading partner has a product
that will bring a better price in another country than it will at home. If each
country specializes in producing the goods in which it has a comparative
advantage, more goods are produced, and the wealth of both buying and
selling nations increases.
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Trade based on comparative advantage still exists: France and Italy are
known for their wines, and Switzerland maintains a reputation for fine
watches. Alongside this kind of trade, an exchange based on a competitive
advantage began late in the 19th century. Several countries in Europe and
North America having reached a fairly advanced stage of industrialization,
competitive advantage began to play a more important role in trade. With
relatively similar economies countries could start competing for customers in
each other's home markets. Whereas comparative advantage is based on
location, competitive advantage must be earned by product quality and
customer acceptance. For example, German manufacturers sell cars in the
United States, and American automakers sell cars in Germany, both
countries as well as Japanese automakers competing for customers
throughout Europe and in Latin America.
Thus, international trade leads to more efficient and increased world
production, allows countries to consume a larger and more diverse amount of
goods, expands the number of potential markets in which a country can sell
its goods. The increased international demand for goods results in greater
production and more extensive use of raw materials and labour, which means
the growth of domestic employment. Competition from international trade
can also force domestic firms to become more efficient through
modernization and innovation.
It is obvious that within each economy the importance of foreign trade
varies. Some nations export only to expand their domestic market or to aid
economically depressed sectors within the domestic economy. Other nations
depend on trade for a large part of their national income and it is often
important for them to develop import of manufactured goods in order to
supply the ones for domestic consumption. In recent years foreign trade has
also been considered as a means to promote growth within a nation's
economy. Developing countries and international organizations have
increasingly emphasized such trade.
2. For statements 1 - 10 chose the best answer from А, В, С or D.
2.1. The theory of international
2.2. Adam Smith was the first
trade is used by
to propose
a) nations with specific
a) exchange of goods
b) trading partners
b) economic units
c) specialization in production
c) enterprises
d) potential markets
d) by most modern economists
2.3. Comparative advantage
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a) to bring a better price to the
b) to increase world productions
c) to rise the growth of domestic
d) to expand the domestic market
2.4 Nowadays foreign trade is
a) to aid economically depressed
sectors in the world
b) to be a means to promote
growth within a nation's economy
c) to produce cheap goods
d) to increase agricultural
products and foodstuffs
2.5 Comparative advantage is
based on
a) new theories of economics
b) on country's scarce resources
c) location
d) national income
2.6. Comparative advantage
appeared in
a) 1776
b) 1786
c) 17 and 18 centuries
d) the 19 century
2.7. Long ago the main task of
foreign trade was to
a) expand trade relations
b) accept specialization
c) exchange goods and services
between nations
f) develop similar economies
2.8. Competitive advantage
depends on
a) location
b) home markets
c) product quality and customer
d) similar economies
2.9. Comparative advantage
was modified in
a) France and Italy
b) North America
c) Switzerland
d) Scotland
2.10. To compete in the
international market domestic firms
must have
a) efficient economy
b) modernized economy
c) innovative economy
d) all of these
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3) Find a word or phrase in the text that means:
a) a large amount of money property
b) A condition or circumstances that puts one in a favorable position
compared to other people
c) involving comparison or comparing
d) involving people competing against each other
e) the exchange of goods and services for money or other goods
f) a place or position
g) of on inside a particular country, not foreign or international
4) Choose a sentence that reflects the main idea.
 Trade enables a country to consume more.
 Trade expands the potential market for the goods of a particular
 Nations depend on trade for a large part of their national income.
 International trade leads to more officient and increased world
production, expands the number of potential markets in which a country can
sell its goods, allows countries to consume a larger and more diverse amount
of goods.
1) Read the first part of the text and say what types of payments are
used in Foreign Trade.
I. Payment of goods supplied in the local trade is a rather simple matter.
It is made either in advance or within a sensible short period after delivery. If
a buyer fails to pay, there comes legal action after which payment can be
The matter is different in foreign trade because a great deal of time is
spent on correspondence, despatch and delivery. It is here that banks play a
fundamental part. Their services have to be paid for, but are not expensive
and always necessary - the bank comes into each transaction at this or that
Payments in foreign trade are usually made by:
1. banker's transfer;
2. bill of exchange;
3. letter of credit.
As well as in the local trade, payment may be made a) in advance; b) on
open account. Payments in advance are used 1) when a buyer is in urgent
need; 2) when a buyer is unknown to a seller; 3) in the case of a single
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isolated transaction. The method of payment in these cases will probably be
by banker's draft or banker's transfer.
Open account terms are granted by a seller to a buyer of unquestionable
reputation in whom he has complete confidence, e.g. regular customers,
agents or distributors. In these cases payment is made quarterly by bill of
exchange or banker's transfer.
II 1) Read this part of the text. Use the words given in capitals at the
end of each line to form a world that fits in the space in the same?
The banker's transfer is a mere transference of money 1. Buy
from the bank account of 1.
a in his own country to 2. Sell
the bank account of the 2.
in the seller's country. It 3. Necessity
is only3.
for the customer to send a letter of 4. Instruct
4._________ to his bank or use a 5.
form. The 5. Specially
transfer is executed at 6.
rates of exchange and 6. Currency
subject to any exchange control 7.
of the countries 7. Regulate
2) Read this part of the text. Look carefully at each line. Tick (v) the
lines which are correct and underline the unnecessary.
The bill of exchange (B/E) is a written of order from a
creditor to a debtor to pay on demand or at a specified date to
a stated sum of money to a person named on the bill, or to his
an order. The bill is drawn by the creditor on the debtor, and
is sent to the debtor or his agent to pay from or accept (to
acknowledge the debt). The debtor accepts it through the
signing his name on the front of the bill, together with the
date. The bill becomes now legally binding', and the acceptor
must meet it at or before the due date. Failure to meet the bill
on the due to date will result in total discredit for the creditor,
and legal action can follow. An unpaid bill is called
"dishonoured", and the creditor can protest it, which gives to
him the right to prosecute the debtor.
3) Read this part of the text and decide which answer А, В, С, or D
The letter of credit (L/C) is the 1
generally used method
payment in the export trade. It starts with the buyer
instructs his bank to issue the L/C for the amount of the
purchase and in favour of the seller. The buyer's bank 4
instruction, a special 5
form containing full details of the
transaction, to its agent (a bank cooperating with it) in the seller's country. On
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the instruction, the agent bank informs the seller about the
credit. The seller can now 7
out the buyer's order, knowing that
when he 8
so, money will be paid at once by the agent bank. The
buyer is equally secure, because the agent bank will pay 9
behalf only if the conditions of the transaction 10
completely by
the seller.
A L/C may be paid to the seller not immediately upon execution of the
order, if there 11
an agreement 12
the seller and
the buyer the agent bank can accept a bill of exchange 13
by the
seller on the agent bank. The buyer gets credit and the action is absolutely
safe for the seller, who 14
discount the bill for ready cash if he
needs it.
1 more
2 in
3 who
4 is sending
to send
5 being printed printing
to print
6 being received to receive
7 to carry
8 does
has done
had done
have done
9 on
10 executed
are ...executed are ... executing execute
11 is
Will be
12 besides
apart from
13 having drawn to draw
14 can
4. Translate into English:
1) Одним из наиболее часто употребляемых способов оплаты во
внешнеторговых операциях является аккредитив.
2) Владелец векселя может продать его банку по номинальной
3) Оплата товара отечественным поставщикам производится обычно
или посредством предоплаты или в течение некоторого разумного
периода времени после поставки товара.
4) Вы можете оплатить данный товар по текущему курсу обмена
5) Условия оплаты по открытому счету предоставляются по
покупателю с безупречной репутацией.
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6) Номинальная стоимость; денежное обеспечение; индоссировать
документ (сделать передаточную надпись); пущенный в обращение
вексель; дисконтировать вексель (снижать учетный процент при
досрочной оплате)
5. Fill in the required prepositions:
1) Payment
the home trade is made either
advance or
a reasonably short period
2) There is little time lost
correspondence and
3) A bill
exchange is an order
written form
addressed one person
another to pay
demand one
demand or
a named date a certain sum
money __
or his order.
4) The banker's transfer is carried
current rates exchange.
5) This transaction is simple and may be speeded
instructions if desired.
6) The L/C is ideal
individual transactions or
series, it gives protection
both the seller and the buyer.
6. Read and translate the text in writing :
One of the
features of the bill of exchange is Importance
that it is
. It means that it can be used by the Negotiate
holder to pay his own debts. To do this, the
the B/E must endorse it, i.e. sign his name on the bill before
it in to the next holder. The
of the bill can also
sell it to the bank, who will pay face value, less interest: this
is called to
a bill. The other way to
a bill is to leave it as security for a loan.
It is due to its free negotiability that the B/E is
to be a useful means of
in foreign trade.
Undoubtedly, its ________operating depends on confidence
and trust. Before handling bills each company's status and Individuality
reputation are thoroughly checked and taken into account.
1. Read the text and answer the questions below the text.
In every country import-export rates are supposed to fulfil four
- to protect home producers from foreign competition in order to increase
their own competitiveness in the domestic market;
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
- to limit exporting products in which there is a shortage in this country
and to regulate foreign trade transactions for political interests;
- to supply local consumers, both legal entities and individuals,
with products which are not produced in this country or produced
- to provide the state budget with additional financial resources.
In order to put these issues into practice, the Russian government
changed its import rates in 1994. The change of import duties' affects mostly
the status of foodstuff imports. Inflation and the subsequent price increases
energy, equipment and other materials make storage, processing the products
and their packing very expensive. Foreign suppliers have the opportunity to
sell products at lower prices, though sometimes their products are of lower
quality. Food intervention of imported goods has led to the reduction in the
production of some agricultural products inside Russia. So the change of
customs tariffs is based on an objective necessity to protect local commodity
producers and does not conflict with the General Agreement on Tariffs and
Trade. Customs duties are levied only on those types of products which are
produced in sufficient quantities.
The level of imposition by import rates was increased at an average of
five to seven percent. Formely, the import rates were, calculated as a
percentage of the customs value of the imported goods. At the present time
there is a universal order for introducing rates as an absolute sum for the
imported unit (kilogram, liter, piece) value. For some types of agricultural
products, mainly fruits and vegetables, seasonal duties with limited duration
are in force.
Apart from the duties on foodstuffs the duties on some types of industrial
products have also been increased. This step of the government is related to
the fact that during the last several years Russian industry has experienced
difficulties connected with the success of sale of imported cars, electronics,
and some other types of industrial import. Duty rates have been increased on
different transport vehicles, on completing articles for assembling electronics
and computers, on consumer electronics and on metal-cutting machines. The
minimum duty sums per one item for cars depend now on the engine volume
and the year of production.
The regulations for granting a delay in payment for import duties have
also been changed. Previously, the delay was permitted for a period of no
more than thirty days. This delay was granted to the importer with no
additional fees or expenses. Under the new regulations, this period is
prolonged up to sixty days, but a certain interest is collected throughout the
whole duration of the delay.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
Export duties in Russia were set up in 1992. At that time world prices
were much higher than internal ones and export was highly profitable, though
it seriously hurt the level of domestic consumption. Nowadays, in relation to
the increase in domestic prices, the existence of export duties negatively
affects the ability for long-term export deals. So export duties are supposed to
be cancelled in future.
Answer the following questions:
1) When did the Russian government change import duties rates?
2) What did this change mostly effect?
3) What was the result of inflation?
4) How does food intervention influence the home agriculture?
5) What are customs duties levied on?
6) What do the duty sums for cars depend on?
2. Look through the text again and find: a) ing-forms and infinitives;
d) translate sentences including them into Russian.
3. Use the word in bold to complete the second sentence so that it has
a similar meaning to the first.
a) Export duties in Russia were set up in 1992.
They set up_______in 1992
b) Russian government changed its import rates in 1994.
Russian__________________________________in 1994.
c) Apart from the duties on foodstuffs the duties on some types of
industrial products have also been increased.
The government____________________________apart from.
the duties on foodstuffs.
d) Foreign suppliers have the opportunity to sell products at lower prices.
don't miss the opportunity
Foreign suppliers _____________________________________at lower
e) The change of import duties affects mostly the status of foodstuff
is sure
The status of foodstuff imports_______________________________the
change of import duties.
f) Food intervention of imported goods has led to the reduction in the
production of some agricultural products inside Russia.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
It was____________________________of some agricultural products
inside Russia.
4. Read the text again and think of words which best fits each space.
1. All taxes, customs duties and other charges levied
the performance
this Contract
Russia are to be paid
the Sellers and those levied outside Russia are to be paid
2. The simplest form
a tariff is one which consists
single column levying the same rate
customs duties proper, many
countries levy extra charges
one kind or another. The most
common form is a surtax charged as a percentage
the duty.
4. The internal taxes are
a different kind. They are
collected imports
many countries. These are usually levied
the same rate as
similar products
origin. Included this
category are sales taxes, excise taxes,
V.A.T., turnover and transaction taxes, and the like.
5. Value added tax (VAT)
Read the text and say what VAT is;
Value Added Tax (VAT) is a Government tax. At present the standard
VAT rate is 17,5 %. Everyone in Britain must pay VAT on almost everything
they buy. VAT is usually incorporated in the price.
Visitors to Britain can reclaim the tax when they leave Britain and
present the appropriate documents issued by she shop. Usually when they buy
rather expensive things like furs, gold, hi-fi goods etc., they should wonder if
the shop operates the VAT scheme.
6. Give the English equivalents of:
Hалоговая ставка; таможенные сборы; взимать налог (3 варианта);
(федеральный) налог; налог на продажу; акцизный сбор; налог с
оборота; налог на добавленную стоимость; взимать определенный
процент от стоимости товара за хранение дополнительные финансовые
промышленные товары; оборудование; хранение, переработка и
упаковка товаров, таможенные тарифы; ввозная таможенная пошлина;
уровень налогообложения; стоимость единицы товара; сезонные
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
пошлины; комплектующие; уровень внутреннего потребления; в
7. Retell the text according to the following plan:
1) The functions of import-export rates.
2) Customs tariffs as an objective necessity to protect a local market.
3) The increase of import rates.
4) The problem of export duties.
1. Read the text and choose a suitable word that fits best each space
International business is 1
in importance. The United
States is 2
the biggest exporter and the biggest importer in the
world. About 25,000 U.S. firms are engaged in some types of international
business activity.
The concept of international business includes the concepts of balance of
trade (the relationship 3
exports and imports) and balance of
payments (the difference between inward and outward cash flows).
Countries are usually better off if they 4
in certain products
or commercial activities. A country has 5
absolute advantage in
marketing a product if it is in a monopolistic position or produces the item at
the lowest cost. It has a comparative advantage if it can supply the product
more efficiently or at 6
cost than it can supply other products.
Some countries refuse 7
because they want to be self-sufficient,
particularly in certain strategic areas.
The five levels of involvement in world business are casual or accidental
exporting, active exporting, foreign licensing, overseas marketing by the firm,
and foreign production and foreign marketing. The three primary obstacles to
world business 8
economic, social, and cultural obstacles; tariffs
and trade restrictions; and political and legal obstacles.
There 9
a movement toward multinational economic
integration in many parts of 10
world. Three basic formats
exist: the free trade area, the customs union, and the common market or
economic union. Multinational corporations
are those operating
internationally-have become11
dominant in foreign markets that in 12
countries they are now the object of close scrutiny. Companies 13
abroad should act fairly and responsibly.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
is grown
well specialize
will be
apart from
such as
has specialized
Have been
In great deal of
being operated
to specialize
has been
The same as
1. International Relations
A summit meeting
1. Put each of the following words or phrases in its correct place in
the passage below.
summit meeting
breakdown leader item spokesperson
conference preliminary settle hold agenda
The American President and the Russian (a) have
intention to (b) _______________ a (c)
in Vienna next month. The two
countries have already had (d) ___ talks and decided on an (e)
meeting. The main (f)__________ will be a discussion about the nuclear
arms situation. At a (g) _________ he d in Washington yesterday a
government (h) _______________ told journalists that the unfortunate
(i)____ of last year's talks between the two countries had been caused by
disagreements over arms. He said the Vienna meeting would be a chance for
the two nations to (j) ______ their differences.
Diplomatic relations
2. Put each of the following words or phrases in its correct place in
the passage below.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
diplomatic relations ambassadors split embassies
in protest at
links break off
Neighboring countries A and B had always had very good, close
relations, but in 1992, owing to a disagreement over the exact location of the
border between them, a (a) began to develop. Finally, in 1994, (b)
military activity by country B near the border, country A announced its
intention to (c)
with country B. Both countries withdrew
their (e) _ __ and the
(f; in the two countries were closed down, it is hoped that a solution will
be found and that it will be possible to (g)
normal trade, cultural and
diplomatic (h)
as soon as possible
3 Put one of the following words in each space in the sentences
in for over of on at about by
(a) The French leader hasn't yet decided _____ a date
(b) At a summit meeting each country is represented
its head of
(c) The announcement was made _______ a news conference Moscow.
(d) __________________ The ambassadors had a discussion
peace treaty
(e)The breakdown
the talks surprised everyone.
(f) The American ambassador walked out of the meeting
the Russian speech
(g) A spokeswoman said there was some disagreement
agenda _____________________________ the meeting
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1. Match the words with their definitions
1 Organization
3 Negotiations
4 Transition
9 Regulations
11 Contribute
12 Consultation
13 Cooperation
a) to give smth, esp money on goods, to help a person or
an organization
b) a tax paid on imports
c) a rule or restriction made by an authority
b) a tax paid on imports
e) the process or period of changing from one state or
condition to another
f) working together for a common purpose
g) of money or currency
h) the taxes that must be paid to the government on
goods brought in from other countries
I) a tax charged on particular goods esp on imports
j) a system of money used in a country
k) discussion aimed at reaching an agreement.
l) a meeting for discussion.
m) the activity of organizing smth.
2) Fill in gaps with the most suitable word. One word is extra which
you don’t need.
Transition, customs, regulations, negotiations, organization, contribute,
monetary, currency, total, consultations.
1. She is brilliant but her work lacks
2. Top tevel
on trade matters between the American and
Chinese delegations took place yesterday.
3. A settlement was reached after lengthy
4. The firm made a
profit of $ 200000.
5. This organization is engaged in
of banking and tax laws.
6. They supported a single European
7. The
have seized large quantifies of smuggled heroin.
8. The
unit of Japan is yen.
9. Will the country be able to make a peaceful
10. Everyone should
if they possibly can.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
1. Read the text and decide which answer A, B, C or D best fits each
The World Trade Organisation (WTO),1
is the successor of
the General Agreement on Tariffs and Trade (GATT), 2
on I January
1995, and is the legal and institutional basis of the multilateral trading system.
It provides the principal contractual obligations 3
how governments
frame and implement domestic trade legislation and regulations.
The essential functions of the WTO 4
- administering
the WTO;
as a forum for multilateral trade negotiations;
- seeking to resolve trade disputes;
- overseeing national trade policies;
- cooperating 6
other international institutions involved in
global economic policy-making.
In accordance with the «most favoured nation» (MFN) clause, members
grant to the products of other members no less favourable
treatment than that accorded to the products of 8
other country.
Quotas are generally outlawed, but tariffs or customs duties are legal in the
WTO. The WTO extends previous GATT rules that laid down the basis on
which governments could impose compensating duties. The WTO Agreement
agriculture is designed to provide on 9
fairness in farm trade. The WTO
intellectual property will improve conditions of competition. And
agreement will do the same for trade in services. GATT
provisions encouraging industrialized countries 12
to assist trade of
developing nations are maintained in the WTO.
Developing countries are given transition periods to adjust to the
WTO provisions. Least-developed countries are given 14
flexibility for their goods.
The WTO authorities are: the Ministerial Conference, the General
Council, three Councils: for Trade in Services for Trade-Related Aspects of
intellectual property rights four Committees: on Trade and Development, on
Balance of Payments, on Trade and Environment, on Budget, Finance and
Administration. The Secretariat is located to 15
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
1 what
2 establishes
was established
3 having
4 have
5 to act
6 at
7 dare to
8 no
9 to increase
to determine
has been
have to
the other
to assisting
more difficult
being acted
are to
is to
to have assisted
being assisted
a more difficult
10 at
11 other
12 to assist
13 difficulter
14 same
15 the
III. The European Economic Community and the European Union
Read the text and think of one word which best fits each gap. You will
have to use some of the words more than once.
Currency, to, establishment, of, the, member, on, customs, with, established,
or, services, objective, among, in, economic.
The European Economic Community,
the Common Market, or the
EEC was
in 1957 by the Treaty of Rome. The original six member
countries of the Community were France, West Germany, Belgium, Italy,
Luxembourg and
Netherlands. Then a few other countries joined
the Community. Britain, together
the Irish Republic and Denmark,
joined the EEC on 1st January, 1973.
The Community formed an enormous trading area of almost 250 million
people, and accounted for two fifths
the world's trade.
The membership allowed imports to enter member countries either free of
duty or at lower
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
All member countries contributed
а common budget for certain
purposes, based on
relative total output of goods and
, or
gross national product.
Under the Community regulations, people of
countries were
allowed to enter freely another member state to travel or to work there.
of the original six members of the Treaty of Rome was to create a
process leading towards the goal of unification.
This political purpose was spelled out in 1969 in
Hague where the
objective of «paving the way for a united Europe» was recognised and was
realfirmed in 1983 in the Stuttgart Solemn Declaration; and in 1986 in the
Single European Act, member states undertook «to transform relations as a
their states into a European Union, and stipulated that the
European Communities and European Political Cooperation would have as
their objectives to contribute together to ma king concrete progress towards
European Unity».
The process
creating an economic involvement and dependence
that would go far to meet most member states ultimate goal of European
Unity was realised
1992 with the signing at Maastricht of the
Treaty on European Union, which set as its objective the establishment
of «a European Union... a new stage in the process of creating an ever closer
among the peoples of Europe». Provision was made for the
become a reality through, inter alia, the establishment
and monetary union, including the creation of a single
(the euro) and the introduction of Union citizenship (and eventually removal of
frontiers, under the Shengen System).
IV. International Monetary Fund: objectives and history
1. First read the text and answer the questions :
a) What is the purpose of IMF?
b) What are the functions of IMF?
The purpose of the International Monetary Fund (IMF) is to promote
international monetary cooperation through a permanent institution that
provides the machinery for consultation and collaboration on international
monetary problems. The function of the IMF is to facilitate the
expansion and balanced growth of international trade, to promote orderly and
stable foreign currency exchange market, and to contribute to balance of
payments adjustment. The IMF monitors members' macroeconomic policies
makes financial resources available to them in times of balance of payments
difficulties, and provides them with technical assistance.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
Much of the IMF's work is centered on annual consultations with each
member country to ensure that its national policies in the area of economic
growth, price stability, financial conditions, and exchange rates take into
account their consequences for the world economy and avoid unfair
exchange policies. To ensure compliance with these basic tenets. the Fund
is empowered to exercise firm surveillance over the exchange rate policies of
member countries.
2) Read the text again and find in it words which mean the following:
1 the quality or state of being stable
2 to the progress of smth or support smth
3 a reason for doing smth; a function of smth
4 a sum of money saved or made available for a particular purpose
5 a measurement of how fast or how many times happens in relating to
6 smth else
7 doing something or working together for a common purpose
8 careful watch kept on sb suspected of doing wrong
V. The World Bank.
First Read the text, paying no attention to gaps, and understand the
contents. Consult a dictionary.
The world bank is a sister institution to the IMF and was set up at the same
time. 1______________. While IMF exists to provide short-term loans, the
purpose of the World Bank is to provide long term loans to assist economic
The World Bank is the world's foremost intergovernmental organization
concerned with the external financing of the economic growth of
developing countries. 2______________.
Before recommending a Bank loan, the staff of the Bank must be
reasonably satisfied that the productivity of the borrowing country will be
increased and that the prospects for repayment are good. A country must be
judged creditworthy. Engineering investigations are frequently carried out
to determine the probable relation of a proposed project to benefits and
costs. The Bank has shifted somewhat away from project lending for example
a dam or a highway or a port); it has become concerned with education and
other human services, the environment, and
structural adjustment
loans, the modification of governmental policies that are thought to have
impeded long-run growth. 3________________.
Recently it has acceded to the requests of the American secretary of the
treasury to help ease the huge, outstanding, largely commercial-bank debt. Voting
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
power in the Bank is determined by the size of each member nation's
subscription. 4_____________. Ultimate power rests with the Board of
Governors of the Bank. The governors meet annually in September. The day-today affairs of the Bank are determined by executive directors who live
permanently in Washington, D.C. They hire a president, who hires a staff.
Read the missing sentences (a-e) then read the text again. Choose the
sentence which fits best each gap.
a) By tradition, rather that law, the President of the Bank is an American,
usually a banker, proposed by the president of the United States.
b) The Bank has also paid increasing attention to the evaluation of previous
c) Subscriptions are based on a formula that takes into account such variables
as the value of each nations foreign trade and its total output.
d) It has now some 150 member countries.
e) The official title of the Institution is the International Bank for
Reconstruction and Development.
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
1.Market Leader.Intermediate Business Course.D.Cotton, D.Kent,2001.
2.Countdown. To First Certificate. Oxford. M.Duckworth and
K.Gude. 2004.
3.Business Vocabulary in Use. Professional English. Bill Mascull, 2004.
4.Test your Business Vocabulary in Use. Tricia Aspinall and G.Bethell.
Cambridge University, 2004.
гуманитарных вузов.
6.Right Word, Wrong Word. L.G.Alexander,2001.
7.Intermediate Vocabulary. B.J.Thomas,2000.
8.В.П.Кузовлев, Н.А.Лана. English Student’s book, 2000.
9.Oxford Advanced Learner’s Dictionary,1998.
10.English Grammar: reference and practice. Н.И.Петряева, Г.А.Глебова,
Белгород, 2006.
11.Английский язык. Методические указания для студентов-заочников
неязыковых специальностей. Белгород, 1998.
12.Шевелева С.А., Стогов В.Е. Основы экономики и бизнеса: Учебное
пособие по англ. языку.- М.: Культура и спорт, ЮНИТИ, 2002.
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