1. Guess the meanings of these words and word combinations. Which of them can be used as special economic terms?
Relationship, to increase, requirements, monetary policy, supply, inflation, tool, treasury bills, accommodative, influence, currency, market circulation.
2. Answer the questions
1. What is monetary policy?
2. What tools does monetary policy use?
3. What is contractionary policy?
4. What is central bank?
5. What is the primary tool of monetary policy?
3. Give the synonyms to the following words
To regulate, growth, ability, to reduce, generally, issuing, separately, ensured, to achieve, target, goal.
4. Read and translate the text
Monetary policy
Monetary policy rests on the relationship between the rates of interest in an economy, that is, the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate (to achieve policy goals). The beginning of monetary policy as such comes from the late 19th century, where it was used to maintain the gold standard.
A policy is referred to as contractionary if it reduces the size of the money supply or increases it only slowly, or if it raises the interest rate. An expansionary policy increases the size of the money supply more rapidly, or decreases the interest rate. Furthermore, monetary policies are described as follows: accommodative, if the interest rate set by the central monetary authority is intended to create economic growth; neutral, if it is intended neither to create growth nor combat inflation; or tight if intended to reduce inflation.
There are several monetary policy tools available to achieve these ends: increasing interest rates by fiat; reducing the monetary base; and increasing reserve requirements. All have the effect of contracting the money supply; and, if reversed, expand the money supply. Since the 1970s, monetary policy has generally been formed separately from fiscal policy. Even prior to the 1970s, the Bretton Woods system still ensured that most nations would form the two policies separately.
Within almost all modern nations, special institutions (such as the Federal Reserve System in the United States, the Bank of England, the European Central Bank, the People's Bank of China, and the Bank of Japan) exist which have the task of executing the monetary policy and often independently of the executive. In general, these institutions are called central banks and often have other responsibilities such as supervising the smooth operation of the financial system.
The primary tool of monetary policy is open market operations. This entails managing the quantity of money in circulation through the buying and selling of various financial instruments, such as treasury bills, company bonds, or foreign currencies. All of these purchases or sales result in more or less base currency entering or leaving market circulation.
Usually, the short term goal of open market operations is to achieve a specific short term interest rate target. In other instances, monetary policy might instead entail the targeting of a specific exchange rate relative to some foreign currency or else relative to gold. For example, in the case of the USA the Federal Reserve targets the federal funds rate, the rate at which member banks lend to one another overnight; however, the monetary policy of China is to target the exchange rate between the Chinese renminbi and a basket of foreign currencies.
5. Match the words and their definitions
| 1. interest rate | a. the number of people in a particular country or area who cannot get a job |
| 2. unemployment | b. the percentage charged by a bank etc. when you borrow money or paid to you by a bank when you keep money in an account there |
| 3. currency | c. a continuing increase in prices |
| 4. inflation | d. the value of the money of one country compared to the money of another country |
| 5. exchange rate | d. the value of the money of one country compared to the money of another country |
6. Translate the following words and definitions into English
1. денежная политика 6. экономический рост
2. казначейский вексель 7. Федеральная резервная система
3. облигация 8. обменный курс
4. деньги в обращении 9. Бреттонвудская валютная система
5. валютная корзина 10. налогово-бюджетная политика
7. Translate the following words and definitions into Russian
1. federal funds rate 6. borrow
2. open market operations 7. lend
3. central banks 8. to combat inflation
4. money supply 9. decreases the interest rate
5. gold standard 10. to issue currency
8. Complete the sentences with the following words:
prices, products, services, wages, consumers, employers, profits
1. Workers are paid ____ by ____ according to how skilled they are.
2. They spend their ____ on the ____ and ____ they need.
3. Firms producing these ____ will make more ____.
4. In a market economy ____ decide what is to be produced.
5. ____ will be willing to pay high ____ for products they particularly desire.
9. Choose the right variant
1. Market economics is also called:
a) command;
b) private;
c) mixed.
2. Mixed economics contains:
a) market economics only;
b) planned economics only;
c) both market and planned economics.
3. ____ does not allow people to make decisions in business.
a)free market;
b) command economy;
c) mixed economy.
4. All economics in the world are:
a) planned;
b) mixed;
c) market.
5. In a mixed economy the government:
a) refuse private sectors;
b) cooperate with private sectors;
c) control private sectors.
10. Choose the right variant
1. rests on the relationship between the rates of interest in an economy.
a) Bretton Woods system b) fiscal policy c) monetary policy
2. At the beginning monetary policy was used to maintain ………...
a) foreign policy b) national currency c) gold standard
3. Monetary policy has generally been formed separately from …………..
a) fiscal policy b) federal funds c) Federal Reserve System
4. The primary tool of monetary policy is …………….
a) central bank b) open market operations c) interest rate
5. Open market operations entail managing the quantity of …………. through the buying and selling of various financial instruments.
a) banks b) federal funds c) money in circulation
11. Write a business letter observing the set rules:
а) Поблагодарите за любезное приглашение принять участие в работе семинара. Попросите прислать Вам прeдварительную повестку дня.
b) Напишите, что Вы получили письмо адресата и рады были выполнить его просьбу. Вы посылаете ему все необходимые материал и надеетесь, что они ему пригодятся.
c) Подтвердите получение письма Напишите, что высылаете отдельным письмом свои предложения по организации конференции. Попросите подтвердить получение.
d) Обратитесь с просьбой выслать Вам последние данные по состоянию рынка. Заранее поблагодарите. Предложите свою помощь.
12. Read the following letter of complaint and write a suitable reply
BASIL HEATHCOTT-JONES
51 Dudley Road, Wembley, Middlesex HA5 6 DM
15 October, 2000
The Manager
Customer Relations Department
Winner Electrical Products
Tor Legh
Wessex
Dear Sir,
About a week ago, I bought your new coffee-percolator intending to keep it in
my office so that I could offer fresh coffee to my visitors. Last Wednesday, I received an important Chinese businessman and, naturally I offered him a cup of coffee. He accepted my invitation. I placed a filter in the machine, filled it with ground coffee, and turned on the machine. I'm quite sure I followed to the letter the instructions for operating the percolator. While we were discussing the finer points of a draft contract, I heard the coffeepercolator making a strange noise. I can only describe it as a bubbling, gurgling sound. Not wishing to appear rude to my Chinese guest, I ignored it. He also, by the way, gave no sign that he had heard anything unusual.
About five minutes later, a tremendous noise came from the machine. It seemed to explode! Coffee shot out from it and sprayed all over the carpet. Some of it fell on the trousers and coat of my guest. And it also splashed over documents I had on my desk. The carpet was soaked, the mess unbelievable.
I don't need to tell you how embarrassed I was. My guest was extremely polite, but we did no further work on the contract. I haven't seen him since. And I'm beginning to think I never will.
Of course I expect financial compensation from your firm for the loss I have suffered because of your faulty product. Perhaps you'd let me know how you're prepared to offer me. Let me say now, the sum must be suitable. If not, I shall place the matter in the hands of my lawyer.
B. Heathcott-Jones
13. Express your own point of view using the following phrases:
To my mind … In my experience …
In my opinion As far as I understand …
On the one hand, …on the other hand From my point of view …
If my memory serves me right … If I am not mistaken …
It seems to me that … Personally, I think …
My personal view is that … I am sure/certain/convinced that
The fact is that … This proves that …
It is obvious that … There is no doubt that …
1. Comment on the expressions «Money makes money», «Time is money», «Money never sleeps».
2. Where can people keep money and what is the role of inflation in it.
3. Imagine you have $1000000. What projects would you like to invest this sum of money into? What return would you expect?