Vocabulary exercises

ESSENTIAL VOCABULARY

1. Assets n – property and possessions that can be accepted in settlement of the debt – майно; активи; капітал; власність; кошти; фонди. Syn. property, possessions.

2. Cash n – money in the form of coins and banknotes – готівка; монети та паперові гроші. Syn. ready money, money in hand.

3. Circulation n – the exchange of information, money etc from one person to another in a group or society – обіг. To be in circulation – знаходитися в обігу.

4. Currency n – money that is actually in use in a particular country – гроші; валюта. Syn. money.

5. Denomination n – class or unit based on quantity, value, or measure – вартість, номінал; купюра. Small/large denomination – банкнота/купюра малої/великої вартості; denomination of money – грошова купюра.

6. Denominator n – міра. Common denominator of value – загальноприйнята міра вартості.

7. Fluctuate v – to keep changing, especially in level or amount – коливатися, змінюватися. Syn. to vary.

8. Issue v – to put coins and banknotes into circulation – випускати, пускати в обіг. Syn. to put in circulation.

9. Life expectancy – length of time something is likely to exist or function – середня тривалість життя. To have reasonable life expectancy – мати значну тривалість життя.

10. Measure n – standard on which something can be based– мірило, критерій. Measure of value – міра вартості. Syn. astandard, a criterion.

11. Medium (pl. -s or media) n – means by which something is expressed – засіб. Medium of exchange – засіб обмін. Syn. a standard.

12. Payment n – the action or process of paying someone or something, or of being paid – сплата, оплата; платіж, плата. To accept in payment for/settlement of something – приймати в сплату за щось. A method of payment – форма оплати; вид платіжного засобу; метод оплати; спосіб платежу; форма платежу; порядок оплати/здійснення платежів/розрахунків. Syn. a pay.

13. Serve v – be of some specified use – служити, слугувати.

14. Store n – quantity of something kept available for use as needed – запас. Store of value – засіб збереження вартості/засіб нагромадження/накопичення вартості. Syn. stock.

15. Store v – to put aside or accumulate for future use – відкладати, накопичувати, запасати. Syn. to accumulate, to put aside.

TEXT

Many people think that the economy and the study of economics are concerned primarily with money – how to make it, how to spend it, and how to get more of it. To realize the role of money, we first need to understand what money is. It should be admitted that money is not income, and money is not wealth. First of all, moneyis anything that is generally accepted in payment for goods and services, and debts and makes the trading process simpler and more efficient.

At different periods of time and in different parts of the world a variety of commodities served as money – cattle, sheep, furs, leather, fish, tobacco, tea, salt, etc. The economists consider that to serve effectively as money, a commodity should be rather durable, easily divisible, and portable. As none of the above-mentioned commodities possessed all these qualities, in time they were replaced by precious metals.

Nowadays the money people are most familiar with is currency. Currency refers to all coins (hard money) and paper money (soft money) issued by the central bank of a nation and held by the public within a country. It also includes cash in the vaults of commercial and savings banks and currency carried abroad by travelers. Currency is a common form of legal tender in many countries. This means that it must be accepted in settlement of debts.

Although anything can serve as money, modern money should have the following characteristics:

· Stability. The value of money should be more or less the same today as tomorrow. When it fluctuates people will store money in the hope its value will increase, or spend it immediately thinking it will be worth less tomorrow.

· Portability. Modern money has to be small enough and light enough for people to carry. It especially relates to checkbooks. Check can be written in almost any amount.

· Durability. Money has to have a reasonable life expectancy. So, durability means that modern money is made of a very high quality material that makes it possible to be in circulation over a long period of time.

· Uniformity. Equal denominations of money should have the same value.

· Divisibility. One of the principal advantages of money is its ability to be divided into parts. In other words, it is easy to make change for a large denomination.

· Recognizability. Money should be easily recognized for what it is and hard to copy.

Since money is best defined in terms of what it does, the economists describe money in terms of its four basic functions – the needs it fulfills in every society. They are a measure of value or as it is often called now a standard of value or a unit of account, a store of value, a medium of exchange, a standard of deferred payment. Money serves these functions regardless of its name or form – U.S. dollar, Japanese yen, or Ukrainian hryvna.

ü When performing afunction ofa measure/standard of value or a unit of accountmoney is used as a common denominator of value for pricing goods and services.

ü Another function of money is a store of value. Money as astore of value enables people to use the value of something that they sell today to make a purchase sometime in the future.

ü The most important and the most easily understood function of money is to serve as a medium of exchange. Money enables exchanges to be made easily. In a money economy people can sell what they have produced and have available to anyone and use the money to buy what they want. When money is used as a medium of exchange, it distinguishes from other assets such as real property, bank deposits, securities, etc.

ü Being one of the defining functions of money a standard of deferred payment means that a contract or agreement may specify (or imply) that the repayment of a debt is made using a particular monetary unit. It differs from other functions of money in that it is not functioning as an immediate medium of exchange or store of value but, rather, as a medium by which future payments will be made.

To the economists the value of moneyorits purchasing power means the amount of goods and services people can buy with their money. When prices increase, money cannot buy as much and its purchasing power declines. An extended period of rising prices is called inflation while a period in which prices are falling is called deflation.

Nowadays economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Commodities such as gold and silver have been used for years as a method of payment. In most countries, commodity money has been replaced with fiat money. Fiat money is an inconvertible paper money made legal tender by a government decree. It is a good, the value of which is less than the value it represents as money. Dollar bills are an example of fiat money because their value as slips of printed paper is less than their value as money. Bank money is checks, drafts, and bank credits other than currency that are the equivalent of money. Transactions made by using checks that are drawn on bank deposits involve the use of bank money.

Bank money differs from commodity and fiat money in two ways. Firstly it is non-physical, as its existence is only reflected in the account ledgers * of banks and other financial institutions, and secondly, there is some element of risk that the claim will not be fulfilled if the financial institution becomes insolvent.

COMMENTS

The account ledgers * – бухгалтерські/облікові книги/реєстри.

VOCABULARY EXERCISES

Exercise 1. Read, translate into Ukrainian and memorize the definitions of the following economic terms and concepts.

1. Bank money:a medium of exchange consisting chiefly of checks and drafts.	_________________________________________________________________________________________________________
2. Commodity money: a specific commodity used as a form of money.	______________________________________________________________________
3. Currency:Paper money and coins issued by the federal government.	______________________________________________________________________
4. Deflation: A decrease in the general level of prices; a period during which the purchasing power of a monetary unit is rising.	____________________________________________________________________________________________________________________________________________
5. Fiat money: money declared by a government to be legal tender though it is not convertible into standard specie.	____________________________________________________________________________________________________________________________________________
6. Inflation:An increase in the general level of prices; a period of rising prices during which the purchasing power of a monetary unit is falling.	______________________________________________________________________________________________________________________________________________________________________________
7. Legal tender:Currency accepted in payment of debt.	______________________________________________________________________
8. Measure/Standard of value: A function performed by money as a common denominator for pricing goods and services.	____________________________________________________________________________________________________________________________________________
9. Medium of exchange:Any substance or article that is used to pay for goods and services.	_________________________________________________________________________________________________________
10. Money: The official currency, in the form of banknotes, coins issued by a government that functions as legal tender.	___________________________________________________________________________________________________________________________________________
11. Purchasing power:The value of money; the amount of goods and services that can be bought with this money at a given time.	____________________________________________________________________________________________________________________________________________
12. Standard of deferred payments: the thing of value in which, by the law or by contract, the amount of a debt is expressed.	____________________________________________________________________________________________________________________________________________
13. Store of value:A function of money, enabling wealth, or value to be stored until some future time.	_________________________________________________________________________________________________________

Exercise 2. Give the Ukrainian equivalents for the following.

1. to be concerned primarily with money – _________________________________

2. to be replaced by precious metals – _____________________________________

3. to be accepted in settlement of debts – __________________________________

4. to be worth less – ___________________________________________________

5. to be written in almost any amount – ___________________________________

6. equal denominations of money – ______________________________________

7. when performing afunction – _________________________________________

8. to distinguish from other assets – ______________________________________

9. to buy with one’s money – ___________________________________________

10. to differentiate among three different types – _____________________________ ___________________________________________________________________

11. to differ from commodity and fiat money – ______________________________ __________________________________________________________________

12. to become insolvent – _______________________________________________

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