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ENGLISH FOR FINANCE НАВЧАЛЬНИЙ ПОСІБНИК

UNIT 3. MONETARY POLICY. FINANCIAL MANAGEMENT

TEXT 1. Monetary System and Monetary PolicY

Task 1. Study the vocabulary:

Lender	позичальник
to take a responsibility for smth	взяти на себе відповідальнісь
to be responsible for smth	бути відповідальним
budget deficit	бюджетний дефіцит
money supply	грошова маса
circulation	обіг
ratio	коефіцієнт, відношення
interest rate	відсоткова ставка
easy policy	м’яка політика
tight policy	жорстка політика
to adopt a policy	приймати політику
to implement, to pursue, a policy	проводити, втілювати політику
liability	відповідальність
partly	частково
to alter	змінювати

Task 2. Read and translate the text:

MONETARY SYSTEM AND MONETARY POLICY

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).

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. 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. Having set the discount rate, the Central Bank controls the money market.

Thus, the Central Bank is responsible for the government's monetary policy. Monetary policy is the control by the government of a country's currency and its system for lending and borrowing money through money supply in order to control the level of spending in the economy.

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 transactions. 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. People want money because of its purchasing power in terms of the goods it will buy.

Task 3. Choose the best variant:

1. The Central Bank acts as … to commercial banks.

a) a borrower

b) a lender

c) a banker

2. The Central Bank is responsible for … .

a) the money supply

b) the budget deficit

c) commercial banks

3. Money supply is partly a liability of … .

a) the commercial banks

b) the Central Bank

c) both of them

4. Monetary policy is the control of … .

a) the government’s lending

b) the government’s borrowing

c) a country’s currency, the government’s lending and borrowing

5. The demand for money is a demand for ….

a) paper money

b) token money

c) nominal money

Task 4. Match the words form column A with the words from column B

A	B
1) a lender	a) покупки
2) a liability	b) валюта
3) money supply	c) продаж
4) sight deposits	d) депозити на пред’явника
5) quantity	e) грошова маса в обігу
6) purchases	f) позичальник
7) sales	g) кількість
8) securities	h) рівний ( однаковий )
9) currency	i) відповідальність
10) equal	j) цінні папери

Task 5. Fill in the gaps with the words given below:

1. A Central Bank takes responsibility of the 1.__________ in the country.

2. Money supply is partly 2.___________ of the Central Bank.

3. The Central Bank controls the 3.__________ of currency in private circulation.

4. The Central Bank controls the money market and sets the 4.__________.

5. People want money because of its 5.__________ in terms of the goods it buys.

Discount rate, purchasing power, money supply, liability, quantity

Task 6. Read the statements and decide whether they are true or false:

1. Money supply includes currency inside the banking system.

2. A Central Bank acts as a borrower to commercial banks.

3. Money supply is the only liability of commercial banks.

4. The central Banks controls the quantity of money held by the banks.

5. Having set the discount rate, the Central Bank controls the money market.

6. The demand for money is a demand for real money.

TEXT 2. MONEY

Task 1. Study the vocabulary:

to measure value	вимірювати вартість
to store wealth	зберігати багатство
coin	монета
paper notes	банкноти
direct exchange	прямий (безпосередній) обмін
to consider	вважати, обмірковувати
to be equal value	бути однакової вартості
unsatisfactory	незадовільний
precise needs	певні (чіткі) потреби
coincide	співпадати
various	різноманітний
to recognize	визнавати, розпізнавати
precious metals	дорогоцінні метали
to take over	(тут) набирати чинності
portable	портативний
durable	тривкий, довговічний
recognizable	той, що можна розпізнати
divisible	подільний
to uncover	відкривати, виявляти
double coincidence	подвійне співпадання
inconvenience	незручність
a medium of exchange	засіб обміну
a standard of value	стандарт вартості
commodity money	товарні гроші
fiduciary money to be redeemed	довірені гроші бути викупленим (погашеним)
fiat money	паперові гроші (не забезпечені золотом)

Task 2. Read and translate the text:

MONEY

Money is used for buying or selling goods, for measuring value and for storing wealth. Almost every society now has a money economy based on coins and paper notes of one kind or another. However, this has not always been true. In primitive societies a system of barter was used. Barter was a system of direct exchange of goods. Somebody could exchange a sheep, for example, for anything in the market place that they considered to be equal value. Barter however was a very unsatisfactory system because people’s precise needs seldom coincided. People needed a more practical system of exchange, and various money systems developed based on goods, which the members of a society recognized as having a value. Cattle, grain, teeth, shells, features, skulls, salt, elephant tusks and tobacco have all been used. Precious metals gradually took over because, when made into coins, they were portable, durable, recognizable, and divisible into larger and smaller units of value.

Barter was the first form of exchange. As the degree of specialization grew, it became more difficult to uncover the double coincidence of wants required with barter. The time and inconvenience involved with barter led even simple economies to introduce money.

Paper money was developed in the 17^th century.

Money serves three primary functions: a medium of exchange, a standard of value, and a store of wealth. The first money was commodity money, where a good such as corn served also as money. With fiduciary money, the second type of money introduced, that changed hands was a piece of paper that could be redeemed for something of value, such as silver or gold. The third type of money introduced was fiat money, which is paper money that can not be redeemed for anything other than more paper money. Fiat money is given its value as money by law. Most currencies throughout world today are fiat money.

Task 3. Choose the best variant:

1. Money is used for…

a) exchanging property

b) buying on selling goods

c) paying taxes

2. Barter was a system of…

a) indirect exchange

b) direct

c) direct exchange

3. People needed a more … system of exchange.

a) complex

b) simple

c) practical

4. The time and inconvenience involved with barters led even simple economies …

a) to introduce money

b) to made money

c) to earn money

5. Money serves … primary functions.

a) two

b) some

c) three

Task 4. Match words from column A with the words from column B

1. Value

2. Wealth

3. Measure

4. Store

5. Exchange

6. Precious

7. Durable

8. Coincide

9. Fiduciary

10. Currency

a) довірений

b) співпадати

c) міра, вимірювати

d) довговічний

e) валюта

f) дорогоцінний

g) запас, зберігати

h) багатство, добробут

i) вартість

j) обмін

Task 5. Fill in the gaps with the words given below:

1. Barter was a system of 1._________ exchange.

2. Barter was a very 2.___________ system.

3. 3.__________ metals gradually took over.

4. The first money was 4.__________ where a good such as corn served also as money.

5. The second type of money was 5.__________ such as silver or gold.

Unsatisfactory, fiduciary money, direct, commodity money, precious

Task 6. Read the statements and decide whether they are true or false:

1. In primitive societies the first type of money was used.

2. In primitive societies somebody could exchange anything in the market place that they considered to be equal value.

3. Various money systems developed based on goods, recognized as having value.

4. Precious metals were portable, durable, but not recognizable and divisible.

5. The first paper money was developed in the XV^th centure.

6. The time and inconvenience of barter led economies to introduce money.

TEXT 3. Money, its Properties and Functions

Task 1. Study the vocabulary:

assess	визначати
commodity	товар
counterfeit	підроблювати
cowries	каурі ( мушля, що замінює гроші в деяких частинах Азії та Африки)
engraving	гравірування
expectancy	очікування, вірогідність
to fluctuate	коливатися
goldsmith	ювелір
to hoard	запасати, накопичувати
medium of exchange	засіб обміну
measure of value	міра вартості
offset	компенсувати
portability	портативність
recognizability	розпізнаваність
redeem	викупляти, виплачувати
remittance	перерахування коштів
savings bank	ощадна каса
store of value	засіб накопичення
uniformity	однаковість, однорідність
unit of account	одиниця рахунку
a fare	плата за проїзд в транспорті
a salary	заробітна плата службовця

Task 2. Read and translate the text:

TEXT A

Goods and services are exchanged for money and money is used to obtain other goods and services. Thus money is a medium of exchange. In many countries, the monetary system has been built on a base of precious metals such as gold and silver, but cowry shells, salt and many other things can be, and have been, used as money. Now almost every society has a money economy based on coins and paper bills of one kind or another.

Although, as we see, anything can serve as money, as a practical matter the material should possess the following qualities:

Stability . The value of money should be more or less the same today as tomorrow. In societies where value of money fluctuates (goes up and down) people will hoard it in the hope that its value will increase, or spend it immediately thinking it will be worth less tomorrow. Either action could be harmful to the economy.

Portability. Modern money has to be small enough and light enough for people to carry. Bowling balls would not be a practical form of money.

Durability. The material chosen has to have a reasonable life expectancy. For that reason most countries use a very high quality paper for their money.

Uniformity. Equal denomination of money should have the same value. It¢s easy to see that if some quarters or dollar bills were worth more than others, things could be pretty confusing.

Divisibility. One of the principal advantages of money over barter is its ability to be divided into parts. In other words, while making change for a dollar is easy, making change for a chicken is more difficult.

Recognizability. Money should be easily recognized for what it is and hard to copy. The quality of the paper and the engravings make paper money extremely difficult to counterfeit.

Task 3. Match words from column A with the words from column B:

A	B
1) to obtain	a) коливатись
2) a medium of exchange	b) однорідність
3) precious metals	c) довговічність, тривкість
4) to possess	d) отримати, придбати
5) paper bills	e) подільність
6) to fluctuate	f) володіти
7) to hoard	g) паперові банкноти
8) durability	h) дорогоцінні метали
9) uniformity	i) засіб обміну
10) divisibility	j) запасати, накопичувати

Task 4. Fill in the gaps with the words from the list:

a. denomination; b. paper money; c. payment; d. medium; e. advantages; f. barter economy; g. money economy

1. Money can be anything, that is generally accepted in 1.________ for goods and services.

2. Equal 2._________ of money should have the same value.

3. The principal difference between a 3.__________ and a 4.__________ is that in a barter economy you must find someone who wants what you have.

4. One of the principal 5.___________ of money over barter is its ability to be divided into parts.

5. Money, therefore, is the 6.__________ that enables exchanges to be made easily.

6. The money you are most familiar with, currency, consists of the

7. __________ and coins, that you use almost daily.

Task 5. Match the following terms with their definitions:

1) a loan а)

2) an interest

3) a wage

4) a pension

5) a fare b)

6) a fee

7) a bill c)

8) a salary

9) an alimony d)

10) a cash

money paid by divorced father to his former wife for the upkeep of his children

an amount of money that a person, business, or country borrows, especially from a bank

paid at a restaurant after eating extra percentage paid on a loan

paid while traveling, especially on public transport buses, trains, etc.

e)money paid for professional services, e. g. to a doctor

f) money which is in the form of coins and notes, not cheques .

g) an amount of money you receive, usually weekly, in return for labour or service

h) extra percentage paid on a loan

i) a fixed amount which is paid, usually monthly, to workers of higher rank

j)paid by a company or the state on your retirement

TEXT 4. Money, its Properties and Functions

Task 1. Study the vocabulary:

a medium of exchange	засіб обміну
a measure of value	міра вартості
a store f value a unit of account	запас вартості одиниця рахунку
to exchange	обмінювати
relative prices	відносні ціни
to determine	визначати
commodity	товар
to be worth	бути вартим
valuation	оцінка, цінність
to grow richer	багатшати
to reflect	відображати
to sicken	хворіти
to permit	дозволяти
possession	володіння(власність)
loss	втрата
modest	простий
money substitutes	грошові замінники
to yield an income	заробляти дохід
to offset	компенсувати
to assess	визначати (оцінювати)
currency	валюта
to consider	вважати

Task 2. Read and translate the text:

TEXT B

We can also define money by what it does. So money serves as (1) a medium of exchange, (2) a measure of value, (3) a store of value, (4) a unit of account.

Money as a medium of exchange. This is the simplest of the functions of money. Goods or services are exchanged for money and the money is used to obtain other goods and services. In a barter economy you must find someone who has what you want and wants what you have. In a money economy people can sell what they have to anyone and use the money to buy what they want. Money, therefore, is the medium that enables exchanges to be made easily.

Money as a measure of value. Since commodities are exchanged through the medium of money, their relative prices determine what one commodity is worth in terms of other commodity. A community¢s valuation of this commodity or that will change as tastes and fashions change or as the community grows richer. The prices at which goods exchange for money and money exchanges for goods will reflect these changes. Money acts as a measure of value.

Money as a store of value. All the early money commodities were very inadequate stores of value. Cattle or slaves might sicken and die. A good money material permits the possession of wealth the storing of value without loss. On the modest forms of money, gold is still a very good store of value, but investments of one kind or another may make effective money substitutes as stores of value, since they yield an income which may offset the rising prices of other commodities.

Money as a unit of account. If a man is in business, it is necessary for him to compute the values of the various stocks of goods that he possesses. These goods can be of different kinds and yet some common unit is needed in which to assess their value. Money, acting as a unit of account, can serve these purposes.

Currency is money in use in a country. Nowadays national currencies are considered to be as strong as the national economies which support them. For example, today our Ukrainian currency “hryvnia” has value only because the Ukrainian government stands behind it.

Task 3. Choose the best variant:

1. In a money economy people use money to buy …

a) only services

b) only goods

c) what they want

2. Commodities are exchanged through the …

a) banks

b) medium of money

c) financial institutions

3. The early money commodities were very … stores of value.

a) simple

b) complex

c) inadequate

4. If a man is in business it is necessary for him to compute … of the various stocks of goods that he possesses.

a) shortage

b) value

c) surplus

5. Nowadays national currencies are considered to be as strong as the national economics which … them.

a) maintain

b) reflect

c) support

Task 4. Match the words from column A with the words from column B:

A B

1) define a) міра вартості обмін

2) a medium of exchange b) запас вартості

3) a measure of value c) обмін

4) a store of value d) засіб обміну

5) a unit of account e) визначати вартість

6) exchange f) визначати

7) possession of wealth g) бути такими

8) to offset the rising prices h) компенсувати зростаючі ціни

9) to assess the value i) одиниця рахунку (обліку) to be as strong as j) володіти достатком (багатством)

Task 5. Choose the best translation:

1. Валюта – це паперові гроші та монети, якими ми користуємося майже щодня.

a) Currency was paper money and coins in every day use.

b) Currency is paper money and coins in every day use.

c) Currency is paper money in every day use.

2. Одна з головних переваг грошей над бартером – це те, що гроші можна ділити на частини.

a) One of the advantages of money over barter is its ability to be divided into parts.

b) One of the principal advantages of money over barter is its disability to be divided into parts.

c) One of the principal advantages of money over barter is its ability to be divided into parts.

3. Більшість країн використовує високоякісний папір для виготовлення грошей.

a) Most countries use high- quality paper to produce money notes.

b) Some countries use high- quality paper to produce money notes.

c) Most countries used high- quality paper to produce money notes.

4. Монети виготовляють із різних металів.

a) Coin is made of different metals.

b) Coins were made of different metals.

c) Coins are made of different metals.

5. Гроші дають нам змогу встановлювати ціну товару.

a) Money serve to assess the value of a commodity.

b) Money serves to assess the value of a commodity.

c) Money served to assess the value of a commodity.

6. Прямий обмін товарами неможливий у розвинутому суспільстві.

a) A direct exchange of commodities is impossible in a developed society.

b) A direct exchange of commodities is possible in a developed society.

c) A direct change of commodities is impossible in a developed society.

7. Головна різниця між бартерною та грошовою економікою полягає в тому, що при бартерній економіці вам слід шукати когось , хто мав би те, що ви хочете, і хотів би те, що ви маєте.

a) The difference between a barter and a money economy is that in a barter economy you must find someone who has what you want and wants what you have.

b) The main difference between a barter and a money economy is that in a barter economy you must find someone who has what you want and wants what you have.

c) The main difference between a barter and a money economy is that in a barter economy you must find someone who had what you wanted and wants what you have.

8. Для того, щоб розвивалася торгівля, мають існувати гроші.

a) Money exists to develop commerce.

b) Money must exist to develop economy.

c) Money must exist to develop commerce.

9. Гроші – це засіб, що дає нам можливість робити обмін.

a) Money is a medium that gives an opportunity to exchange.

b) Money are a medium that gives an opportunity to exchange.

c) Money was a medium that gives an opportunity to exchange.

10. Гроші дають нам змогу робити покупки коли-небудь у майбутньому, використовуючи вартість чогось, що ми продаємо сьогодні.

a) Money gave us a chance for purchase in the future using the value of what we sell at present.

b) Money will give us a chance for purchase in the future using the value of what we sell at present.

c) Money gives us a chance for purchase in the future using the value of what we sell at present.

TEXT 5. Money Laundering

Task 1. Study the vocabulary:

money laundering	відмивання грошей
to earn money	заробляти гроші
legally	законно, легально
to steal (stole, stolen)	красти
bank robberies	пограбування банку
bank raids	напади на банк
extremely rare	надзвичайно рідкісний
illegal transactions	незаконні угоди
to smuggle	займатись контрабандою
drug trafficking	контрабанда та торгівля наркотиками
underground market	’’чорний‘‘ (нелегальний) ринок
dirty money	’’брудні‘‘ гроші
to remember	пам’ятати
tax avoidance	ухилення від сплати податків
to try	намагатись

Task 2. Read and translate the text:

John: The other day I heard the term money laundering. Do you know what it is?

Mark: First, I must tell you that not all money has been earned legally.

John: Do you mean to say that the money has been stolen? Bank robberies or something like that?

Mark: Not only. Bank raids are extremely rare in our times. That means earning money in illegal transactions.

John: Like what?

Mark: Smuggling, drug trafficking, prostitution.

John: Oh, I see.

Mark: On the whole, it is called the underground market and the money earned there is called dirty money.

John: But nobody knows it is dirty.

Mark: Well, it seems true but in fact it isn’t. Remember that there are taxes. People who earn dirty money pay no taxes. Tax avoidance is also illegal.

John: It certainly is.

Mark: So you see, they can’t spend dirty money as they like. They can’t show that they have the money. So they try to invest it in some legal business.

John: And this is called money laundering.

Mark: Exactly.

Task 3. Choose the best ending:

1. Money laundering is …

a) cleaning clothes

b) washing money

c) earning money illegally

2. Bank robberies are …

a) bank loans

b) bank raids

c) bank borrowings

3. Money earned at the underground market is called …

a) dry money

b) clean money

c) dirty money

4. People who earn dirty money pay …

a) taxes

b) no taxes

c) debts

5. They try to invest dirty money in some …

a) legal business

b) illegal business

c) underground business

Task 4. Match the words in column A with their definition in column B:

1) money

2) smuggling

3) coin

4) liquidity

5) portability

6) currency

7) dirty money

8) tax avoidance

a) paper money

b) you can carry your money in a wallet or a purse

c) a metallic form of money

d) earning money illegally

e) a market without any laws

f) a means of exchange

9) underground market

10) money laundering

g) unwillingness to pay taxes

h) illegal trafficking of goods

g) giving money to buy food

h) unwillingness to pay taxes

i) illegal trafficking of goods

j)money earned in illegal transactions

Task 5. Read the statements and decide whether they are true or false:

1. Money laundering is a process of earning money at the perfect money.

2. Bank robbery is depositing money with a bank.

3. Bank raids are not rare in our times.

4. Dirty money is usually earned at the underground market.

5. People who earn dirty money don’t pay taxes.

Task 6. Choose the best answer:

1. Is all money earned legally?

a) yes, it is

b) no, it is not

c) no, they are not

2. What is called the underground market?

a) a perfect market

b) a legal market

c) an illegal market

3. What is dirty money?

a) money earned in legal business

b) money earned in a free market

c) money earned in illegal transaction

4. Is smuggling legal?

a) yes, it does

b) yes, it is

c) no, it isn’t

5. Do people who earn dirty money pay no taxes?

a) yes, they are

b) yes, they will

c) yes, they do

6. What is money laundering?

a) selling goods illegally

b) trafficking goods illegally

c) earning money illegally

TEXT 6. Money Today

Task 1. Study the vocabulary:

change	тут, дрібні гроші
bills	банкноти
purse	гаманець
wallet	сумка, гаманець
major	головний
several	декілька
familiar	знайомий
to consist	складатись
average	середнє (число)
circulation	обіг
legal-tender	законний платіжний засіб
to mean	означати
law	закон
to require	вимагати
to accept	приймати
payment	оплата
debt	борг
demand deposit	вклад на вимогу
money supply	грошова маса
checking account	поточний рахунок
available	доступний
to pay an interest	платити відсоток
to find (found, found)	знаходити
definition	визначення
to use	використовувати

Task 2. Read and translate the text:

MONEY TODAY (TEXT A)

You may think that the change in your pocket and bills in your purse or wallet are the major forms of money used in the United States today. But, in fact, Americans use several forms of money. Table lists the kinds of money in circulation in this country.

Currency. The money you are most familiar with, currency, consists of the paper money and coins that you use almost daily. In 1994 there was an average of $355 billion in currency in circulation daily. Currency is legal tender. This means the law requires that it be accepted in payment of a debt.

Demand deposits. Another large component of the money supply is demand deposits.

Demand deposits are checking accounts held by the public at commercial banks. They are called demand deposits because they are available "on demand" by writing a check. These checking accounts do not pay any interest. Commercial banks, which are used by both business and the general public, do most of the nation's banking business. Why are checking accounts listed as part of the money supply? The answer is found in the definition of money, which is anything generally accepted in payment for goods and services. Since checks are generally accepted (they are the predominant form of payment used by business), they are a form of money.

Task 3. Match the words from column A with the words from column B:

A	B
1) circulation	a) борг
2) to accept	b) вклад на вимогу
1) legal tender	c) поточний рахунок
2) money supply	d) платити відсоток
3) demand deposit	e) приймати
4) available	f) банкноти
5) checking account	g) законний платіжний засіб
6) debt	h) обіг
7) to pay an interest	i) грошова маса
8) bills	j) доступний

Task 4. Find in the gaps with words given below:

1. Americans use 1._________ forms of money.

2. Currency consists of the 2.__________ and coins that you use almost daily.

3. As currency is a legal tender, this means the law requires that it be 3.__________ in payment of a debt.

4. Demand deposits are 4.__________held by the public at commercial banks.

5. The checking accounts do not pay any 5.__________.

6. Why are checking accounts listed as a part of the 6.__________?

Paper money, interest, money supply, checking accounts, accepted, several

Task 5. Read the statements and decide whether they are false or true:

1. Change and bills in our purses are the major forms of money used in the United States today.

2. Currency consists of the paper money and coins.

3. Currency is considered a legal tender.

4. Demand deposits are called so because they are available “on demand by writing a check”.

5. Checking accounts pay much interest.

Task 6. Choose the right answer:

1. What is currency?

a) paper money

b) coins

c) both

2. What is legal tender?

a) checks

b) currency

c) shares

3. Are checking accounts called demand deposits?

a) Yes, it is

b) Yes, they were

c) Yes, they are

4. Why are checking accounts listed as a part of money supply?

a) because they are widely used

b) because they are generally accepted

c) because they are not generally accepted

5. Is a demand deposit a large component of the money supply?

a) Yes, it was

b) Yes, it is

c) No, it was not

TEXT 7. Money Today

Task 1. Study the vocabulary:

to allow	дозволяти
depositor	вкладник
to make withdrawals	здійснювати вилучення (грошей)
payment	платіж
loan associations to offer	кредитні установи пропонувати
checking account	поточний рахунок
to pay interest	платити відсоток
to make up	формувати, створювати
money supply	грошова маса
traveler’s check	дорожний чек
various denominations	різноманітної номінальної вартості
face amount of the check	номінальна сума по чекуплата за
fee for the service	послуги
to guarantee	гарантувати
cash	готівка
to lose (lost, lost)	втрачати
to steal ( stole, stolen)	красти
money in circulation	гроші в обігу
to expand	розширювати
to cash checks	перевести чек у готівку
to deposit currency	зробити валютний вклад
to reduce	скорочувати

Task 2. Read and translate the text:

TEXT B

Other checkable deposits. A checkable deposit is one that allows the depositor to make withdrawals and payments by check. Most savings banks, savings and loan associations, and credit unions offer checking accounts and pay interest. These accounts make up another large part of the money supply.

Traveler’s checks. Traveler’s checks are sold in various denominations by banks and travel agencies. Buyers pay the face amount of the check plus a small fee for the service. These checks are popular because they are guaranteed, and, unlike cash, they can be replaced if they are lost or stolen. The $8 billion in traveler’s checks at any one time is the smallest component of the money supply.

The amount of money in circulation is constantly changing; our economy has an elastic currency. That is, its supply automatically expands and contracts with the needs of business. For example, in November and December banks need a lot of currency because many people are cashing checks for Christmas shopping. After the holidays stores deposit the currency in their bank accounts, reducing the amount in circulation. Therefore, the money supply in February or September is different from the money supply during the peak of the holiday season.

Task 3. Match the words in column A with the words in column B:

A B

1) кі

1 2 3 4 5 6 7 8 9 10 11 12 13

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