8 Business and Money

Ex:1
Someone once described the age we live in as that of a vanishing world, one in which the
familiar is constantly disappearing for ever and technological change is often difficult to
cope with. So it should come as no surprise to most of us to hear that yet another part of
everyday life is about to go for ever. Still, when I read recently that within the next decade
money as we know it will probably cease to exist in technologically advanced countries, I
had to read the article twice to make sure it wasn't April 1st. According to Professor Gerry
Montague of the Institute for Economic Reform, the familiar coins and banknotes will
soon be replaced entirely by credit cards of various kinds. And the shop of the future (the
'retail outlet' as Prof. Montague puts it) will be linked directly to the network of banking
computers. The assistant will simply key in your bank account code number and the
amount you have spent, and thank you politely. You won't have to dig deep in your
pockets for change or pretend at the pub that you have left your money at home. You may
not even have a number for your account as such, as the computer may by then be able to
read your handprint. So no more credit card frauds either But I am afraid that I shall miss
money. I have felt strongly attached to it, ever since I received my first pocket money
when I was five, and kept it in a money-box. Even if my credit card of the future will be
able to tell me exactly how much spending power. I have left in the computer files, even if
it lights up and plays a happy (or sad) tune at the same time, nothing will be able to replace
the sheer pleasure I gained from rattling the coins in my money- box mention the other
obvious problems which will be caused by an absence money - like how to start a football
match, for example!

Ex:2
a) Harry gains/gets/makes over £20 000 a year.
b) Mary was awarded a grant/scholarship/subsidy to study child psychology.
c) How much did you give/pay/take for your new car?
d) Their house fetched/produced/sold for a lot more than they expected.
e) I'm going to the bank to get out/remove/withdraw the money for the rent.
f) The manager disappeared with the receipts/takings/wages from the concert.
g) By the time Kate retired she was a fortunate/prosperous/wealthy businesswoman.
h) We had a good holiday but it was rather costly/expensive/valuable.
i) We would appreciate it if you would close/settle/pay your bill as soon as possible.
j) Unfortunately the old painting I found turned out to be priceless/valueless/worthless.

Ex:3
a) John became rich by playing the stock market
b) We have decided to turn our business into a limited company
c) This government believes firmly in the value of free enterprise
d) I am interested in buying the property, but I find the currency too high
e) I am saving money to make the down payment on a new car.
f) We put in an insurance claim after our house was damaged in a storm.
g) Everyone was impressed with the sales figures for the new product.
h) Margaret lost a lot of money in an unwise business venture
i) I keep most of my money in a savings account
j) Our company receives a lot of payments in foreign price.

Ex:4
a) We have to haggle.
b) We have a nice little nest-egg.
c) We have high expenditure.
d) We get in free.
e) We are in debt.
f) We are very thrifty.
g) We are paid on commission.
h) We want a rise.
i) We lend money.
j) We have a high income.
5) We argue about the price.
10) We have some savings.
1) We spend a lot.
7) We don't have to pay.
9) We owe money.
2) We don't waste money.
4) We earn according to what we sell.
8) We need higher wages.
3) We let people borrow from us.
6) We earn a lot.

Ex:5
a) I inherited £10 000 in my uncle'............
A) legacy B) inheritance C) will D) testament
b) The...............price is always lower than the retail price.
A) wholesale B) bargaining c) cut D) budget
c) I still have three more................ to pay on my motorbike.
A) shares B) donations C) installments D) contributions
d) We had to give the customs official a.............. not to inspect our suitcases. A)
fee B) reward c) bonus D) bribe
e) After my business failed, I was declared............... by the court. A)
profitless B) bankrupt c) insignificant D) uneconomical
f) As soon as you buy a car, it starts falling in...................
A) cost B) worth C) value D) price
g) A multinational company has made a/an.............. to take over our firm.
A) bid B) venture C) investment D) estimate
h) We demanded pay rises to take account of the .............. of inflation. A)
figures B) percentage C) price D) rate
i) Things are going well. In fact, business is............
A) soaring B) booming c) leaping D) rolling
j) I.............. you don't make as much profit this year!
A) assure B) challenge C) bet D) doubt

Ex:6?
 handle charge
a) Sheila made a lot of money selling used cars.- Handle
b) When Mark took his new job, his earnings nearly doubled. – Taking
c) The cost of moving house was another problem for us. –Expense
d) We need someone else to be in charge of the meeting.- Chair
e) I am afraid this product is temporarily out of stock.- Unavailable
f) We usually count the money we have made when the shop closes.- Income
g) Do you like my new dress? It was a very good price.- Fortune
h) We don't deal with goods of that kind in this company.-- Bargain
i)Don't forget to draw up the list of items to be discussed for the next meeting -Agenda
j) We make no request for payment for delivery in the London area.-Charge

Ex:7?
a) We've decided to put our house up for sale. On the market
b) Jean has inherited a lot of money. Come into a fortune
c) At the meeting Peter said he thought the amounts were wrong. Challenged the figures
d) No one believes that the shop will ever be a business success. Commercially viable
e) I am the possessor of a healthy balance at the bank. In credit
f) Sue and Jane went to S America with everything paid for by their company. On
expenses
g) We don't believe you have the money to take over this company. Financial means
h) All employees can stay at the hotel without paying. Free of charge
i) We bought our new electric cooker by instalments. On easy terms
j) Harry became rich after he managed to put his money in the right place. Make a wise
investment

Ex:8
a) The precious stones our company mines are now known to be priceless. Worthless
b) Nigel cannot get used to being an unsuccessful businessman. Make
c) The company has decided the sell the premises in East Road. Purchase
d) I like living in this part of town. Of course, it's very cheap! Hard up
e) Jim inherited £20 000 and managed to save it all. Squander
f) We were poor when I was young and my father was very thrifty. wasteful
g) At the moment house values tend to go down in this area. Appreciate
h) The workers were given a cut in wages when the takeover was announced. Rise
i) Nobody thought that the company would lose a lot of money. Prosperous
j) Richard's family is incredibly well-off. Dear
Finance and banking
Exercise 1
1. a huge amount of money- fortune
2. the money that you spend- expenses
3. the money the company earns- turnover
4. a machine where you can draw out money- cash dispenser
5. somebody who gives another person a loan- lender
6. a worker of a bank who deals directly with customers- teller
7. a sort of part payment- retainer
8. the price for another currency- exchange rate
9. to pay back- to redeem
10.to limit- to restrict
Exercise 2:

1. We accept payments by bank draft_.

2. They had to mortgage their house in order to raise enough capital to buy the
business.
3. In this store alone, we make a(n) daily turnover of about $3,000.
4. The back interest on the loan has already exceeded the sum total of the loan itself.
5. The company seems to be experiencing something of a(n) adverse balance
problem.
6. Your accountant will fill out your tax return forms and calculate how much revenue
tax you must pay each year.
7. The financial statement of the company shows clearly a(n) liquidity .
8. I’m afraid you have a(n) overdraft of 100 pounds.
9. I pay my phone bills with direct debit from my account.
10. We are struggling to maintain cash flow

Exercise 3
1. Me and my husband have a joint account.
2. Tony had left his wallet at home, so he had to borrow some money from me.
3. I would like to check my bank.- balance
4. The washing machine is quite expensive, but you can pay in Instalments .
5. Alice spent all her savings and now she's completely broke.
6. Unfortunately, we have to deduct those additional costs from your salary.
7. As soon as I get paid, I will settle the account.
8. It's high time you paid off your overdue debts!
9. Our company can't acquire external capital now, we need outside funding.
10.We have to pay 1% interest on the loan. It's quite a low lending rate
Exercise 4
1. You still owe / own me the $50 you borrowed last month!
2. They can't acquire / afford this house, it's too expensive.
3. We don't keep pouring money into our business, we're breaking even / ever at last.
4. - You are in the black / red! - Really? I didn't know about the overdraft!
5. The company is running short of money, they need some additional financial
resources / years.
6. Ireland and Greece contracted / ran into serious debt.
7. The insurer told me he was financial / financially sound.
8. In our restaurant we have a 40% payment / profit margin on alcohol.
9. She couldn't take out a loan because of her unsatisfactory credit rate / rating.
10.I wanted to cash the check, but they bounced / withheld it.

Exercise 5
debit card overdue restrict
extension
commercial bank
economical
bank
statement non-cash terms of payment
turnover draw exchange rate merchant
non-taxable
out bank
encumber
lending rate
1. Please check all monthly bank transfer to ensure that all revenues have
been received.
2. I want to make a to Australia. How long will it take for the money to get
there?
3. The promotion budget has been cut.
4. Usually money deposits in banks are guaranteed to some extent by the
central bank.
5. UBL is the most popular commercial bank in Pakistan.
6. If weany more contract a debt, it will discourage prospective investors.
7. I gave him my , not a credit card, so he won’t spend too much even if he
wants to.
8. I want to $5,000 of my account, please.
9. With this budget we will have to lay some people off this year.
10. Is this property with a mortgage?
11. I bought Swiss francs at the of 1.21 to US dollar.
12. We are applying for a loan .
13. The bank is to raise its by 1%.
14. We are a and we don’t open private accounts.
15. With a growing number of credit card holders, shops are registering larger .
16. The limit for income has been lowered.
17. Interest will be calculated from payments.
18. Only part payment is required upon purchase, the rest will be paid in
monthly instalments.
19. The remittance was finally made.
20. Since John lost his job we had to our expenses dramatically.
21. The lawyer has already been paid a retainer to prepare the contract.
22. The are specified in the contract and cannot be altered.
 23. We concluded the with a handshake. transaction
24. Payments to this supplier will be withhold until the damaged goods are
replaced.

Money and banking, NBP - the Central Bank in Poland

Ex 2. Matching
way of buying goods gradually by making regular payments until the full price is paid – high
purchase
a security given for the repayment of a loan – collateral
information given formally in advance - notice
a person who pays money into a bank account - depositor
ability to pay debts, and therefore worthy of being allowed credit - credit
to buy, to get - purchase
a design impressed on banknotes and visible only against the light - watermark
responsibility - liability
the value on a banknote or stamped on a coin – face value
a locked room in a bank where money and other valuables are stored - vault
starting and running new businesses - enterpreneurship
the movement of goods, money and ideas - circulation

ex 3.
1. You can rent a safety deposit box in this bank vault to keep your jewellery there
2. Some customers try to defer payments as long as it is possible.
3. The withdraw of money from a deposit account in our bank requires a week-notice.
4. As soon as he is given his salary, he will settle all the outstanding bills.
5. The bank is always willing to lend him money because his credit worthiness has been
confirmed.
6. The forger was caught red-handed when he was counterfeiter 100-dollar bills.
7. The bank issue a letter of credit for the Polish importer of shoes.
8. I'd advise you to deposit all the inherited money into a savings account.
9. His main responsibility was to supervise the work of other people.

Ex 6

1. Decide what kind of account you need. Probably the most popular is a saving account. It
allows you-to deposit money and receive interest on the money you keep in the bank.
2. Open your account(s) at a bank near your home or workplace so that it is convenient for you
to make deposits, use an ATM or talk to bank staff.
3. Don't forget to ask how many ATMs the bank has and if or how much they charge for their
services. Ask if 24-hour service is available by phone or if they also offer Internet banking.
However, there is a risk connected with it because sometimes bank accounts with online access
are cling out by cyber crooks using spyware.
4. When you come to a bank, fill out an application form. You'll need to provide some details
like your name and birthday, as well as identification numbers. Some people decide on joined
account established in the names of more than one person e.g. wife-husband, parent-child.
5. Then you will be given a(n) identification number and an ATM card.
6. Give the number to your employer and your salary will be transferred to your account.
7. If you want, the bank will send you a monthly statment informing you in detail about the
activity in your account for a specified period of time.
8. When you pay with card, money is debeted from your account. Be careful, don't spend more
money than you have in your account, then you'll owe a bank money and your account will be
overdraw. You'll be in the red.
9. You can always withdraw money from your current account if you need cash or deposit it in
another bank.
The money supply
Ex 1 The money supply
Following the monetarist argument that the average level of prices and wages is determined by
the amount of money in circulation, and its velocity of circulation, many central banks now set
money supply targets. By increasing or decreasing the money supply, the central bank indirectly
influences interest rates, demand, output, growth, unemployment and prices. The central bank
can reduce the reserves available to commercial banks by changing the reserve requirements.
This reduces the amount of money chat banks can create and makes money tight. Alternatively,
the central bank can engage in what are called open market operations, which involve selling
short-term government bonds (such as three-month Treasury bills) to the commercial banks, or
buying them back.
Ex 2
When money is tight,
1.Interest rates rise, because commercial banks have to borrow at a higher rate on the inter-bank
market.
2. Credit falls, because people and businesses borrow less at higher cates.
3.Aggregrate demand falls, because people and businesses buy less, as they have less money.
4.Output falls too, because with less consumption, firms produce less.
5.Unemployment rises, because companies are producing and selling less, and so require less
labour.
6.Inflation falls, because there is less money in circulation.
7.The exchange rate will probably rise, if there is the same demand but less money, or if there is
higher demand, as foreigners take advantage of the higher interest rates to invest in the currency.
Increasing the money supply, by making more reserves available, has the opposite effects.
Government spending
1. If tax revenues are higher than government spending, a country has a budget surplus.
2. If, on the contrary, government expenditures exceed money collected by taxes, a country has a
budget deficit.
3. A structural surplus or deficit is the result of government policies such as tax rates, welfare
and defense spending, and so on.
4. A cyclical surplus or deficit, on the other hand, is the result of the business cycle: changes in
spending or revenues caused by a boom or a slump.
5. Budget deficits have to be funded by the sale of government bonds, called gilt-edged securities
in Britain, and Treasury bonds in the USA.
6. The higher the amount of government bonds sold in a country the less capital is available for
private sector investment.
7. Neo-classical economists call this "crowding out", and use it as an argument against
Keynesian fiscal policies.
8. On the other hand, if the money supply is expanded, increased government spending can raise
output and investment, at least in the short term.
9. This is partly due to the acceleration principle, which is that increased demand for consumer
goods produces a greater increased demand for capital goods.
10. But of course everybody knows that increasing the money supply almost inevitably leads to
inflation.
Fiscal policy
Exercise 1: Put the words in the right places.
When the recession of 2009 hit, the federal government tried to (1) stimulate the American
economy. It cut taxes and increased (2) spending. In other words, it conducted (3) expansionary
fiscal policy. Fiscal policy -- the government's policies on taxes, spending and borrowing - that's
used to try to mitigate (4) fluctuations in the business cycle, to even out the booms and the (5)
busts. But, how is it that expansionary fiscal policy is capable of actually working? Imagine an
economy that's operating at full (6) employment. Workers have jobs, and factories are operating
near capacity. If in that case, the federal government tries to increase spending to, say, build a
new road, then it necessarily has to take away some people and some capital from other (7)
sectors of the economy. GDP wouldn't increase, because there's already full employment. So,
government spending would simply be (8) crowding out private spending and investment.
Building the new road? It may or may not be a good idea, depending on how valuable that road
would be.
But still, the increased government spending would not, in the short run, stimulate the economy.
But now, in contrast, imagine an economy during a (9) recession. The fundamental factors of
production are underused. Labor and capital are unemployed or underemployed. Machines and
buildings are idle. In this case, government spending on a new road probably would increase
GDP. In fact, an extra dollar spent during a recession might even increase GDP by more than a
dollar. Say, for instance, the government hires (10) unemployment construction workers. These
construction workers then use their new income to, say, eat out at restaurants. This causes
restaurant owners to hire more workers, and these newly employed waiters and waitresses -- they
then spend their money throughout the economy. There's a kind of (11) ripple effect, and the
people who receive that money in turn spend more money themselves.
The subsequent increases in spending caused by the initial increase in government spending --
that's known as the "fiscal (12) multiplier." Now, expansionary fiscal policy is not the only kind
of fiscal policy. The government also conducts (13) contractionary fiscal policy by saving
during an economic (14) boom - by either increasing taxes or by decreasing spending. At least
that's how fiscal policy is supposed to work. Later, we'll discuss some of the political economy
issues of continual deficit spending and why government surpluses sometimes are so hard to
come by.
Test
1. The government hires 2000 workers for new infrastructure projects. Over half of the newly
hired construction workers, however, were employed in other sectors of the economy and quit
their jobs to take this better paying opportunity.
a) Expansionary fiscal policy.
b) Contractionary fiscal policy.
c) Crowding out.
d) Fiscal multiplier.
e) a and c only.
f) a and d only.
2. The government increases taxes on corporations.
a) Expansionary fiscal policy.
b) Contractionary fiscal policy.
c) Crowding out.
d) Fiscal multiplier.
e) a and c only.
f) a and d only.
3. During a recession, the government increases spending by $300B, which in turn increases
GDP by $350B.
a. Expansionary fiscal policy.
b. Contractionary fiscal policy.
c. Crowding out.
d. Fiscal multiplier.
e. a and c only.
f. a and d only.
4. During a recession, the government sends $500 checks to every American family. 70% of
American families save the money or use it to pay off their debt.
a. Expansionary fiscal policy.
b. Contractionary fiscal policy.
c. Crowding out.
d. Fiscal multiplier.
e. a and c only.
f. a and d only.
Monetary policy
This is mr. Clifford welcome to econ movies right now we're going to talk about monetary policy
by looking at the movie Despicable Me monetary policy is when a central bank or other
regulatory agency changes the money supply to achieve specific economic objectives well
actually it's not that complicated the first thing that you need to know to understand monetary
policy is the role of banks and bankers in the economy banks are financial institutions that link
borrowers with lenders and although sometimes are perceived as evil they're absolutely essential
to the health of the economy people with extra money deposit these savings in banks and the
bank turns around and loans that money out to businesses and individuals that need to buy
something expensive before giving that loan the bank analyzes the risk involved to make sure
they get paid back do you have the audacity to ask the bank for money you have any idea of the
capital that this Bank has invested in your crew how can I put it let's say this Apple is you if we
don't start getting our money back the bank also charges an interest rate which is basically the
price of borrowing money the lower the interest rate the cheaper the loan and the easier it is to
pay back the higher the interest rate the more expensive the loan and the more difficult it is to
pay it back we stop right there that's it this scene with the pillars shows the relationship between
interest rates and the overall economy if the interest rate is really high then less people are going
to take out loans because they don't want to be crushed by that giant interest rate consumer
spending on big-ticket items is going to decrease and so the GDP is going to fall but if interest
rates are really low the consumers can go and buy things like cars the lower the rate the more
they can afford so interest rates affect consumer spending but they also affect business
spending in the form of investment remember investment is when companies buy machines tools
factories to produce more stuff if interest rates are really high and loans become more expensive
then companies are going to invest less and produce less and possibly even go out of business
the bank is no longer funding us in terms of money we have no money and if a lot of companies
go out of business that could cause a recession and a whole lot of unemployment now it would
probably be a good time to look for other employment options so lending and interest rates affect
the entire economy but what affects interest rate well the answer is the money supply but who
controls the money supply the Federal Reserve is the central bank of the United States and it's
ran by Janet Yellen it regulates banks and controls the money supply change in the money
supply affects interest rates which can affect the entire economy that's called monetary policy a
committee of bankers chaired by Janet Yellen set target interest rates that signal the health and
overall direction of the economy an increase in the target range for the federal funds rate remains
unlikely at our next meeting in April an increase in the target range could be warranted at
subsequent meetings there are two types of monetary policy expansionary monetary policy is
when the Fed increases the money supply and puts more money in the system this makes it
easier for banks to loan out money so it lowers the interest rates that'll increase consumer
spending and business spending which will increase the GDP and expand the economy
contractionary monetary policy is when the Fed decreases money supply causing interest rates
to go up that will decrease consumer spending and investment spending and slow down the
overall economy now the goal isn't to ruin the economy and cause unemployment the goal is to
fight inflation in fact some people say that inflation is the feds nemesis and normally spending is
a good thing but if there's a whole lot of spending we're not producing more stuff then we're
going to get higher prices in that case the Fed uses contractionary monetary policy to decrease
the money supply raise interest rates and slow down the entire economy to fight inflation it's like
the feds private shrink ray actually a Fed Chairman many years ago joke the main job of the Fed
is to take away the punchbowl once the party gets started some economists think the
government shouldn't get involved in the overall economy but other economists think that
some fine-tuning done by the Fed actually prevents some of the ups and the downs of the
business cycle many economists think that economic calamities like the 2008 financial crisis
would have been a whole lot worse if the Fed hadn't stepped in now either way monetary policy
along with fiscal policy are the two main weapons the government uses to fight high
unemployment and high inflation whether some banks are too big to fail or whether we need
more banking regulation one thing's for certain we mean an effective way to make sure the
worthy borrowers can buy things like homes or expand their business I really don't see how we
could afford this hey chillax I'll just get another loan from the bank they love me okay thanks
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