ЧАСТНОЕ ОБРАЗОВАТЕЛЬНОЕ УЧРЕЖДЕНИЕ

СРЕДНЕГО ПРОФЕССИОНАЛЬНОГО ОБРАЗОВАНИЯ

«КРАСНОДАРСКИЙ ТЕХНИКУМ УПРАВЛЕНИЯ, ИНФОРМАТИЗАЦИИ И СЕРВИСА»

М.С. Манукян

«Английский язык.

Практикум для студентов СПО. Укрупненная группа 38.00.00 «Экономика и управление»»

Учебное пособие

Краснодар

2014

3

ПРЕДИСЛОВИЕ

Учебное пособие «Английский язык. Практикум для студентов СПО.

Укрупненная группа 38.00.00 «Экономика и управление»», является одним из

циклов учебных материалов на иностранном языке (английский),

предназначенных для слушателей и студентов, обучающихся по

специальностям 080110 – Банковское дело, 080114 – Экономика и

Бухгалтерский учет». Данное учебное пособие носит практический характер

и составлено в соответствии с требованиями рабочей программы по

подготовке экономистов для системы среднего профессионального

образования. В учебном пособии содержится информация по специальности

«080110 – Банковское дело, 080114 – Экономика и Бухгалтерский учет»,

которая может быть полезна студентам любого СПО с подобного рода

тематикой. Сочетание аутентичных текстов экономической тематики,

текстов оригинальных контрактов и образцов коммерческой документации

нацелено на дальнейшее формирование навыков и умений в различных видах

чтения, в работе с лексикой и терминологией профессиональной сферы

бизнеса, а также обучение устным формам общения, умению кратко

передавать содержание прочитанного материала.

4

Part I

UK ECONIMICS

The UK economy

Great Britain has an open economy, in which foreign trade plays a vital part.

About one-quarter of its gross domestic product comes from the export of goods

and services, a high share among major economies. Private enterprise accounts for

three-quarters of gross domestic product and over two-thirds of total employment.

Services now account for 60 percent of gross domestic product and manufacturing

for about 25 percent. Britain is among the largest exporters of steel, chemicals,

aircraft and satellites, textiles and clothing, financial, business and other services.

The keynote of government industrial policy is to encourage enterprise.

Competition policy seeks to promote market efficiency where this is not achieved

solely by market forces. A substantial privatization program has encouraged share

ownership. It has also involved the privatization of a number of major businesses

including British Airways, British Gas, British Telecom, and the water supply

industry.

1. What do you know about the British economy?

2. What is the large-scale privatization program?

3. What is the keynote of government industrial policy?

The administration of welfare in the UK

The administration of the welfare state has undergone two major reforms

since its inception. The first phase, covering the 1960s and 1970s, saw central

government reformed in order to allow the planning and control of public

expenditure by the Treasury. The aims of this reform were managerial efficiency

and economic planning. The effect was to create a system in which the Treasury

allocated resources to departments, and departments to services.

The second phase, which has led in the 1980s and 1990s to restructuring of

the civil service and the administration of welfare, has three main elements:5

The breakup of the administration into agencies, so that the efficiency of each

part of the administration can be assessed individually. Examples are NHS trusts

and the administrative agencies responsible for Social Security.

The introduction of 'management', with managers being responsible for

running agencies in a business-like fashion; this is widespread in health and

personal social services.

Quasi markets. Public services are required to act more like economic

markets, with the separation of purchasing and provision of services and the

introduction of competition. The trend is strongest in health and social care.

In recent years, the work of many central government agencies serving

government, like the DWP's information technology or the DoH's laboratories,

have been privatized or contracted out; the main role of the agencies that remain is

direct service provision to the public. 

Welfare and children (the 'personal social services').

Contemporary arguments emphasized the inter-related nature of these

services, and the importance of each for the others. However, the administrative

division between services was reinforced by reactions against the unifying and all-

embracing nature of the Poor Law, which led to a strong distinction being made

between income maintenance, health and welfare services.

The 'Welfare State' was not intended to respond to poverty; that was what the

Poor Law had done. The main purpose was to encourage the provision of the social

services on the same basis as the public services - roads, libraries and so forth - an

'institutional' model of welfare. Criticisms of the Welfare State in later years,

however, were to concentrate increasingly on the problem of poverty, and debates

in the UK are increasingly residual in tone.

1. What are the distinctive features in the structure of Scotland,

Northern Ireland and Wales?

2. How do you understand the administrative structure in Northern

Ireland?

3. What steps led to the restructuring of public service? 6

4. How do you understand the word “management”?

5. Tell about local government in Britain?

6. What changes led to the industrial revolution in Britain?

7. Which system of state insurance did Beveridge in 1942offer?

8. How could you describe the social state of Britain after 1948?

Foreign trade of the UK

In the 19th century Britain dominated international trade, accounting for

about one-third of the world's exports. Early in the 20th century Its position

changed. The volume of world's exports increased but the percentage of British

exports in world trade declined significantly.

But still foreign trade is vital to Britain's livelihood. With a large population,

small land area, and few natural resources, the country must depend on foreign

trade to supply the raw materials for English factories and to provide a market for

the sale of the thousands of types of manufactured goods produced by English

industries,

The United Kingdom's principal exports are vehicles, machinery,

manufactured goods and textiles. Her main imports are food-staffs and most of the

raw materials for industry.

There is usually an unfavorable balance of trade, that is, imports exceed

exports, but this is compensated for in part by the so-called invisible trade.

The earnings from invisible trade come in the way of shipping, charges,

interest payments from foreign investments, interest payments from British

enterprises abroad, and tourist expenditure. The earnings from foreign tourist trade

make this one of British important industries.

Britain has got very sound economic ties with various countries of the world,

especially the Commonwealth countries. The Commonwealth, officially called The

Commonwealth of Nations has grown out of the old British Empire which came to

an end with the Second World War. The Commonwealth countries are Canada,

Australia, New Zealand and a few small countries and territories. The UK enjoys 7

special rights to import various agricultural products such as fruits and vegetables

from the Commonwealth at very good prices all year round.

1. What do you know about foreign trade of Great Britain?

2. What is the main export of Great Britain?

3. What is the main import of Britain?

4. Tell us about the Commonwealth of Nations?

5. Which countries are the members of the Commonwealth of Nations?

Types of UK Companies

UK companies are a common form of business entity in the UK for carrying

out some trade of other venture.

The main types of company are: private and public limited and unlimited

companies. Those which fall in to the private category can be further divided in

types which are limited by guarantee and those by shares.

All of the above types of business entity are incorporated by Companies

House.

The latter type, private companies limited by shares are by far the most

common form of registered entity in the UK.

Private Companies Limited by Shares

This type of business is a traditional trading entity. It is owned by

shareholders and is run by at least one director. Whilst the specific activities which

this type of company will be engaged in will vary businesses adopting this

structure are usually engaged in some form of profit seeking enterprise. Private

Companies Limited by Guarantee

Private companies limited by guarantee are not for profit organizations such

as charities and societies. They have members rather than shareholders and would

not be permitted to distribute excess income to them. Any surpluses would be

retained for future activities and given back to the original source if no such

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projects were available. The object clauses of a company limited by guarantee are

usually far more specific than those of a business limited by shares.

In many cases, such entities are set up with a particular purpose in mind and

thus stating these objectives might ensure that the actual activities do not deviate

from this stated reason.

Public Limited Companies PLCs

Public limited companies are usually larger business entities engaged in some

trading activity with the view of making a profit.

A company seeking a listing on the London Stock Exchange must be a PLC

before admission can be granted.

Minimum Share Capital Requirements

A public limited company have minimum share capital requirement which

must be met before Companies House will incorporate the company.

The rules are that there must be at least Ј 50,000 worth of shares issued on

incorporation with at least Ј12, 500 paid up. Because of the necessity to deposit

this sum of money with the company up on registration, the number of this type of

entity which are formed in the UK are fewer than for private companies which do

not require any initial deposits.

Unlimited Companies

Unlimited companies are those which are incorporated without limited

liability. This type of business entity is extremely rare in the UK. One situation

where an unlimited company might be appropriate is where individuals essentially

require a partnership business, but wish to avoid the time and expenses involved in

drafting a detailed agreement. The share distribution (and the rights which each

confers) available through a company might be preferable.

Owners should be confident that their insurance will replace all of their

merchandise.

1. What types of companies in the UK do you know?

2. How would you describe the private limited companies?

3. What is the Limited Company PLC? 9

4. What are the minimum capital requirements for Share?

5. Why are the unlimited companies extremely rare in the UK?

Part II MONEY

MONEY

Money is anything that is in general use in the purchase of goods and services

and in the discharge of debts. Money may also be defined as an evidence of debt

owed by society. The money supply in the US consists of currency (paper money),

coins, and demand deposits (checking accounts). Currency and coins are

government-created money, whereas demand deposits are bank-created money. Of

these three components of the money supply, demand deposits are by far the most

important. Thus, most of the money supply is invisible, intangible, and abstract.

The two most important inherent attributes that money must possess in a

modern credit economy are acceptability and stability. In earlier times in the

evolution of money and monetary institutions in the United States, the attributes of

divisibility, portability, and visibility were important. The two legal attributes of'

legal tender' and 'standard money' are not of as much importance today as in the

past.

The four functions that money often performs are (1) standard of value, (2)

medium of exchange, (3) store of value, and (4) standard of deferred payment. In a

modern specialized economy, (2) and, most especially, (1) are the most important

of these.

Although it is agreed that the value of money has fallen in the US over time,

there are three in part conflicting theories of value that have been advanced to

explain this phenomenon: the commodity, quantity, and income theories. Most

economists today espouse either the second or, more typically, the third of these.

Any money can retain its value as long as its issuance is limited; it need not have a

commodity backing. Inflation or rising prices have been explained by demand

10

and/or supply theories in recent years, although historically the former has been

thought to provide the more satisfactory explanation.

1. What does the money supply in the US consist of?

2. What attributes of money were important in the past?

3. What are the most important attributes of money in a modern credit

economy?

4. What are the functions that money performs?

5. The value of money has fallen in the US over time, hasn't it?

Glimpses of history of money

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 experts underline that to serve

effectively as money, a commodity should be fairly durable, easily divisible, and

portable. 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 weighted out. The next stage

was the cutting of the metal into pieces of definite weight and so coins came into

use.

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

the receipts became banknotes. That's how the first banknotes came into existence.

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.

1. What qualities should a commodity have to serve as money?

2. What precious metal was used first to serve as money?

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3. How did coins come into existence?

4. How did the first banknotes come into existence?

5. Coppers are made from bronze, aren't they?

6. What coins are called silver?

Money and its function

All values in the economic system are measured in terms of money. Our

goods and services are sold for money, and that money is in turn exchanged for

other goods and services. Coins are adequate for small transactions, while paper

notes are used for general business. There is additionally a wider sense of the word

'money', covering anything, which is used as a means of exchange, whatever form

it may take. Originally, a valuable metal (gold, silver or copper) served as a

constant store of value, and even today the American dollar is technically 'backed'

by the store of gold which the US government maintains. Because gold has been

universally regarded as a very valuable metal, national currencies were for many

years judged in terms of the so-called 'gold standard'.

Nowadays however valuable metal has generally been replaced by paper

notes. National currencies are considered to be as strong as the national economies,

which support them. Paper notes are issued by governments and authorized banks,

and are known as 'legal tender'.

The value of money is basically its value as a medium of exchange, or as

economists put it, its 'purchasing power'. This purchasing power is dependent on

supply and demand. If too much money is available, its value decreases, and it

does not buy as much as it did, say five years earlier. This condition is known as

'inflation'.

1. What does the purchasing power of money depend on?

2. Who issues paper notes?

3. The American dollar is technically 'backed' by the store of gold, isn't it?

4. What is inflation?

12

English banknotes and coins

The official currency of the UK is the pound sterling, which is equal to one

hundred pence. English banknotes are issued by the Bank of England. As to coins

they are minted also by this state bank.

There are banknotes of the following denominations: £1, £5, £10, £20, £50

and £100. The following coins are in circulation: halfpenny, one penny, two pence,

five pence, ten pence, fifty pence.

On the face of English banknotes one can read the denomination given both in

figures and in words.

Then the inscription on the face of the banknote reads: I promise to pay the

bearer on demand the sum of.... And then there are two signatures. The first

signature is that of the person authorized by the Government and the Bank of

England. The second signature is that of the Chief Cashier.

The backs of English banknotes, like many other banknotes, feature portraits

of different famous people.

1. Is the official currency of the UK the pound sterling or euro?

2. What banknotes and coins are in circulation in the UK?

3. Whose signatures are there on the face of English banknotes?

4. The backs of English banknotes feature portraits of different famous

people, don't they?

Monetary Policy

Monetary policy is conducted by a nation's central bank. In the U.S. monetary

policy is carried out by the Federal Reserve Bank frequently referred to us "the

Fed." The Fed has three main instruments that it uses to conduct monetary policy:

open market operations, changes in reserve requirements, and changes in the

discount rates. Open market operations involve Fed purchases and sales of U.S.

government bonds. When the Fed purchases government bonds, it increases the

reserves of the banking sector, and by the multiple deposit expansion process, the

13

supply of money increases. When the Fed sells some of its stock of bonds, the end

result is a decrease in the supply of money. If the Fed increases bank reserve

requirements, the banking sector's excess reserves are reduced, leading to a

reduction in the supply of money; a decrease in reserve requirements induces an

increase in the supply of money.

The discount rate is the interests rate the Fed charges banks that need to

borrow reserves in order to meet reserve requirements.

If these obligations are not met, the corporation can be forced to sell its assets

in order to make payments to the bondholders.

Stocks often rise and fall in value rapidly, while bonds tend to be more stable.

Bondholders are creditors of a corporation with a guaranteed return on their

investment, whereas stockholders are owners, with all the risks and rewards

ownership entails.

Banks can make up deficiencies in their required reserves by borrowing from

the Fed at the discount rate. If the Fed sets the discount rate high relative to market

interest rates, it becomes more costly for banks to fall below reserve requirements.

Similarly, when the discount rate is low relative to market interest rates, banks tend

to hold fewer excess reserves, allowing for greater deposit expansion and an

increase in the supply of money.

The Fed is engaging in expansionary monetary policy when it uses any of its

instruments of monetary policy in such a way as to cause an increase in the supply

of money. The Fed is said to engage in contractionary monetary policy when it

uses it instruments to effect a reduction in the supply of money.

Keynesian and classical views of monetary policy. They believe that

expansionary monetary policy increases the supply of loanable funds available

through the banking system, causing interest rates to fall. With lower interest rates,

aggregate expenditures on investment and interest-sensitive consumption goods

usually increase, causing real GDP to rise. Hence, monetary policy can affect real

GDP indirectly. Keynesians tend to place less emphasis on the effectiveness of

monetary policy and more emphasis on the effectiveness of fiscal policy, which 14

they regard as having a more direct effect on real GDP. The classical economists

believe that an increase (decrease) in the quantity of money leads to a proportional

increase (decrease) in the price level. Their view is that expansionary monetary

policy can only lead to inflation, and contractionary monetary policy can only lead

to deflation of the price level.

Monetarist view on monetary policy. Since the 1950s, a new view of

monetary policy, called monetarism, has emerged. Monetarists believe that

persistent inflations (or deflations) are purely monetary phenomena brought about

by persistent expansionary (or contractionary) policies. Their view is that monetary

policy should serve to accommodate increases in real GDP without causing either

inflation or deflation.

1. Explain the meaning of "monetary policy"?

2. What role does the Federal Reserve Bank's have?

3. What are the three main instruments is the Federal Reserve Bank?

4. Define the word "discount rate"?

Inflation

The control of rising prices and the depreciating value of money has been an

aim of economic policy for many years. In the past, it was thought that the control

of inflation created unemployment and that inflation only occurred at times of full

or near-full employment. In recent years, the problem has been much more serious

because rising inflation has been accompanied by high levels of unemployment.

A simple description of inflation is too much money chasing too few goods. It

poses a serious problem because it has so many bad effects. The first obvious one

is that one's money buys less and less as prices of goods and services continue to

rise and one's standard of living falls as a result. This is made worse by the fact that

people of low and fixed incomes, for example pensioners, are most seriously

affected and they are the least able to help themselves. It is argued by some

economists that some inflation is good for the economy, since deflation leads to

unemployment and depression, but clearly, a high level of inflation is injurious and 15

makes economic progress difficult, if not possible. Successive governments,

therefore, introduce policies which are designed to control inflation. These fall into

two groups. The first aims to decrease demand for goods and services. It includes

increases in taxation, restriction of credit, and rising of interest rates, all of which

reduce consumers' spending power (demand). These measures are usually

supported by reduced government expenditure which, in turn, decreases the

amount of money circulating in the economy and is therefore a further control on

demand.

The second group of measures aims to hold or reduce costs and therefore

prices. The chief measure is the carrying out of an incomes policy designed to

control wages and salaries at a specified level or specific ones to the level of

increased productivity achieved.

Economists talk of, and distinguish between, cost-push inflation -price rises

which occur because the costs of production are increasing more than output, and

demand-pull inflation - price rises which occur as a result of increased demand.

The two types of inflation are closely connected.

Control of inflation

In recent years many measures have been used in an attempt to control

inflation. The main ones have been those which limit rises in incomes and prices.

While prices and incomes policies do help to control inflation, they obviously do

not provide a complete answer. The level of prices at home depends to some

extend on the prices of imports, which are determined by factors outside our

control, as well as on the value of home currency, which depends partly on the

levels of other countries' currencies.

The only permanent answer to the control of inflation is an increase in

productivity - and consequently total production - that is easier said than achieved.

Many internal and external influences govern economic activity and performance.

The government must try to influence and control these for the best interests of the

country and its people, through measures which affect the supply of money in the

economy, taxation and other controls16

1. What is inflation? What is it characterized by?

2. What are the measures to control inflation?

3. Does the level of prices at home depend on the prices of imports?

4. Can the government influence and control inflation?

Part III BANKS

Banking

The goldsmiths of the seventeenth century were the first real English bankers.

Gold and silver were accepted internationally for the payment of debts. Gold

was most commonly used in this country. Consequently, merchants needed to keep

some in reserve to meet their demands. They placed these stocks in gold with the

goldsmiths for safekeeping. In return for the gold the goldsmiths issued receipts,

upon presentation of which the gold would be repaid. From this process two

customs naturally emerged. The merchants realized that it was not necessary to go

to the goldsmiths and withdraw gold every time they needed money when other

merchants who knew or trusted the goldsmith were willing to accept a receipt

instead. This was the beginning of the use of paper money. Soon the goldsmiths

realized that while people who had deposited gold with them would want to

withdraw it at some time, not everyone withdrew simultaneously. Consequently, as

long as sufficient gold was retained to meet the demand for withdrawals, the rest

could be lent to reliable customers on payment of interest.

From these beginnings gradually emerged the foundations of the modern

banking system. Today this is sophisticated, highly organized and efficient, but the

basic functions, namely to receive deposits and keep them safe, make loans and

facilitate the transfer of money, still remain.

Banks

Banks are closely concerned with the flow of money into and out of the

economy. They often cooperate with governments in efforts to stabilize economies

and to prevent inflation. They are specialists in the business of providing capital, 17

and in allocating funds on credit. Banks originated as places to which people took

their valuables for safekeeping, but today the great banks of the world have many

functions in addition to acting as guardians of valuable private possessions.

Banks normally receive money from their customers in two distinct forms: on

current account, and on deposit account. With a current account, a customer can

issue personal cheques. No interest is usually paid by the bank on this type of

account. With a deposit account, however, the customer undertakes to leave his

money in the bank for a minimum specified period of time. Interest is paid on this

money.

The bank in turn lends the deposited money to customers who need capital.

This activity earns interest for the bank, and this interest is almost always at a

higher rate than any interest, which the bank pays to its depositors. In this way the

bank makes its main profits.

We can say that the primary function of a bank today is to act as an

intermediary between depositors who wish to make interest on their savings, and

borrowers who wish to obtain capital. The bank is a reservoir of loanable money,

with streams of money flowing in and out. For this reason, economists and

financiers often talk of money being 'liquid', or of the 'liquidity' of money. Many

small sums which might not otherwise be used as capital are rendered useful

simply because the bank acts as a reservoir.

The system of banking rests upon a basis of trust. Innumerable acts of trust

build up the system of which bankers, depositors and borrowers are part. They all

agree to behave in certain predictable ways in relation to each other, in relation to

the rapid fluctuations of credit and debit. Consequently, business can be done and

cheques can be written without any legal tender visibly changing hands.

1. What is the main function of a bank?

2. Do banks cooperate with governments?

3. Does the bank pay any interest on current account?

4. Does the bank pay any interest on deposit account?

5. How can money be 'liquid'?18

6. The system of banking rests upon a basis of trust, doesn't it?

7. Do banks act only as guardians of valuable private possessions?

Types of Banks

Whether commercial or public, government or private - there are numerous

types of banks, each serving its own specific role.

There are several types of banks in the world, and each has a specific role and

function - as well as a domain - in which they operate. In broad strokes, banks may

be divided into several groups on the basis of their activities and these include

investment banks, retail, private, business, and also corporate banks. Many of the

larger banks have multiple divisions covering some or all of these categories.

Retail banks deal directly with consumers and small business owners. They

focus on mass market products such as current and savings accounts, mortgages

and other loans, and credit cards. By contrast, private banks normally provide

wealth management services to high net worth families and individuals.

Business banks provide services to businesses and other organizations that are

medium sized, whereas the clients of corporate banks are usually major business

entities.

Lastly, investment banks provide services related to financial markets, such as

mergers and acquisitions.

Another way in which banks may be categorized is on the basis of their

ownership. They might either be privately held or publicly owned banks.

Privately owned banks are motivated by profit in their business operations.

Publicly owned banks are held by the state governments of the individual countries

and they serve as a nation’s centralized bank, as well as an economic backbone for

that particular country. They are also known as central banks.

Publicly owned banks, which are controlled by the government, have

numerous responsibilities pertaining to the banking sector of the country, such as

administering various activities for the commercial banks of that country. They 19

also determine the rates of interest offered by banks doing business in that country,

as well as playing a major role in maintaining liquidity in the banking sector.

There are several types of notable retail banks. These include the offshore,

community and savings banks, as well as the community development banks,

building societies, postal savings banks, ethical banks and Islamic banks.

Offshore banks operate in areas of reduced taxes, as compared to the country

in which the investor lives in. This is why most offshore banks are private banks.

Community banks are monetary organizations operated on a local basis, while

community development banks cater to the populations or markets that have

typically not been served properly.

Postal savings banks are basically savings banks that operate in conjunction

with the national postal systems of that country.

Building societies where traditionally mutually owned by their customers.

They provide a full range of retail banking services, but with a particular focus on

mortgages.

Ethical banks do their business based on their own code of conduct. They

only accept investments that they perceive to be useful from a social and

environmental point of view. The Islamic Banks perform their business operations

as per the Sharia law, the Islamic code of law. In particular, this means that they

operate sans interest.

There are two types of investment banks - the investment banks that perform

underwriting activities, and the merchant banks, a traditional form of banking, that

performs trade-financing activities.

1. What types of banks do you know?

2. What is the difference between retail and business banks?

3. What are the investment banks?

4. What do you know about community banks monetary organizations?

5. What similarities do all types of the banks have?

20

Different bank systems

Primarily all banks gather temporarily idle money for the purpose of lending

to others and investments which bring gain in the form of return, profit and

dividends etc. However, due to the variety of resources of money and the diversity

in lending and investment operations, banks have been placed in various

categories, such as commercial banks, savings banks, merchant banks, mortgage

banks, consumer banks, investment banks, development banks, cooperative banks,

eximp banks and central banks etc.

Commercial Banks. The commercial banks receive deposits from the general

public which are repayable on demand upon written orders of the depositors. As

their most distinctive feature the commercial banks maintain chequing accounts for

the constituents. The commercial banks are also distinguished for providing short

term finance to trade, commerce and industry to enable these sectors to expand

their productive activities.

Merchant Bank. Merchant banks are those which have been mainly financing

the domestic and international trade in United Kingdom. During the late eighteenth

and early nineteenth centuries the trade between countries was financed by bills of

exchange by well reputed merchant houses for which they would charge a

commission for their service. Thus the business of accepting bills of exchange to

finance the trade developed and gradually these business houses entered into other

banking activities and became known as “merchant banks”. Since all the

commercial banks, in addition to other banking functions, also deal in trade

financing, the term ‘merchant banks’ has gradually faded away.

Savings Banks. The basic purpose of these banks is to inculcate the habit of

savings in the people. The savings bank deposits are not repayable upon only the

written orders of the depositor but the depositor or his agent has to appear

personally at the saving bank to make withdrawal, and for this purpose he must

present a pass hook, a certificate of deposit or some similar documents to prove his

right to receive payment. Post Office Savings Banks and Savings Account at

national Saving Organization are well known operational Savings Banks.21

Mortgage Banks. These banks mainly deal in loans for the acquisition or

construction of real estate against the security of mortgages. Quite a few such

banks are operating in developed part of the world. Savings, and Loans

associations and farm-loan associations are some of the well known forms of the

mortgage banks.

Consumer Banks. These banks provide finance for purchasing consumption

goods for the use of the borrowers. Consumer finance companies, sales finance

companies and credit unions are some of the popular forms of consumer banks.

Investment Banks. The investment banks assist business houses and the

governmental bodies to raise money through the sale of stocks and bonds for

usually long term purposes. These banks perform the usual functions of raising

deposits of idle money from the public and finance the business houses and other

bodies.

Development Banks. These banks have been established to provide long term

development finance to the trade, commerce, and industry. Generally government

owned banks, established under a specially promulgated law. Agricultural

Development Bank and Industrial Development Bank are every well-known

development banks.

Cooperative Banks. These are the banks established and registered as a

cooperative venture to provide banking facilities to the members of the

cooperative. The Federal Bank of Cooperatives is well known such bank.

Exim Banks. These are the banks which provide finance for promotion of

imports and exports to trade, commerce and industry, these banks are contributing

greatly towards the expansion of international trade of developed countries, where

they function mainly in private sector.

Central Banks. Central banks occupy unique position in the banking structure

of a country because they have been entrusted with the responsibility of controlling

the money supply, interest rates and financial market of the country for the purpose

of economic development. Bank of England and Federal Reserve Bank of U.S.A.

are well known central banks.22

1. What are the main goals of banks?

2. What is the deposit?

3. What differs the commercial banks from trading?

4. What is the difference between investment, consumer and mortgage banks?

5. What do you know about co-operative banks?

English Banks

Today the British banking is a complicated tripartite system like a three-layer

cake. The system is headed by the Bank of England.

This bank was established under a royal charter in 1694. The head of the

Bank is Governor of the Bank appointed by the Queen on the recommendation of

the Prime Minister. The Queen also appoints Deputy Governor and the Court of

Directors, which consists of 16 directors.

The Bank of England is a central bank or a national bank. It controls the

British banking system, issues banknotes and mints coins. It lends and borrows

money for the government, manages the national debt and is in the control of the

nation's gold reserve. The other two layers are:

•the commercial or joint stock clearing banks

•specialized banking institutions such as the discount houses and merchant

banks.

The commercial or joint stock banks deal with the general public. The four

large English commercial banks are known as the Big Four. They are Barclays,

Lloyds, the Midland, and the National Westminster. Together they have upwards

of 10,000 branches. Commercial banks render various services to companies and

individuals. Some of the services are:

•to receive or accept from their customers the deposit of money

•to collect and transfer money both at home and abroad against deposit and

current accounts

• to provide overdrafts to both personal and business customers

•to lend loans to their customers23

•to exchange money

•to supply economic information and to prepare economic reviews to be

published

•to make foreign exchange transactions, including spot transactions, forward

transactions and swap transactions

•to issue various banker's cards

Merchant banks and discount houses deal only with special customers

providing funds for special purposes. They accept commercial bills of exchange

and offer quite a lot of financial services. They provide advisory services about

new issues of securities, mergers, take-over’s and reorganizations. They also

arrange financing for their customers and provide fund-management services.

Besides there is a big group of banks in the UK made up of foreign banks. All

the major foreign banks are represented in the UK by subsidiary, branch,

representative offices or consortium. They provide finance both in sterling and in

other currencies and offer a wide range of financial services.

Lombard Street is the symbol of British banking. This is the place where the

first bankers coming from Italy settled.

1. The Bank of England is a central bank, isn't it?

2. Who appoints the head of the Bank of England?

3. Deputy Governor is appointed by the Queen, isn't he?

4. Are there any foreign banks in the UK?

5. What is the Big Four?

6. What kind of services do merchant banks provide?

About Comerzbank

With consolidated total assets of about 380 billion Euros, Commerzbank,

based in Frankfurt am Main and- founded in 1870, is one of Germany's - and

Europe's - leading private-sector banks. Some 32,000 employees, including 7,000

abroad, serve roughly 7 million customers. Apart from the parent bank,

24

Commerzbank AG, the Group consists of numerous subsidiaries in Germany and

around the globe.

Commerzbank AG's domestic operations include a national network of over

700 branches. Internationally, the Group's activities are concentrated primarily in

Europe. Additional operations are maintained in key markets such as the USA

Commerzbank also has participations in and cooperations with, a number of

institutions worldwide.

A bank should and indeed must be primarily a provider of services. Our

market success is gauged first and foremost by how well it performs this function.

The yardstick is customer satisfaction, to which we at Commerzbank are

wholeheartedly committed.

We see ourselves as an efficient provider of financial services for demanding

private customers in Germany. We are also the creative relationship bank for the

successful German Mittelstand, for major corporates and institutions in Europe as

well as multinationals from all over the world.

In regional terms, we are concentrating on Germany, where we provide

integrated financial services, operating a nationwide branch network to advise and

sell our products to all customer groups. In corporate business, we also look upon

Western, Central and Eastern Europe as our core market, and North America as

well, where we have a long tradition.

1. Where is Commerzbank located?

2. When was it established?

3. Is it a state bank or a private bank?

4. How many employees does it have?

5. Does it serve 7 thousand or 7 million customers?

6. The bank has subsidiaries all over the world, does it?

25

Sberbank

Sberbank (Savings Bank of the Russian Federation) is the undisputed leader

of the Russian banking industry, accounting for over a quarter of national banking

assets. Established in 1841 it gained its present status of an open joint-stock

company in 1991. The General License of Sberbank allows it to operate as a

universal commercial bank in every segment of the financial market, providing its

customers with the full range of banking services.

The Bank's history of more than 160 years is closely related to the economic

and social development of the country. Numerous political and economic shifts

affected the Bank but its role as the major provider of funds to the national

economy through channeling deposits and its main mission of providing banking

services for all layers of the population have always remained unchanged. Public

recognition gained by Sberbank through tradition of being the bank for the people,

helped in establishing mutually advantageous relations between the Bank and its

customers.

Today Sberbank is a universal commercial bank, offering the widest range of

banking services, having a stable customer base and efficiently operating

practically on all segments of the financial market. Sberbank through its unique

network of over 20,000 branches provides banking services across the country in

11 time zones to over 1.3 million corporate customers and operates 250 million

retail accounts.

Backed by stable financial results, solid background and fine track-record

Sberbank stands out from other financial and banking institutions. Sberbank

accounts for 29% of banking assets, 62% of retail deposits and 17% of corporate

funds in Russia. The share of retail and corporate lending exceeds 50% and 32%

respectively.

Notwithstanding growing competition and rapid progress of the banking

sector Sberbank retains its stable market position and leadership in the Russian

banking system.26

Sberbank is universally recognized as number one in Russia, being the Bank

of the Year 2004 (The Banker), and ranked the 1st in CEE and 152nd in the world

(The Banker, 2004), the 1st on the Banker's Top 1000 banks from 27 transition

countries, and 381st among the largest 2000 world companies (Forbes, 2004).

Sberbank progresses as a universal commercial bank, providing both retail

and corporate services. State-of-the-art technologies, wide customer reach and

significant capital base facilitate successful servicing of the largest Russian

companies. Sberbank exercises integrated approach to corporate banking offering

tailor made services to its clients. The Bank's operations in corporate and retail

banking set a certain standard in Russia while some of the services are just unique.

The Bank maintains correspondent relations with over 200 banks around the

world and with its vast proprietary settlement system provides for payments

throughout Russia. The powerful IT systems insure fault free operations

domestically and abroad.

Starting from 1992 Sberbank's RAR financial statements and from 1996

financial statements under IAS are audited by top auditor companies chosen

through tender, among which are 'Price Waterhouse Coopers' and 'Ernst & Young'.

The Bank follows its 5-year Development Concept guidelines and its success

is achieved by meeting the Concept targets and by following the global banking

trends, full realization of its market potential and business success of its clients.

1. When was Sberbank established?

2. Now it is an open joint-stock company, isn't it?

3. Is it number one in Russia?

4. How many branches does Sberbank have?

5. What is the bank's rating in Russia, in CEE, and in the world?

6. Who audits Sberbank's financial statements?

7. The bank follows the global banking trends, does it?

27

World Savings Banks Institute

On October 27-29, 2004 the General Assembly of the World Savings Banks

Institute (WSBI) held its session in Brussels concurrently with the 'Access to

Finance' conference, coarranged by the World Bank.

The General Assembly of WSBI, which is its supreme body, unanimously

endorsed the Resolution on Access to Finance. The document highlights the

important role the savings banks play in the economic development of their

countries by mobilizing private savings for financing of companies and enterprises

of various size and type. Thus sustainable overall economic growth is provided,

employment is generated and higher standard of living is assured. The resolution

also calls for special attention to the accessibility of financial services to be

available for all strata of population, including in remote areas, as an important

factor of social and economic development. In this respect, the savings banks with

their ramified branch networks and enormous private customer reach, bear great

social responsibility to the state and the public and form an integral part of the

national financial systems.

The WSBI General Assembly decided on active participation of the

organization in the activities contemplated by the UN Year of Microcredit 2005.

The General Assembly also summed up the work of WSBI in the past year,

approved the budget and drafted action programs for the forthcoming year. Special

attention was given to strengthening the position and raising the authority of the

savings and similar retail banks in the financial community.

Currently WSBI is one of the largest international banking associations

uniting over a hundred savings banks from 89 countries. The total assets of

member banks amount to €7,600 bn; non-bank deposits make €4,750 bn and loans

to corporate non-bank clients and private customers exceed €4,000 bn. WSBI

member banks operate over 200,000 branches and employ close to 2.3 million

people. The Year 2004 is an anniversary year for the organization, which was

founded in Milan in 1924. The key objective of WSBI is to promote interests of the

savings banks worldwide. Sberbank is WSBI member since 1992.28

1. WSBI is one of the largest international banking associations, isn't it?

2. When and where was it founded?

3. Where did the General Assembly of the WSBI hold its session?

4. Who organized the conference 'Access to Finance'?

5. How many savings banks does WSBI unite?

6. How many people are employed in WSBI member banks?

7. Is Sberbank a member of WSBI?

The dual banking system - 1860s

In 1863, Congress passed the National Bank Act in an attempt to retire the

greenbacks that it had issued to finance the North's effort in the American Civil

War. This opened up an option for chartering banks nationally. As an additional

incentive for banks to submit to Federal supervision, in 1865 Congress began

taxing any issue of state bank notes (also called "bills of credit" or "scrip") a

standard rate of 10%, which encouraged many state banks to become national

ones. This tax also gave rise to another response by state banks—the invention of

the demand deposit account, also known as a checking account. By the 1880s,

deposit accounts had changed the primary source of revenue for many banks. The

result of these events is what is known as the "dual banking system." New banks

may choose either state or national charters (a bank also can convert its charter

from one to the other).

This rise of the commercial banking sector coincided with the growth of early

factories, since entrepreneurs had to rely on commercial banks in order to fund

their own projects. Contrary to the belief that insider lending prevents growth

because bad projects are funded from the inside, in this case lending to family and

friends actually helped further the development of banks. This was mainly due to

the fact that there was free entry into banking, insider projects were good, and few

bank failures occurred because they were not highly leveraged.

National Banks, are the bank that have the word "National" or "N.A." in the

name of the bank (i.e. First National Bank, or Citibank N.A.) National Banks are 29

regulated by the Office of the Comptroller of the Currency, Department of the

Treasury.

1. What has provided an opportunity for chartering banks nationally in

1863?

2. What is the deposit?

3. What you know about the national banks?

4. What is it like to dual banking system?

The Federal Reserve System

The Federal Reserve Act of 1913 established the present day Federal Reserve

System and brought all banks in the United States under the authority of the

Federal Reserve (a quasi-governmental entity), creating the twelve regional

Federal Reserve Banks which are supervised by the Federal Reserve Board.

Notwithstanding the Glass-Steagall Act of 1932 and the Banking Act of 1933 and

the Banking Act of 1935, which were attempts to reform various banking abuses,

the Federal Reserve System has remained more or less unchanged through to the

present day. The Glass-Steagall Act was repealed in 1999, whereas the Banking

Act of 1933 simply strengthened the supervisory powers of federal authorities and

created the Federal Deposit Insurance Corporation.

1. What is the Federal Reserve System?

2. What year was the Law of the Federal Reserve?

3. What is the deposit?

4. What is the Glass-Steagall?

5. What represents the Banking Act 1933?

Bank mergers and closures

Bank mergers happen for many reasons in normal business. For instance, to

create a single larger bank in which operations of both banks can be streamlined or 30

to acquire another banks brands. As well as due to regulators closing the institution

due to unsafe and unsound business practices or inadequate capitalization and

liquidity.

Banks are not allowed to go bankrupt in the United States. Accounts are

insured up to $250,000 as of Oct 2008 per individual per bank by the Federal

Deposit Insurance Corporation. Banks that are in danger of failing are either taken

over by the Federal Deposit Insurance Corporation, administered temporarily and

eventually sold off or merged with other banks. A List of banks seized by

regulators and the assuming institutions can be obtained at Federal Deposit

Insurance Corp - Failed Bank list.

1. What is the bank merger?

2. What is the deposit?

3. Speak about the error list of banks?

Loans

A loan is a type of debt. Like all debt instruments, a loan entails the

redistribution of financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money,

called the principal, from the lender, and is obligated to pay back or repay an equal

amount of money to the lender at a later time. Typically, the money is paid back in

regular installments, or partial repayments; in an annuity, each installment is the

same amount. The loan is generally provided at a cost, referred to as interest on the

debt, which provides an incentive for the lender to engage in the loan. In a legal

loan, each of these obligations and restrictions is enforced by contract, which can

also place the borrower under additional restrictions known as loan covenants.

Although this article focuses on monetary loans, in practice any material object

might be lent.

31

Acting as a provider of loans is one of the principal tasks for financial

institutions. For other institutions, issuing of debt contracts such as bonds is a

typical source of funding.

Types of loans

Secured

A secured loan is a loan in which the borrower pledges some asset (e.g. a car

or property) as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many

individuals to purchase housing. In this arrangement, the money is used to

purchase the property. The financial institution, however, is given security — a

lien on the title to the house — until the mortgage is paid off in full. If the

borrower defaults on the loan, the bank would have the legal right to repossess the

house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be

secured by the car, in much the same way as a mortgage is secured by housing.

The duration of the loan period is considerably shorter — often corresponding to

the useful life of the car. There are two types of auto loans, direct and indirect. A

direct auto loan is where a bank gives the loan directly to a consumer. An indirect

auto loan is where a car dealership acts as an intermediary between the bank or

financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the

recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of

a borrower is hedged by the lender against loss, using options or other hedging

strategies to reduce lender risk.

A pre-settlement loan is a non-recourse debt, this is when a monetary loan is

given based on the merit and awardable amount in a lawsuit case. Only certain

types of lawsuit cases are eligible for a pre-settlement loan.[citation needed] This is

considered a secured non-recourse debt due to the fact that if the case reaches a

verdict in favor of the defendant the loan is forgiven.32

Unsecured

Unsecured loans are monetary loans that are not secured against the

borrower's assets. These may be available from financial institutions under many

different guises or marketing packages:

credit card debt

personal loans

bank overdrafts

credit facilities or lines of credit

corporate bonds

The interest rates applicable to these different forms may vary depending on

the lender and the borrower. These may or may not be regulated by law. In the

United Kingdom, when applied to individuals, these may come under the

Consumer Credit Act 1974.

Demand

Demand loans are short term loans that are atypical in that they do not have

fixed dates for repayment and carry a floating interest rate which varies according

to the prime rate. They can be "called" for repayment by the lending institution at

any time. Demand loans may be unsecured or secured.

Loan payment

The most typical loan payment type is the fully amortizing payment in which

each monthly rate has the same value overtime.

Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually

involves granting a loan in order to put the borrower in a position that one can gain

advantage over him or her. Where the moneylender is not authorized, they could be

considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive

interest. In different time periods and cultures the acceptable interest rate has

varied, from no interest at all to unlimited interest rates. Credit card companies in

33

some countries have been accused by consumer organizations of lending at

usurious interest rates and making money out of frivolous "extra charges".

Abuses can also take place in the form of the customer abusing the lender by

not repaying the loan or with intent to defraud the lender.

1. What is а credit?

2. What distinguishes the legal loan?

3. What are the different types of loans?

4. Speak about the abuse of credit?

5. What is the interest rate?

Part IV The US Economics

The US economy

The American economy is a dynamic system that is constantly evolving out

of the choices and decisions made by millions of citizens who play multiply, often

overlapping roles as consumers, producers, investors and voters. By any standard,

the American economy has been immensely successful. With less than 5 percent of

the world's population, the United States in the early 1990s produced about 25

percent of the world's output. The U.S. economy is more than twice as large as the

next largest economy, that of Japan. By conventional measures, U.S. productivity

and standard of living remain among the highest in the industrial world.

Although the American economy has transformed itself over the years, certain

issues persisted since the early days of the republic. One is the continuing debate

over the proper role for government in what is basically a market economy.

Another recurrent theme has been the transformation of the U.S. economy by

emerging technologies. Beginning in 1870 and lasting for around a century, the

United Stated became the world's manufacturing power-house — leading the world

in the production of steel, automobiles and other products. Since the 1960s,

another transformation has been taken place, as new service-based and 34

information-processing industries gradually replace some of the old stalwarts of

the traditional industrial base. By the 2000s, advances made in such fields as

chemistry, electronics and biotechnology were producing goods and services

ranging from semiconductor circuits to laser surgery. Similarly, new farming

technology has transformed the American agricultural sector, allowing more food

and fiber to be produced by a constantly dwindling number of farmers.

The third theme has been the continuous debate over international trade

policy and, thus, over the degree of the United States integration into the world

economy. Each of these themes underscores certain fundamental characteristics of

the American economy. First, it is changing continuously, as citizens freely

express their economic preferences directly in the marketplace and indirectly in the

voting booth. At the same time, the Americans accept an important role for

government to help create an environment with the widest possible opportunities

for individual opportunity, and economic growth and progress.

1. What do you know about the U.S. economy?

2. When did the U.S. become the world's leading steel producer and cars?

3. What transformations have been in the U.S. since 1960?

4. Tell a few words about politics in the U.S. International Trade?

5. What distinguishes the U.S. economy of the Russian economy?

6. What are the similarities between the U.S. and the UK economy?

The US Consumer protection laws

Consumer protection laws often mandate the posting of notices, such as this

one which appears in all automotive repair shops in California

In the United States a variety of laws at both the federal or state levels

regulate consumer affairs. Among them are the federal Fair Debt Collection

Practices Act, the Fair Credit Reporting Act, Truth in Lending Act, Fair Credit

Billing Act, and the Gramm-Leach-Bliley Act. Federal consumer protection laws

35

are mainly enforced by the Federal Trade Commission and the U.S. Department of

Justice.

At the state level, many states have a Department of Consumer Affairs

devoted to regulating certain industries and protecting consumers who use goods

and services from those industries.

For example, in the U.S. state of California, the California Department of

Consumer Affairs regulates about 2.3 million professionals in over 230 different

professions, through its forty regulatory entities.

In addition, California encourages its consumers to act as private attorneys

general through the liberal provisions of its Consumers Legal Remedies Act, Cal.

Civil Code § 1750 et seq.

California has the strongest consumer protection laws of any US state, partly

because of rigorous advocacy and lobbying by groups such as Utility Consumers'

Action Network, Consumer Federation of California and Privacy Rights

Clearinghouse.

Other states have been the leaders in specific aspects of consumer protection.

For example Florida, Delaware and Minnesota have legislated requirements that

contracts be written at reasonable readability levels as a large proportion of

contracts cannot be understood by most consumers who sign them.

1. What is the federal Fair Debt Collection?

2. What is dedicated to the many states of the Department of Consumer

Affairs?

3. Which countries are leaders in aspects of consumer protection?

The US Tax System

One important aspect of tax policy is that the optimal provisions for one type

of tax will often depend on the way in which other taxes are levied. A tax should

be efficient and equitable when analyzed on its own, but often the efficiency and

equity of a tax depend upon how it fits in with the whole system of taxes. So, taxes 36

must be viewed as individual components of an overall tax system to really

understand their effects.

The United States has a federal system of government, and, followings that

model, the tax system can be divided into the three major categories of federal,

state, and local taxes. Federal, taxes make up about 56 percent of total taxes,

although federal expenditures are: only about half of total expenditures. The

difference occurs because a substantial fraction of state and local government

expenditures are, financed by federal government grants. Intergovernmental grants

make up nearly one-third of local government revenues. One of the goals of this

chapter is to examine how the various levels of government raise revenues to

finance their expenditures.

The federal government collects more in revenues than all other governments

in the United States combined. Own-source revenues excludes intergovernmental

grants, which are discussed in a separate section later, but includes revenues

collected from fees and user charges, which might ordinarily not be considered as

tax revenue. The federal Government collects 56.4 percent of total government

revenues, with states collecting 24.3 percent and local 19.3 percent.

Most income taxes are collected by the federal government, which collects 81

percent of all individual income taxes and 81.5 percent of all corporate income

taxes. States collect about 17 percent of both individual and corporate income tax

payments, and local governments collect less than 2 percent. Thus, while states

rely to a significant degree on income tax collections, the income tax is primarily a

federal tax. When considering the income tax from an equity standpoint, this is

even more true because most states base their income tax structures on the federal

income tax structure, so changes in federal tax laws can have a significant effect on

state income tax collections, both in terms of the amount of tax collected and in

terms of the distribution of income tax payments among taxpayers.

The tax that is most clearly assigned to one level of Government is the

property tax. More than 96 percent of property taxes are collected by local

governments. Sales and gross receipts taxes, taxes are collected primarily by state 37

governments. Although 62.9 percent of sales and gross receipts taxes are collected

by states, both the federal government and local governments collect a significant

amount. The federal government collects 24 local governments 24 percent of sales

and gross receipts taxes, mostly through federal excise taxes on motor fuel,

alcohol, and tobacco. Local governments collect 13. 1 percent of sales and gross

receipts taxes, coming from a combination of local general sales taxes, excise taxes

on gasoline, and other less significant excise taxes.

Stepping back to examine the overall tax system, we see that the federal

government relies primarily on income taxes, state governments on sales taxes, and

local governments on property taxes. This division makes some sense when one

considers the mobility of tax bases.

Although the property tax has remained a local tax, the income tax is

becoming, increasingly important at the state level, as will be discussed later, so

states might be viewed as encroaching on a traditionally federal tax base. Likewise,

the federal government collects a significant amount of sales and gross receipts

taxes, primarily as excise taxes, which might be viewed as taxing a state tax base.

One factor relevant to the discussion of a federal value added tax is that, as a

consumption tax, it would be placed on a tax base that has traditionally been used

by state governments. This was less of an issue when the value added tax was

adopted by European governments because tax systems in Europe tend to be more

centralized than the tax system in the United States.

So, we can divide US tax system into the three major categories of federal,

state, and local taxes. Intergovernmental grants make up nearly one-third of local

government revenues. The federal government collects more in revenues than all

other governments in the United States combined.

Most income taxes are collected by the federal government, which collects 81

percent of all individual income taxes and 81.5 percent of all corporate income

taxes. Thus, while states rely to a significant degree on income tax collections, the

income tax is primarily a federal tax.

38

We see that the federal government relies primarily on income taxes, state

governments on sales taxes, and local governments on property taxes. This

division makes some sense when one considers the mobility of tax bases.

1. What is the U.S. tax system?

2. What are the basic principles of the tax system in the U.S.?

3. What are the principles of federalism in the tax system?

4. What types of taxes do you know?

5. What other tax reforms do you know?

U.S. foreign trade

U.S. foreign trade and global economic policies have changed direction

dramatically during the more than two centuries that the United States has been a

country. In the early days of the nation's history, government and business mostly

concentrated on developing the domestic economy irrespective of what went on

abroad. But since the Great Depression of the 1930s and World War II, the country

generally has sought to reduce trade barriers and coordinate the world economic

system. Americans are convinced that trade promotes economic growth, social

stability, and democracy in individual countries and that it advances world

prosperity, the rule of law, and peace in international relations.

Over the past decade, U.S. exports accounted for about a quarter of the

economic growth. The United States also maintains a trade surplus in services,

$79.7 billion in 2006. The biggest U.S. services export category was travel by

foreigners to the United States, $85.8 billion that year. In contrast, the United

States runs a large and growing deficit in merchandise goods trade. While the

United States exported more than $1 trillion in goods in 2006, it imported more

than $1.8 trillion worth. By far the top imports that year were autos and auto parts,

$211.9 billion, and crude oil, $225.2 billion. The top sources of U.S. imports were

Canada, China, Mexico, Japan, and Germany. Among the top U.S. exports in 2006

were autos and auto parts, semiconductors, and civilian aircraft. The top U.S. 39

export destinations were Canada, Mexico, Japan, China, and the United Kingdom.

In 2000-2006, even though U.S. goods exports increased 33 percent, U.S. goods

imports went up even faster, 52 percent.

The United States supported trade liberalization and was instrumental in the

creation of the General Agreement on Tariffs and Trade (GATT), an international

code of tariff and trade rules. One other principle the United States traditionally

has followed in the trade arena is multilateralism. Despite its commitment to

multilateralism, the United States in recent years also has pursued regional and

bilateral trade agreements. The emergence of electronic commerce also is opening

a whole new set of trade issues. In 1998, ministers of the World Trade

Organization issued a declaration that countries should not interfere with electronic

commerce by imposing duties on electronic transmissions, but many issues remain

unresolved. The United States would like to make the Internet a tariff-free zone,

ensure competitive telecommunications markets around the world, and establish

global protections for intellectual property in digital products.

1. How do you understand the foreign trade of the United States?

2. What do you know about exporting from the U.S.?

3. What role does the U.S. played in the creation of the GATT?

4. What kind of statement made by the ministers of the WTO in 1988?

Banking system of the USA

With nearly 90,000 branches and 371,000 automated teller machines (ATMs),

US banking system is the largest in the world. As of September 30th 2004, US

banks had US$9.88 turn in assets and US$5.98 turn in total loans. US banking is

more diverse than in most Western countries. Despite ongoing consolidation,

vigorous competition exists within the vast banking community, which includes

financial holding companies that operate nationwide, dominant regional banks and

smaller independents. Large foreign banks also continue to expand in the US

market.

40

Federal Reserve the Federal Reserve System is the central bank of the United

States. It was founded by Congress in 1913 to provide the nation with a safer, more

flexible, and more stable monetary and financial system. Over the years, its role in

banking and the economy has expanded. Today, the Federal Reserve’s duties fall

into four general areas: - conducting the nation’s monetary policy by influencing

the monetary and credit conditions in the economy in pursuit of maximum

employment, stable prices, and moderate long-term interest rates; - supervising and

regulating banking institutions to ensure the safety and soundness of the nation’s

banking and financial system and to protect the credit rights of consumers; -

maintaining the stability of the financial system and containing systemic risk that

may arise in financial markets; - providing financial services to depository

institutions, the U.S. government, and foreign official institutions, including

playing a major role in operating the nation’s payments system. A network of

twelve Federal Reserve Banks and their Branches (twenty¬ five as of 2004) carries

out a variety of System functions, including operating a nationwide payments

system, distributing the nation’s currency and coin, supervising and regulating

member banks and bank holding companies, and serving as banker for the U.S.

Treasury. The twelve Reserve Banks are each responsible for a particular

geographic area or district of the United States. Each Reserve District is identified

by a number and a letter. Besides carrying out functions for the System as a whole,

such as administering nationwide banking and credit policies, each Reserve Bank

acts as a depository for the banks in its own District and fulfills other District

responsibilities.

1. What do you know about the U.S. banking system?

2. What distinguishes the U.S. banking system from the British?

3. In what year was founded the Federal Reserve System?

4. What is the role of the banking system is the Fed?

5. What functions of the system provides a network of 12 Federal Reserve

banks and branches?41

DIFFERENT ECONOMIC TEXTS

Marketing Research: Key Players

The major actors in a company's microenvironment are the company itself,

suppliers, market intermediaries, customers and competitors. Let us consider the

roles of each of them.

The company. All the departments within a company (e.g. production,

finance, personnel) have an impact on the marketing department's plans and

actions.

The suppliers. Changes in the supplier environment, such as prices and

availability of raw materials, have a considerable impact on a company's marketing

operations.

The market intermediaries. Middlemen such as agents, wholesalers and

retailers, are powerful actors. In some cases they can dictate terms and even bar the

manufacturer from certain markets.

Customers. The marketer needs to know what people are involved in the

buying decision and what role each person plays. For many products, it is not

difficult to identify the decision-maker. Men normally choose their own shoes and

women choose their own make-up. However, some products and especially new

ones may involve more than one person in decision-making.

Competitors. A company's marketing system is greatly influenced by a host

of competitors. The best way for a company is grasp the full range of its

competition is to take the viewpoint of a buyer.

There are four steps in the market research process: (1) defining the

problem, (2) developing the research plan, (3) implementing the plan, and (4)

interpreting and presenting the findings.

1. What is marketing?

2. What is Network Marketing?

3. Who are the suppliers?

4. Who are the market intermediaries? 42

5. Which role customers play in marketing?

6. What are the four steps in the process of market research?

Decision Making Маnagement

One of the most important tasks a manager performs is decision making.

This may be defined as the process of choosing a course of action (when

alternatives are available) to solve a problem. The ability to implement the

decision-making process is often determined by environmental factors rather than

the steps in some 'ideal' model. Decisions are frequently influenced more by the

environment and structure of the organization than by the method itself. The

process of decision making may, therefore, be examined in light of environmental

factors.

A number of factors may change the ideal decision-making process. The

amount of flexibility within an organization and the available resources are often

limiting factors. Another organizational factor is the importance of the decision

being made in relation to other problems and responsibilities of management.

Three other factors also influence the decision-making process. They are:

time, creativity, and risk. The amount of time available to make a decision for a

given problem is often determined by the environment, not the management. The

risk associated with a particular course of action may be lessened by use of a group

rather than an individual. As agile, groups make better solutions than individuals.

1. What is management?

2. What are the manager’s main tasks?

3. What qualities should acquire the manager?

4. What factors may alter the decision making process?

5. What are the impact time, risk and creativity in management

development?

43

Privately-owned enterprise

A privately-owned enterprise refers to a business that is owned by private

investors, shareholders or owners (usually jointly, but they can be owned by a

single individual), and is in contrast to state institutions, such as publicly-owned

enterprises and government agencies. Private enterprises comprise the private

sector of an economy. An economic system that contains a large private sector

where privately-run businesses are the backbone of the economy is referred to as

capitalism. This contrasts with socialism, where industry is owned by the state or

by all of the community in common. The act of taking assets into the private sector

is referred to as privatization. The goal of private enterprise differs from other

institutions, the major difference being private businesses exist solely to generate

profit for the owners or shareholders. A privately owned enterprise is one form that

private property may take.

Types of Privately-Owned Business

Sole proprietorship: A sole proprietorship is a business owned by one

person. The owner may operate on his or her own or may employ others. The

owner of the business has total and unlimited personal liability of the debts

incurred by the business. This form is usually relegated to small businesses.

Partnership: A partnership is a form of business in which two or more people

operate for the common goal of making profit. Each partner has total and unlimited

personal liability of the debts incurred by the partnership. There are three typical

classifications of partnerships: general partnerships, limited partnerships, and

limited liability partnerships.

Corporation: A business corporation is a for-profit, limited liability entity

that has a separate legal personality from its members. A corporation is owned by

multiple shareholders and is overseen by a board of directors, which hires the

business's managerial staff. Corporate models have also been applied to the state

sector in the form of Government-owned corporations.44

Privately-owned businesses are typically divided into two subcategories:

privately-held companies and publicly-traded companies. Publicly-traded firms list

their shares on the stock market, allowing for more diversified ownership as

anyone who purchases their stock becomes a partial owner and is able to receive a

portion of its profit. Despite the term "public" in its name, a publicly-listed

company does not entail public ownership because it is not owned by the whole

society. It just means that shares of the company are for sale to anyone in the

general public who wishes to purchase them. Publicly-listed corporations may be

partially owned by governments.

1. What do you know about private companies?

2. What is private enterprise?

3. What is the purpose of private enterprise?

4. What types of private businesses do you know?

Aggregate demand and aggregate supply

In macroeconomics, the focus is on the demand and supply of all goods and

services produced by an economy. Accordingly, the demand for all individual

goods and services is also combined and referred to as aggregate demand. The

supply of all individual goods and services is also combined and referred to as

aggregate supply.

It is assumed that the government holds the supply of money constant. One

can think of the supply of money as representing the economy's wealth at any

moment in time. As the price level rises, the wealth of the economy, as measured

by the supply of money, declines in value because the purchasing power of money

falls. As buyers become poorer, they reduce their purchases of all goods and

services. On the other hand, as the price level falls, the purchasing power of money

rises. Buyers become wealthier and are able to purchase more goods and services

than before. The wealth effect, therefore, provided one reason for the inverse

45

relationship between the price level and real GDP. Real GDP is GDP evaluated at

the market prices of some base year.

The second reason is the interest rate effect. As the price level rises,

households and firms require more money to handle their transactions. However,

the supply of money is fixed. The increased demand for a fixed supply of money

causes the price of money, the interest rate, to rise. As the interest rate rises,

spending that is sensitive to rate of interest will decline. Hence, the interest rate

effect provides another reason for the inverse relationship between the price level

and the demand for real GDP.

The third and final reason is the net exports effect. As the domestic price

level rises, foreign-made goods become relatively cheaper so that the demand for

imports increases. However, the rise in the domestic price level also means that

domestic-made goods are relatively more expensive to foreign buyers so that the

demand for exports decreases. When exports decrease and imports increase, net

exports (exports — imports) decrease. Because net exports are a component of real

GDP, the demand for real GDP declines as net exports decline.

Changes in aggregate demand are not caused by changes in price level.

Instead, they are caused by changes in the demand for any of the components of

real GDP, changes in the demand for consumption goods and services, changes in

investment spending, changes in the government's demand for goods and services,

6r changes in the demand for net exports.

1. What is the aggregate demand?

2. What is the total supply?

3. Which role does the aggregate supply and demand in macroeconomics

play?

4. What is GDP?

5. What is the interest rate?

6. What is the net export?

7. What kinds of export do you know

46

Black Economy

Illegal or semi legal goods and services, ranging from endangered animals

and foreign currencies to prostitution and drugs, are traded every day on the

world's black markets. They will spring up wherever a good or service is

prohibited or severely controlled. In some countries, black markets are tolerated

with little or no police interference. In countries where currencies are artificially

controlled, the black market rates usually indicate the tale market price. When the

official rate has nothing to do with the real value of a currency, people start trading

outside the official market. In Brazil, this was tolerated to the point that the black

market rates were published as parallel exchange rates in the newspapers. The

black economy consists of those underground transactions that, because of their

illegality, go unreported.

The equilibrium interest rate is determined in the loanable funds market. All

lenders and borrowers of loanable funds are participants in the loanable funds

market. The total amount of funds supplied by lenders makes up the supply of

loanable funds, while the total amount of funds demanded by borrowers makes up

the demand for loanable funds.

Present Value and Investment Decisions. Firms purchase capital goods to

increase their future output and income. Income earned in the future is often

evaluated in terms of its present value. The present value of future income is the

value of having this future income today.

The firm's investment decision is to determine whether to purchase new

capital. In determining whether to purchase new capital — for example, new

equipment — the firm will take into account the price of the new equipment, the

revenue that the new equipment will generate for the firm overtime, and the scrap

value of the new equipment. The firm will also take into account the interest rate,

which represents the firm's opportunity cost of investing in the new equipment. It

will use the interest rate to calculate the present value of the future net income that

it expects to earn from its purchase of the new capital equipment. If the present

47

value is positive, the firm will choose to purchase the new equipment. If the

present value is negative, it is better off forgoing the investment in new equipment.

1. What is the shadow economy?

2. Did Russia develop underground economy?

3. Give examples of the shadow economy?

Labor market

In addition to making output and pricing decisions, firms must also

determine how much of each input to demand. Firms may choose to demand many

different kinds of inputs such as labor and capital. The demand and supply of labor

are most common inputs. They are determined in the labor market.

Labor Demand and Supply in a Perfectly Competitive Market

The participants in the labor market are workers and firms. Workers supply

labor to firms in exchange for wages. Firms demand labor from workers in

exchange for wages. The firm's demand for labor is a derived demand; it is derived

from the demand for the firm's output. If demand for the firm's output increases,

the firm will demand more labor and will hire more workers. If demand for the

firm's output falls, the firm will demand less labor and will reduce its work force.

When the firm knows the level of demand for its output, it determines how

much labor to demand by looking at the marginal revenue product of labor. The

marginal revenue product of labor (or any input) is the additional revenue the firm

earns by employing one more unit of labor. The term is related to the marginal

product of labor. In a perfectly competitive market, the firm's marginal revenue

product of labor is the value of the marginal product of labor. The marginal

revenue product of labor is the additional revenue that the firm earns from hiring

the additional worker; it represents the wage that the firm is willing to pay for each

additional worker. The wage that the firm actually pays is the market wage rate,

which is determined by the market demand and market supply of labor. In a

perfectly competitive labor market, the individual firm is a wage-taker; it takes the

48

market wage rate as given, just as the firm in a perfectly competitive market takes

the price for its output as given. The market wage rate in a perfectly competitive

labor market represents the firm's marginal cost of labor, the amount the firm must

pay for each additional worker that it hires.

An individual supply of labor depends on his or her preferences for two

types of "goods": consumption goods and leisure. Consumption goods include all

the goods that can be purchased with the income that an individual earns from

working. Leisure is the good that individuals consume when they are not working.

By working more (supplying more labor), an individual reduces his or her

consumption of leisure but is able to increase his or her purchases of consumption

goods.

In choosing between leisure and consumption, the individual faces two

constraints. First, the individual is limited to twenty-four hours per day for work or

leisure. Second, the individual's income from work is limited by the market wage

rate that the individual receives for his or her labor skills. In a perfectly

competitive labor market, workers — like firms — are wage-takers; they take the

market wage rate that they receive as given.

As wages increase, so does the opportunity cost of leisure. As leisure

becomes more costly, workers tend to substitute more work hours for fewer leisure

hours in order to consume the relatively cheaper consumption goods, which is the

substitution effect of a higher wage.

An income effect is also associated with a higher wage leads to higher real

incomes, provided that prices oil consumption goods remain constant. As real

income rise, individuals will demand more leisure, which is considered a normal

good the higher Individual's income, the easier it is for that individual to take more

tunc oil from metals such as gold or sterling.

The free-floating system still does not keep governments from trying to

influence the value of their currency by buying or selling on the open markets. The

present system, sometimes referred to as a "dirty float," is based on periodic central

bank intervention to keep currencies from changing its value too quickly or from 49

moving out of a predetermined range, such as those periodically fixed in the

European Monetary System.

However, like trying to reverse the flow of water, it is very difficult to

intervene in the international currency markets. Because of the enormous amount

of currencies traded every day on the foreign exchange (forex) markets,

interventions by the central banks usually succeed in only slowing down a freely

floating currency's inevitable rise or fall.

In addition, some firms do pro-active research, that is, gather information

that is not currently needed but is likely to prove valuable in the future. Such

information can then be placed in the swipe files and updated or cut and pasted

into an article or a report when needed.

1. What is the labor market?

2. What is due to supply and demand?

3. Which stories do you know stories about the coins origin?

4. What is the value of the currency today?

5. What is the forex market?

Dealing with Numerical Data

Statistics deals with so called quantitative side of things. However, the

quantitative side is closely connected with the qualitative side of things. So

statistics is a science studying mass numerical data. Most people working in

various areas spend a lot of time dealing with facts and figures. Reading, hearing,

pronouncing, and writing figures and numbers requires practice.

The objective of studying numbers is to enable students to recognize,

understand and use numbers in English. They must be confident using different

types of business numerical data. It is necessary for the following reasons:

Analyzing the financial reports and current business problems of a

company;

Describing a market;

Negotiating a contract or an agreement;50

Considering the financial position of a nation, its major economic and

financial indicators.

The aggregate supply curve is defined in terms of the price level. Increases

in the price level will increase the price that producers can get for their products

and thus induce more output. But an increase in the price will also have a second

effect; it will eventually lead to increases in input prices as well, which, ceteris

paribus (Latin for "all else held constant"), will cause producers to cut back. So,

there is some uncertainty as to whether the economy will supply more real GDP as

the price level rises. In the short run, the input providers do not or cannot take

account of the increase in the general price level right away so that it takes some

time for input prices to fully reflect changes in the price level for final goods. For

example, workers often negotiate multi-year contracts with their employers. These

contracts usually include a certain allowance for an increase in the price level,

called a cost of living adjustment (COLA). The COLA, however, is based on

expectations of the future price level that may turn out to be wrong. Suppose, for

example, that workers underestimate the increase in the price level that occurs

during the multi-year contract. Depending on the terms of the contract, the workers

may not have the opportunity to correct their mistaken estimates of inflation until

the contract expires. In this case, their wage increases will lag behind the increases

in the price level for some time. In the long-run, the increase in prices that sellers

receive for their final goods is completely offset by the proportional increase in the

prices that sellers pay for inputs. The result is that the quantity of real GDP

supplied by all sellers in the economy is independent of changes in the price level.

Like changes in aggregate demand, changes in aggregate supply are not

caused by changes in the price level. Instead, the are primarily caused by changes

in two factors. The first of these is a change in input prices. For example, the price

for oil, an input good, increased dramatically in the 1990s due to efforts by oil-

exporting countries to restrict the quantity of oil sold. Many final goods and

services use oil or oil products as inputs. Suppliers of these final goods and

services faced rising costs and had to reduce their supply at all price levels.51

A second factor that causes the aggregate supply curve to shift is economic

growth. Positive economic growth results from an increase in productive resources,

such as labor and capital. With more resources, it is possible to produce more final

goods and services, and hence, the natural level of real GDP increases. Similarly,

negative economic growth decreases the natural level of real GDP.

Combining the aggregate demand and aggregate supply curves it is possible

to determine both the equilibrium price level, and the equilibrium level of real

GDP.

1. What is statistics?

2. What is the purpose of studying the numbers?

3. What determines the aggregate demand curve? Give an example?

An Accounting Overview

Accounting is frequently called the "language of business" because of its

ability to communicate financial information about the organization. Various

interested parties, such as managers, potential investors, creditors, and the

government, depend on a company's accounting system to help them make

informed financial decisions. An effective accounting system, therefore, must

include accurate collecting, recording, classifying, summarizing, interpreting, and

reporting of information on the financial status of an organization.

In order to achieve a standardized system, the accounting process follows

accounting principles and rules. Regardless of the type of business or the amount

of money involved, common procedures for handling and presenting financial

information are used. Incoming money (revenues) and outgoing money

(expenditures) are carefully monitored, and transactions are summarized in

financial statements, which reflect the major financial activities of an organization.

The work of accountants is rather sophisticated. People who specialize in the

field of accounting are known as bookkeepers and accountants. Bookkeepers deal

in taxes and different business transactions of the company. The accountant's

responsibility is to analyze and interpret the financial data and make it 52

understandable for users. In the United States, accountants are usually classified as

private, government, and public. Private accountants work solely for private

companies or corporations that hire them to maintain financial records, and

governmental accountants work for governmental agencies. Both private and

governmental accountants are paid on a salary basis, whereas public accountants

receive fees for their services. Public accountants work independently and provide

accounting services such as auditing and tax computation to companies and

individuals.

Many accountants have special certificates after they pass examinations in

Institute of Accountants. Certified accountants in England are called chartered

accountants. In the USA the certified accountants are called certified public

accountants

Through effective application of commonly accepted accounting systems,

accountants provide accurate and timely financial information that is necessary for

organizational decision-making. No expansion or reorganization is planned

without them. New products and advertising campaigns are also prepared with the

help of the accountant.

1. Why is accounting called the "language of business"?

2. What are revenues and expenditures?

3. How is a standardized accounting system achieved?

4. What is the difference between a bookkeeper and an accountant?

5. How the accountants are classified in the USA?

6. What kind of services do certified accountants provide?

Theory of the consumer

The branch of economics known as microeconomics focuses on the behavior

of individual consumers and individual firms. This section reviews the theory of

the consumer and the following section reviews the theory of the firm. The theory 53

of the consumer describes how individual consumers make economic decisions,

given their preferences, their work and still maintain a high standard of living in

terms of consumption goods. The substitution effect of higher wages tends to

dominate the income effect at low wage levels, while the income effect of higher

wages tends to dominate the substitution effect at high wage levels.

Many different markets for labor exist, one for every type and skill level of

labor. For example, the labor market for entry level accountants is different from

the labor market for football pros. The demand for labor in a particular market —

called the market demand for labor — is the amount of labor that all the firms

participating in the market will demand at different market wage levels. The

market supply of labor is the number of workers of particular type and skill level

who are willing to supply their labor to firms at different wage levels. There will

always be some workers in the market who will be willing to supply more labor

and take less leisure time, even at relatively high wage levels. While each labor

market is different, the equilibrium market wage rate and the equilibrium number

of workers employed in every perfectly competitive labor market is determined in

the same manner: by equating the market demand for labor with the market supply

of labor.

Labor demand and supply in a monopsony. A labor market in which there is

only one firm demanding labor is called a monopsony. The single firm in the

market is referred to as the monopsonist. An example of a monopsony would be

the only firm in a "company town," where the workers all work for that single firm.

Because the monopsonist is the sole demander of labor in the market, its demand

for labor is the market demand for labor. The supply of labor that the monopsonist

faces is the market supply of labor. Unlike a firm operating in a perfectly

competitive labor market, the monopsonist does not simply hire all the workers

that it wants at the equilibrium market wage; it is a wage-searcher rather than a

wage-taker. If the monopsonist wants to increase the number of workers that it

hires, it must increase the wage that it pays to all of its workers, including those

whom it currently employs. The monopsonist's marginal cost of hiring an 54

additional worker, therefore, will not equal to the wage paid to that worker because

the monopsonist will have to increase the wage that it pays to all of its workers.

Because the monopsonist is the only demander of labor in the market, it has power

to pay wages below the marginal revenue product of labor and to hire fewer

workers than a perfectly competitive firm. So monopsony like monopoly in a

product market reduces society's welfare.

1. What is microeconomics?

2. What does microeconomics study?

3. What is the theory of the consumer?

4. Microeconomics focuses on the behavior of individual firms, doesn’t

it?

5. Who is a monopolist?

Consumer Protection

The United Kingdom, as member state of the European Union, is bound by

the consumer protection directives of the EU. Domestic (UK) laws originated

within the ambit of contract and tort but, with the influence of EU law, it is

emerging as an independent area of law. In many circumstances, where domestic

law is in question, the matter judicially treated as tort, contract, restitution or even

criminal law.

Consumer Protection issues are dealt with when complaints are made to the

Director-General of Fair Trade. The Office of Fair Trading will then investigate,

impose an injunction or take the matter to litigation.

The Office of Fair Trading also acts as the UK's official consumer and

competition watchdog, with a remit to make markets work well for consumers, and

at a local, municipal level by Trading Standards departments. General consumer

advice can be obtained from Consumer Direct or via a local branch of the Citizen's

Advice Bureau.

55

Consumer protection law

Consumer protection laws are designed to ensure fair competition and the free

flow of truthful information in the marketplace. The laws are designed to prevent

businesses that engage in fraud or specified unfair practices from gaining an

advantage over competitors and may provide additional protection for the weak

and those unable to take care of themselves. Consumer Protection laws are a form

of government regulation which protects the interests of consumers. For example, a

government may require businesses to disclose detailed information about products

—particularly in areas where safety or public health is an issue, such as food.

Consumer protection is linked to the idea of "consumer rights" (that consumers

have various rights as consumers), and to the formation of consumer organizations

which help consumers make better choices in the marketplace.

Consumer is defined as someone who acquires goods or services for direct

use or ownership rather than for resale or use in production and manufacturing.

Consumer interests can also be protected by promoting competition in the

markets which directly and indirectly serve consumers, consistent with economic

efficiency, but this topic is treated in Competition law.

Consumer protection can also be asserted via non-government organizations

and individuals as consumer activism.

Consumer law

"Consumer protection law" or "consumer law" is considered an area of law

that regulates private law relationships between individual consumers and the

businesses that sell those goods and services. Consumer protection covers a wide

range of topics, including but not necessarily limited to product liability, privacy

rights, unfair business practices, fraud, misrepresentation, and other

consumer/business interactions.

Such laws deal with credit repair, debt repair, product safety, service and sales

contracts, bill collector regulation, pricing, utility turnoffs, consolidation, personal

loans that may lead to bankruptcy and much more.

56

Germany

A minister of the federal cabinet is responsible for consumer rights and

protection (Verbraucherschutzminister). In the current cabinet of Angela Merkel,

this is IlseAigner.

When issuing public warnings about products and services, the issuing

authority has to take into account that this affects the supplier's constitutionally

protected economic liberty (article 12 Basic Law, see Bundesverwaltungsgericht

(Federal Administrative Court) Case 3 C 34.84, 71 BVerwGE 183).

1. What can you say about consumer rights in Russia?

2. Give meaning to the word "consumer"?

3. What kind of consumer benefit do you remember?

4. What is the Article 12 of the Basic Code about?

Capital (economics)

In economics, capital, capital goods, or real capital are factors of production

used to create goods or services that are not themselves significantly consumed

(though they may depreciate) in the production process. Capital goods may be

acquired with money or financial capital.

In finance and accounting, capital generally refers to saved-up financial

wealth, especially which used to start or maintain a business. A financial concept

of capital is adopted by most entities in preparing their financial reports. Under a

financial concept of capital, such as invested money or invested purchasing power,

capital is synonymous with the net assets or equity of the entity. Under a physical

concept of capital, such as operating capability, capital is regarded as the

productive capacity of the entity based on, for example, units of output per day.

Financial capital maintenance can be measured in either nominal monetary units or

units of constant purchasing power. There are thus three concepts of capital

maintenance in terms of International Financial Reporting Standards (IFRS): (1)

Physical capital maintenance (2) Financial capital maintenance in nominal 57

monetary units (3) Financial capital maintenance in units of constant purchasing

power.

1. What is the capital?

2. What factors of production do you know?

3. Which concepts of capital maintenance in terms of international

accounting standards are enumerated in the text?

Capital market

Capital goods are input goods that are purchased in order to increase the

production of future output. Capital goods include tangible goods, such as

buildings and structures, machinery and equipment, and inventories of goods in

process. Capital goods also include intangible goods such as franchises, literary

rights, and product brand names. An individual's investment in knowledge from

taking classes or learning "on the job" is another form of intangible capital called

human capital.

Measure of Capital

While labor is measured in terms of the number of workers hired or the

number of hour worked, it is difficult to measure capital in terms of physical units

because there are so many different types of capital goods. Capital goods,

therefore, are simply measured in terms of their market or currency value.

Capital stock. The market value of capital goods at a given point in time, for

example, at the end of a year, is referred to as the capital stock. A firm's capital

stock is the market value of its factory, equipment, and other capital goods at a

given point in time. A household's capital stock is the market value of its

residential structures, human capital, and other capital goods at a given point in

time. Firms' and households' capital stocks will vary overtime due to investment

and depreciation.

Investment. Investment is the addition of new capital goods to a firm's or

household's capital stock. Investment is a flow measurement; it represents the 58

market value of new capital purchased or produced per unit of time. For example,

if a firm with $ 90,000 in capital at the end of last year purchased $ 10,000 in

capital during the current year, its investment for this year is $ 10,000, while its

capital stock at the end of the current year is $ 100,000.

Depreciation. Depreciation is also a flow measurement; it measures the

reduction in market value of a firm's or household's capital stock per unit of time.

Depreciation of the capital stock is caused у normal wear and tear and by

obsolescence of capital goods over time.

When depreciation over a period of time exceeds investment over the same

period of time, the capital stock decreases; otherwise, the capital stock increases or

remains the same. For example, if the firm with $ 90,000 in capital at the end of

last year purchases $ 10,000 in new capital during the current year, but experiences

$ 20,000 in depreciation during the current year, its capital stock at the end of the

current year will have decreased to $ 80,000 ($ 90,000 + $ 10,000 - $ 20,000). If

depreciation during the current year is only $ 5,000, instead of $ 20,000, then the

firm's capital stock at the end of the current year will have increased to $ 95,000.

Capital, Loanable Funds, and Interest Rate

The demand and supply for different types of capital take place in capital

markets. In these capital markets, firms are typically demanders of capital, while

households are typically suppliers of capital. Households supply capital goods

indirectly, by choosing to save a portion of their incomes and lending these savings

to banks. Banks, in turn, lend household savings to firms that use these funds to

purchase capital goods.

The term loanable fund is used to describe funds that are available for

borrowing. Loanable funds consist of household savings and or bank loans.

Because investment in new capital goods is frequently made with loanable funds,

the demand and supply of capital is often discussed in terms of the demand and

supply of loanable funds.

The interest rate is the cost of demanding or borrowing loanable funds.

Alternatively, the interest rate is the rate of return from supplying or lending 59

loanable funds. The interest rate is typically measured as an annual percentage rate.

For example, a firm that borrows $ 20,000 in funds for one year, at an annual rate

of 5%, will have to repay the lender % 21,000 at the end of the year; this amount

includes the $ 20,000 borrowed plus $ 1,000 in interest ($ 20,000 x 0.5)

1. What is the capital market?

2. What is measured by labor?

3. How do you understand the concept of "investment"?

4. Give the definition of the word "depreciation"?

5. Loanable funds, how do you understand it?

6. What is the capital stock?

Acquisition of Capital

All businesses need financial support. The process of acquiring necessary

capital is known as financing. A corporation uses two basic types of financing:

equity financing and debt financing. Equity financing refers to funds that are

invested by owners of the corporation. Debt financing, on the other hand, refers to

funds that are borrowed from sources outside the corporation.

Equity financing (obtaining owner funds) can be exemplified by the sale of

corporate stock — pieces of paper that state that "the holder of this share owns a

part of this corporation". When the corporation makes a profit, its owners share in

the benefits by receiving a dividend or by selling their shares for more money than

they originally paid. When the corporation loses money, however, the dividends

are reduced or eliminated and the share price tends to fall. In the worst case, the

corporation goes bankrupt, owing more than it can pay. The shares then became

worthless, and the owners lose all the money invested in them.

Often equity financing does not provide the corporation with enough capital

and it must turn to debt financing, or borrowing funds. One example of debt

financing is the sale of corporate bonds. In this type of agreement, the corporation

borrows money from an investor in return for a bond. The bond has a maturity

date, a deadline when the corporation must repay all of the money it has borrowed. 60

In the event of a depreciation of a currency, that currency will, of course,

purchase fewer units of foreign currency, and imports will thus become more

expensive to domestic consumers. If, for example, the dollar depreciates, the dollar

amount of U.S. expenditure on imports will fall if demand is elastic, but will rise if

demand is inelastic.

The Marshall-Lerner condition states that depreciation of a currency will

result in an excess of exports over imports for the depreciating country if the sum

of the elasticity’s of the home and foreign demands is greater than one. This

assumes that supply elasticity’s are infinite, and that the trade balance was zero

before the depreciation.

Since currency depreciation has inflationary effects, the monetary authorities

of a country undergoing depreciation may choose to use contractionary monetary

policy. If so, there will be a rise in interest rates that will attract a short-term capital

inflow. This capital inflow will help to cure the payments imbalance.

Conflicts will occur between external and internal policies in cases where a

country has a balance of payments deficit during a period of internal recession.

Contractionary monetary and fiscal policies are appropriate to cure the trade

deficit but recession calls for expansionary monetary and fiscal policies.

One way to reduce pressure toward currency depreciation is to restrict

imports, as well as to place special taxes on interest or dividends from foreign

investment. Such policies tend to disrupt trade and resource allocation and are not

widely favored by economists.

Comparing international investments, like comparing apples and oranges, can

be a difficult task. Just as an apple and an orange can be priced according to its

weight, an international investment can be evaluated according to its total return,

the total increase in value plus any dividend or other payments.

College endowment funds, pension fund managers, insurance companies, and

individual investors use yields to compare their growing portfolios of global

investments. In this way, all investment instruments — ranging from stocks and

61

commodities to art and real estate — can be compared and evaluated by looking at

their yield: their percentage increase in value over a given period of time.

Inflation also has to be considered when comparing international investments.

Money is worth only what it will buy in goods and services. If prices rise, money

loses its value. For example, in order to have the same purchasing power after a

decade of inflation, a $ 10,000 investment in 1980 have had to rise to $ 16,410 by

1990 just to keep up with the rise in prices.

1. What is the financing?

2. What is a charter capital?

4. What is equity financing?

5. What role do the bonds in economics have?

6. What is the currency depreciation?

7. What measures can combat the inflation?

Types of companies

There are various types of company that can be formed in different

jurisdictions, but the most common forms of company (generally formed by

registration under applicable companies’ legislation) are:

A company limited by guarantee. Commonly used where companies are

formed for non-commercial purposes, such as clubs or charities. The members

guarantee the payment of certain (usually nominal) amounts if the company goes

into insolvent liquidation, but otherwise they have no economic rights in relation to

the company. This type of company is common in England.

A company limited by shares. The most common form of company used for

business ventures. Specifically, a limited company is a "company in which the

liability of each shareholder is limited to the amount individually invested" with

corporations being "the most common example of a limited company." This type

of company is common in England.

62

A company limited by guarantee with a share capital. A hybrid entity, usually

used where the company is formed for non-commercial purposes, but the activities

of the company are partly funded by investors who expect a return. This type of

company may no longer be formed in the UK, although provisions still exist in law

for them to exist.

A limited-liability company. "A company—statutorily authorized in certain

states—that is characterized by limited liability, management by members or

managers, and limitations on ownership transfer", i.e., L.L.C.

An unlimited company with or without a share capital. A hybrid entity, a

company where the liability of members or shareholders for the debts (if any) of

the company are not limited.

1. What types of companies do you know?

2. Tell about limited liability companies?

3. When is a limited liability company typically used?

4. Who are the hybrid entities?

Less commonly seen types of companies are:

Companies formed by letters patent. Most corporations by letters patent are

corporations sole and not companies as the term is commonly understood today.

Charter corporations. Before the passing of modern company’s legislation,

these were the only types of companies. Now they are relatively rare, except for

very old companies that still survive (of which there are still many, particularly

many British banks), or modern societies that fulfill a quasi regulatory function

(for example, the Bank of England is a corporation formed by a modern charter).

Statutory Companies. Relatively rare today, certain companies have been

formed by a private statute passed in the relevant jurisdiction.

Note that "Ltd after the company's name signifies limited company, and PLC

(public limited company) indicates that its shares are widely held."

63

In legal parlance, the owners of a company are normally referred to as the

"members". In a company limited or unlimited by shares (formed or incorporated

with a share capital), this will be the shareholders. In a company limited by

guarantee, this will be the guarantors. Some offshore jurisdictions have created

special forms of offshore company in a bid to attract business for their

jurisdictions. There are however, many, many sub-categories of types of company

that can be formed in various jurisdictions in the world.

Companies are also sometimes distinguished for legal and regulatory

purposes between public companies and private companies. Public companies are

companies whose shares can be publicly traded, often (although not always) on a

regulated stock exchange. Private companies do not have publicly traded shares,

and often contain restrictions on transfers of shares. In some jurisdictions, private

companies have maximum numbers of shareholders.

Banking in the United States is regulated by both the federal and state

governments of the United States of America.

The US banking sector's short-term liabilities as of October 11, 2008 are 15%

of the GDP of the United States or 43% of its national debt, and the average bank

leverage ratio (assets divided by net worth) is 12 to 1.

In 1781, an act of the Congress of the Confederation established the Bank of

North America in Philadelphia, where it superseded the state-chartered Bank of

Pennsylvania founded in 1780 to help fund the American Revolutionary War. The

Bank of North America was granted a monopoly on the issue of bills of credit as

currency at the national level. Prior to the ratification of the Articles of

Confederation & Perpetual Union, only the States had sovereign power to charter a

bank authorized to issue their own bills of credit. Afterwards, Congress also had

that power.

Robert Morris, the first Superintendent of Finance appointed under the

Articles of Confederation, proposed the Bank of North America as a commercial

bank that would act as the sole fiscal and monetary agent for the government. He

has accordingly been called "the father of the system of credit, and paper 64

circulation, in the United States." He saw a national, for-profit, private monopoly

following in the footsteps of the Bank of England as necessary, because previous

attempts to finance the Revolutionary War, such as continental currency emitted by

the Continental Congress, had led to depreciation of such an extent that Alexander

Hamilton considered them to be "public embarrassments." After the war, a number

of state banks were chartered, including in 1784: the Bank of New York and the

Bank of Massachusetts.

After the US Constitution subsumed the Articles of Confederation, which still

persist in the hard-copy edition of US Code Title 1 as a foundation stone of

American government, Congress chartered in 1791 the First Bank of the United

States to succeed the Bank of North America under Article One, Section 8.

However, Congress failed to renew the charter for the Bank of the United States,

which expired in 1811. Similarly, the Second Bank of the United States was

chartered in 1816 and shuttered in 1836. Despite this (and more on the commercial

banking side of the spectrum), in the early 1800s, up until around the mid-1800s,

many of the smaller commercial banks within New England were easily chartered

as laws allowed to do so (primarily due to open franchise laws). This private

banking sector witnessed an array of insider lending, due primarily to low bank

leverage and an information quality correlation, but many of these banks actually

spurred early investment and helped spur many later projects. Despite what some

may consider discriminatory practices with insider lending, these banks actually

were very sound and failures remained uncommon, further encouraging the

financial evolution in the United States.

1. What can you say about the company established patent-mails?

2. What are the names of the owners in legal terms?

3. Bank business in the United States is regulated by both federal and

state governments of the United States, isn’t?

4. What is a monopoly?

65

5. Who is Robert Morris? What role did he play in the development of the

Bank of North America?

Public Limited Companies PLCs

Public limited companies are usually larger business entities engaged in some

trading activity with the view of making a profit.

A company seeking a listing on the London Stock Exchange must be a PLC

before admission can be granted.

Minimum Share Capital Requirements

A public limited company have minimum share capital requirement which

must be met before Companies House will incorporate the company.

The rules are that there must be at least £50,000 worth of shares issued on

incorporation with at least £12,500 paid up. Because of the necessity to deposit this

sum of money with the company up on registration, the number of this type of

entity which are formed in the UK are fewer than for private companies which do

not require any initial deposits.

Unlimited Companies

Unlimited companies are those which are incorporated without limited

liability. This type of business entity is extremely rare in the UK. One situation

where an unlimited company might be appropriate is where individuals essentially

require a partnership business, but wish to avoid the time and expenses involved in

drafting a detailed agreement. The share distribution (and the rights which each

confers) available through a company might be preferable.

1. What is a Limited Company PLC?

2. What do you know about the joint-stock companies?

3. What's lising?

4. What is the minimum capital requirement for Share?

5. Tell about the unlimited company?

66

Demand and Supply

Demand is the quantity of a good that buyers wish to buy at each price, Other

things equal, at low prices the demanded quantity is higher.

Supply is the quantity of a good that sellers wish to sell at each price. Other

things equal, when prices are high, the supplied quantity is high as well.

The market is in equilibrium when the price regulates the quantity supplied by

producers and the quantity demanded by consumers. When prices are not so high as

the equilibrium price, there is excess demand (shortage) raising the price. At prices above

the equilibrium price, there is excess supply (surplus) reducing the price.

There are some factors influencing demand for a good, such as the prices of

other goods, consumer incomes and some others.

An increase in the price of a substitute good (or a decrease in the price of a

complement good) will at the same time raise the demanded quantity.

As consumer income is increased, demand for a normal good will also

increase but demand for an inferior good will decrease. A normal good is a good for

which demand increases when incomes rise. An inferior good is a good for which

demand falls when incomes rise.

As to supply, some factors are assumed as constant. Among them are tech-

nology, the input price, as well as degree of government regulation. An im-

provement in technology is as important for increasing the supplied quantity of a

good as a reduction in input prices.

Government regulates demand and supply, imposing ceiling prices (max-

imum prices) and floor prices (minimum prices) and adding its own demand to the

demand of the private sector.

Economy of the USA

The United States has been the world's leading industrial nation, since

early in the 20th century. Until second half of the 19th century, agriculture

remain the dominant US economic activity. After the Civil great advances were

made in the production of basic industrial goods. By World War 1, exports of 67

manufactured goods had become more important than the exp of raw

materials; as manufacturing grew, agriculture became increasingly

mechanized and efficient, employing fewer and fewer workers. The most

important in the economy since World War II has been tremendous; growth of

service industries, such as government services, professional services, trade,

and financial activities. Today, service industries are the most important sector

of the economy, employing almost three-quarters of the workforce.

Manufacturing employs approximately 17 per cent of the labor force and

agriculture less than 3 per cent of the workers.

Beginning in the 1930s, the government of the United States played an

increasingly active role in the economy. Even though the US economy in the

1990s was based on free enterprise, the government regulated business in

various ways. Some government regulations were drawn up to protect

consumers from unsafe products and workers from unsafe working conditions;

others were designed to reduce environmental pollution.

The federal budget for fiscal year 1993-1994 included estimated

expenditures of $1.48 trillion, or about one-quarter of the nation's gross

national product (GNP). Revenue in 1991—1992 was estimated at $1.08

trillion. The United States has consistently recorded annual budget deficits of

$100 billion or more since the early 1980s.

In 1993 the United State's annual GNP was more than $6.4 trillion. With a

per-capita GNP of nearly $24,700, the people of the United States had one of the

highest standards of living. The GDP in 1994 was over $6.7 trillion.

The US economy consists of three main sectors-the primary, secondary,

and tertiary.

Primary economic activities are those directly involving the natural

environment, including agriculture, forestry, fishing, and mining, and usually

contribute about 4 per Cent of the yearly GDP.

68

Secondary economic activities involve processing or combining materials

into new products, and include 'manufacturing and construction, this sector

accounts for (approximately 23 per cent of the GDP.

Tertiary economic activities involve the output of services rather than goods.

Examples of tertiary activities include wholesale and retail trade, banking,

government, and transport. The tertiary is the most important sector by far and

accounts for almost 73 per cent of the annual GDP.

1. When, according to the author, the US became a world's leading industrial nation?

2. What tendency took place by the end of the Civil War?

3. What is said in the text about the development of the service industry?

4. What is said about the size of the manufacturing sector of the economy?

5. What role does the government play in the modern economy of the USA?

6. What was the US GNP in 1993?

7. What are the three major sectors of American economy?

8. What are the examples of tertiary activities?

The style of business letters

When writing a business letter in English, be careful not to use an old-

fashioned commercial instruction book as a guide. The style of writing is changing

rapidly. Every year it is getting simpler and less formal. Instead of using an out-of-

date phrase like 'We are in receipt of your favor', we now write 'Thank you for

your letter'. Except for a few firms who still live in the past, business

correspondents prefer simple English to express what they want to say as

effectively as possible. Time is more precious than ever to a busy executive and he

does not want to have to read a lot of unnecessary words. But the writer of a

business letter must create a good impression, especially if he is selling, so a few

words to promote a feeling of friendship and goodwill are not wasted. However,

69

compliments must not be exaggerated, as they may produce the opposite effect,

and the reader may feel that the writer is being insincere.

We suggest the following points should be remembered when writing a

business letter in English:

1. Make a new paragraph for a new subject.

2. Say what you want to say in the simplest, clearest way.

3. Don't sell aggressively.

4. Remember that real feelings will have more effect than pretended ones.

The function of banks in national economy

To be able to understand the role and the work of banks properly, we must

first say what the term 'national economy' means. It covers three principal fields:

industry, commerce and direct services.

Industry provides energy, raw materials and goods. The extractive industry

produces coal, oil, gas, iron ore and a number of other metals and minerals from

the ground or seabed. These are needed by the manufacturing industry for the

production of machines and all those goods, which the customers buy: the car, the

TV set, furniture, the dishwasher in the kitchen etc.

However, we do not get these goods direct from the factory but buy them in a

shop or a department store. They are transported there and delivered to our homes

by railroad, sometimes by ship or air, especially if they have been imported.

This brings us to another field of economy, commerce, which can be divided

into trade and the service industries.

Trade is the buying and selling of any commodity. It can be divided into

home trade and foreign trade.

A television set is transported several times before we can switch it on in our

living room. Transport is, of course, a service which industry, trade and the

consumer make use of. But it is only one of the service industries.

70

If the television set is damaged or gets lost while being transported, the

insurance pays for this. Insurance is a service industry that specializes in covering

risks of all kinds: damage, loss, fire, accidents - to give just a few examples.

Industry and commerce depend on precise, up-to-date information, which

could not be provided, if we did not have our highly developed communication

services like the telephone, telex and the post.

You may have noticed that banks have not been mentioned yet. Where does

banking link up with the other sectors of a national economy? The simple answer

is everywhere.

Banking:

• collects money from its clients in small or large amounts

• provides efficient means and methods of payment for goods and services

• finances industry, commerce and direct services

• grants credits to consumers for the purchase of consumer goods

• sells foreign currencies

• has contacts with all important national and international money and

capital markets, etc.

1. What does the extractive industry produce?

2. Do we get many goods direct from the factory?

3. What is trade?

4. What does insurance as a service industry specialize in?

5. What do industry and commerce depend on?

6. What are the functions of banks?

Taxation

Taxation is the Government's main source of revenue. A tax is a compulsory

charge levied on the taxpayer by the state. There are two main types of taxation in

the UK, namely direct and indirect. Income tax, corporation tax, capital transfer

tax, motor vehicle tax and local rates are all direct taxes, since they are paid by the

71

taxpayer direct to the respective Government department. Indirect taxes are those

paid on the purchase or importation of certain goods and services. They include

value added tax, customs duties and excise duties. They are indirect because they

are paid initially by the manufacturer, importer or wholesaler and then passed on to

the final customer.

Taxation can obviously be classified again into three groups: taxes on income,

taxes on capital and taxes on expenditure.

While the main function of taxation is to provide revenue, it also has

important subsidiary functions and is one of the ways in which the government

effects its policies. The first of these is to reduce the inequality of incomes. This

has been achieved - and is still being maintained - by income tax and capital

transfer tax. These taxes are progressive. The amount people pay is in accordance

with what they can afford, so that a person with a high income pays more income

tax than one who earns less and, in addition, account is taken of their financial

responsibilities. Consequently, if two men receive the same amount in wages but

one is single and the other is married and has two children, the single person will

pay more income tax. This system is operated by giving allowances and relieves

against income. Income tax and capital transfer tax (which replaced estate duty)

have, therefore, been the main causes of the more equal distribution of Britain's

wealth, particularly since the end of the Second World War.

The second subsidiary function of taxation is to control the level of economic

activity. Selective employment tax fell into this category, since it encouraged

economy in the use of labor in the service and construction industries. The

repayment of the tax, together with additional sums to manufacturing industries in

the development areas, was an added incentive to firms to move to those areas and

therefore stimulated economic activity in them. Similarly, a substantial increase in

corporation tax could cause firms to limit their plans for development and

expansion, while a reduction in the rate charged would encourage firms to adopt an

expansionist policy.

72

Taxation's third subsidiary function is to influence production and

consumption. The imposition of a tax when goods are bought, or excise duty on

certain goods, can reduce the total consumption of them. The imposition of tariffs

on imported goods will discourage people from buying them and stimulate the

sales of home-produced goods. This was one of the measures used at the end of the

1960s to help to correct the balance of payments.

The last two functions can obviously have a direct effect on businesses, while

the first will have indirect consequences for them. The effects of taxation are

obviously taken into account as far as possible when planning company policy.

Companies are subject to corporation tax on their profits and any capital gains

obtained by the disposal of assets. The rate of this tax is subject to change in each

budget. It is payable to the Inland Revenue.

Besides being subject to taxation themselves, businesses are also responsible

for deducting income tax from the wages and salaries of their employees and

transmitting it to the Inland Revenue. Wages departments also deduct National

Insurance contributions from employees' pay. This is, in effect, another tax, since it

represents a compulsory cost to the firm.

The government's financial policy - and hence taxation - is reviewed annually

in the budget. Tax changes can be made at other times if they become necessary

but changes outside the budget are exceptional. In preparing the budget the

Chancellor of the Exchequer must consider the total obligation for government

expenditure on education, defense, social services, housing, etc. and decide how

this is to be raised. It must be decided how much of this can be raised from

taxation; the remainder is financed by borrowing. It is here that the effects of the

various forms of taxation must be considered and the right ones chosen for the

state of the economy.

A constant watch is kept on levels of employment in all parts of the country,

trends of production, prices and the balance of payments throughout the year, by

the Chancellor's economic advisors. On the basis of this information the budget is

prepared. Work continues constantly on possible taxation changes and their effect 73

and implementation. Major tax reforms require years of work before they can be

introduced. However, an effective budget must be designed to suit the current

economic circumstances of the country. Specific work on it, therefore, begins a

few months before Budget Day which is usually at the beginning of the financial

year, early in April.

1. Taxation is the Government's main source of revenue, isn't it?

2. What are direct taxes in the UK? What are indirect taxes?

3. What are three groups into which taxation can be classified?

4. What are the main functions of taxation?

Value added tax in Great Britain

General explanation

The main internal taxes on expenditure are the excise duties on tobacco, drink

and hydrocarbon oils (petrol and diesel), together with Value Added Tax (VAT),

which is, in effect, a single tax system on the sale of goods and services.

All countries within the Common Market (the EEC) are obliged to operate a

VAT system, thus smoothing the way for the harmonization of the laws of member

states on turnover taxes.

The VAT system has a great advantage in being, in the eyes of the Treasury,

an economy regulator. Changes in the rates of VAT can be made by Treasury

Order, within the Statutory Regulations.

The law concerning VAT is contained in the Finance Act 1972, and is

administered by Orders and Regulations made under that Act by the

Commissioners of Customs and Excise, from headquarters at Alexander House,

Victoria Avenue, South – end – on Sea, SS99 1AA.

Operation of VAT

The appropriate amount of tax is collected at each stage of the process of

production or distribution of goods or services, and the final tax is borne by the

consumer, who is the ultimate purchaser or user at the end of the line.74

At each stage of the business suppliers charge VAT on goods, trading stock,

materials to be used in manufacture, and the services used in the normal day-to-day

running of the business.

All these goods and services supplied are 'inputs', and the tax paid on them is

'input tax'.

When the business proceeds to supply goods and/or services to customers,

VAT is charged to such customers, as a separate amount. The supply of the goods

and services by the business is 'output' and the tax collected on them is 'output tax'.

At prescribed intervals the business must make a return to Customs and

Excise on which is totaled respectively the amount of input and output tax. It

follows that if the output tax amount is greater than the amount of input tax the

balance is payable to Customs and Excise. If the opposite were the case, a refund

would be made.

Rates of tax

The Treasury by Order, under the Act, regulates the rates of VAT, and

currently this is the 'standard' rate. There is however, a range of goods and services

which are the subjects of a 'zero-rate', and others which are 'exempt' from VAT.

Both zero-rating and exemption mean that no output tax is chargeable. An

important difference lies in the provision that on zero-rated goods or services the

VAT charged on inputs, relating to them can be reclaimed like any other input tax.

On the other hand, exempted goods or services are outside the scope of VAT, and

no input tax can be reclaimed in respect of them.

The ranges of goods and services designated as zero-rated or exempt are

specified in a VAT Notice No. 701, obtainable from VAT offices.

1. What is VAT?

2. What is 'input tax'?

3. What is 'output tax'?

4. Who regulates the rates of VAT?

5. All countries within the Common Market are obliged to operate a VAT

system, aren't they?75

The development of accounting thought

Accounting has a long history. Some scholars claim that writing arose in

order to record accounting information. Account records date back to the ancient

civilizations of China, Babylonia, Greece, and Egypt. The rulers of these

civilizations used accounting to keep tracks of the cost of labor and materials used

in building structures like the great pyramids.

Accounting developed further as a result of the information needs of

merchants in the city-states of Italy during the 1400s. In that commercial climate

the monk Luca Pacioli, a mathematician and friend of Leonardo da Vinci,

published the first known description of double-entry bookkeeping in 1494.

The pace of accounting development increased during the Industrial

Revolution as the economies of developed countries began to mass-produce goods.

Until that time, merchandise had been priced based on managers' hunches about

cost, but increased competition required merchants to adopt more sophisticated

accounting systems.

In the nineteenth century, the growth of corporations, especially those in the

railroad and steel industries, spurred the development of accounting. Corporation

owners - the stockholders - were no longer necessarily the managers of their

business. Managers had to create accounting systems to report to the owners how

well their businesses were doing.

The role of government has led to still more accounting developments. When

the federal government started the income tax, accounting supplied the concept of

'income'. Also, government at all levels has assumed expanded roles in health,

education, labor, and economic planning. To ensure that the information that it

uses to make decisions is reliable, the government has required strict accountability

in the business community.

1. Does accounting have a long history? 76

2. What countries did accounting appear first?

3. Did the growth of corporations lead to the development of accounting?

4. Who published the first known description of double-entry

bookkeeping?

5. Has the role of government led to more accounting developments?

6. What is the importance of accounting nowadays?

Bookkeepers, accountants, controllers and auditors

Bookkeepers deal in taxes, cash flow, which includes cash receipts and cash

disbursements, sales, purchases and different business transactions of the company.

Bookkeepers first record all the appropriate figures - in the books of original entry,

or Journals. 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. The Ledger shows all

the expenditures and all the earnings of the company. On the basis of all the totals

of each account in the Ledger, the bookkeeper prepares a Trial Balance. Trial

Balances are usually drawn up every quarter.

The accountant's responsibility is to analyze and interpret the data in the

Ledger and the Trial Balance.

The accountant is to determine the ways in which the business may grow in

the future. No expansion or reorganization is planned without the help of the

accountant. New products and advertising campaigns are also prepared with the

help of the accountant. The work of accountants is rather sophisticated. Many

accountants have special certificates after they pass examinations in Institute of

Accountants. Certified accountants in England are called chartered accountants. In

the USA the certified accountants are called certified public accountants. But it is

not necessary to have a certificate to practice accounting. Junior employees in large

companies, for example, often practice accounting and then take the examination.

The chief accounting officer of a large company is the Controller, or

Comptroller. Controllers are responsible for measuring the company's

77

performance. They interpret the results of the operations, plan and recommend

future action. This position is very close to the top executives of the company.

Auditors are usually independent certified accountants who review the

financial records of a company. These reviews are called audits. They are usually

performed at fixed intervals - quarterly, semiannually. Auditors are employed

either regularly or on a part-time basis. Some large companies maintain a

continuous internal audit by their own accounting departments. These auditors are

called internal auditors.

Not so many years ago the presence of an auditor suggested that a company

was having financial difficulties or that irregularities had been discovered in the

records. Currently, however, outside audits are a normal and regular part of

business practice.

Auditors see that current transactions are recorded promptly and completely.

Their duty is to reduce the possibility of misappropriation, to identify mistakes or

detect fraudulent transactions. Then they are usually requested to propose solutions

for these problems. Thus auditors review financial records and report to the

management on the current state of the company's fiscal affairs in the form of

Auditor's Report or Auditor's Opinion.

1. What are the functions of bookkeepers?

2. What are the functions of accountants?

3. What do auditors deal with?

4. Is it necessary to have a certificate to practice accounting in the USA?

5. The work of accountants is rather sophisticated, isn't it?

Marketing

Marketing is not the same as selling. Effective marketing is about creating a

product and a product image that the sales force can sell. It is both a creative and a

strategic function. It has been said that engineers create devices while marketers

create products. One of the best books of this is 'Marketing High Technology' by

William Davidow.78

Marketing concept includes various elements such as planning, research, new

product development, sales, communications, advertising, etc. Marketing starts

with production and later studies all its stages before, during and after production.

In the sales area, marketing provides information about forward demand for the

company's products or services, helps to find and promote demand for products

and services.

Marketing planning is an integral part of the marketing mix and it depends on

thorough situation analysis. When the situation is analyzed it is necessary to

consider controllable and uncontrollable factors. The controllable ones are four:

product, price, place and promotion. Uncontrollable factors are mainly

environmental factors.

1. Is marketing the same as selling?

2. What are the elements of marketing concept?

3. What are the controllable and uncontrollable factors of marketing?

About business publications

A presentation of the research based evidence that business magazines are a

powerful advertising medium. Business publications reach over 90% of decision-

makers in business. They are considered by decision-makers to be the most useful

source of information in many areas. Business publications contain the advertising

considered to be most useful by decision makers.

Advertisers view business magazines as the most essential medium for their

marketing effort. Advertising in business publications generates proven increases

in sales leads, sales and profit. 96% of Sales and Marketing Directors said that the

business press is the best for providing effective advertising for their marketing

campaigns. 86% said that the business press is best for providing sales leads. 73%

of decision-makers agree that business publications 'contain advertising that is

useful to my job'.

'I look for new products and advertising information about products'.

79

'I think that it is all very interesting, and there's a lot of advertising that is

useful to you'.

78% of Main Board Directors said that advertisements in business

publications are more useful to them than advertisements in other media. 83% of

decision-makers agreed that 'I am more likely to read an advertisement in a

business publication than on the Internet'. 93% of decision-makers agree that

business publications 'keep me regularly informed about my industry'.

'They are a first rate asset to me and my work, and keep me informed of

what's going on in the market. Very important'.

80% of decision-makers agree that business publications are 'an authoritative

source of information'.

'Quality independent news coverage of industry trends which are valuable

sources of information'.

73% of decision-makers agree that business publications 'stimulate new

ideas'.

'They are very useful for new ideas. It helps to give you more original ideas

and helps with lateral thinking'.

72% of decision-makers agree that business publications 'give breadth and

depth about my sector'.

'They are very useful for giving a broad overview of the whole industry

sector'.

71% of decision-makers agree that business publications are 'essential

reading'.

'They are an essential part of our work, for information on products and

services, to keep abreast of what's happening in the market place and for future

new developments'.

81% of Main Board Directors said that business publications provide the best

editorial coverage of the industry.

79% said that the business press is best for new ideas.

72% agree that business magazines 'reach a unique quality of audience'.80

90% of Main Board Directors agree that business magazines 'have a targeted

audience'.

87% said that the business press is best for seeing new technical applications.

79% said that the business press is best for finding new operational methods.

Business publications are seen as a fundamental element of working life.

'Business publications are a valuable part of our culture at work'.

'Business publications provide readers an opportunity to relax within the

working environment - and offer advertisers a receptive audience as a result'.

Advertising in business publications builds awareness. Awareness builds

preference and increases the perception of product quality. Collectively this

generates interest and action. This ultimately leads to sales. McGraw-Hill tracked

brand awareness for two years across 2,594 products sold in the chemical process

industry. Those that advertised during the period grew their brand awareness by

nearly 4 times as much as those that did not.

The University of Lowell examined Cahner's Brand Preference Study to

determine any link between brand awareness and brand preference. Advertising

communicates product attributes and generates brand awareness. Brand preference

increases as brand awareness increases. The Strategic Planning Institute asked

buyers to rate a range of competing products in terms of quality. For products with

above-average advertising weight the perception of the product's quality was 50%

higher than those that were not advertised.

In American Business Media's research more than half of those exposed to

advertising had purchased or recommended purchase of an advertised product.

Advertising generates profit growth. The profit generated from sales grows as

advertising pressure increases.

1. Do you agree that business publications are ' an authoritative source of

information'?

2. Are business magazines a powerful advertising medium?

3. Do they contain advertising that is useful to you?

81

4. Does advertising in business publications generate proven increases in

sales and profit?

5. Do most decision-makers read an advertisement in a business publication

or on the Internet?

Advertising

In the eyes of the business world and of many economists, advertising serves

an indispensable function. It helps consumers to choose among competing

products. Also, by spurring demand for products, it extends the possibilities of

mass production and thus leads to economies of scale and to lower consumer costs.

Indeed, advertising is sometimes depicted as 'the engine of prosperity'. From

another perspective, however, advertising goes against important social values. It

promotes self-indulgence and thus counters moral and religious teachings that urge

selflessness. It creates false 'needs' and encourages waste.

This inevitable tension between business values and other social values often

spills over onto the political stage, with the institutions of government struggling to

resolve a point at issue. Should there be limits on the types of products that

business people can advertise? Should advertisers be forced to mention the hazards

as well as the attractions of a product such as cigarettes? Should advertisers be

required to substantiate their growing claims? The give-and-take of the democratic

political process provides answers to such questions in a continuing process of

adjustment and change -increasingly offering protection to the consumer against

false or harmful advertising.

1. What is the function of advertising?

2. Can advertising be harmful to people?

3. Should there be limits on the types of products that business people can

advertise? What do you think?

Shopping in the USA

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Every year US retailers hope for dramatic increases in consumer spending

during the holiday season. In fact, the retailers depend on these holiday sales

figures to boost their yearly profits. Consumers usually begin hitting the stores in

early November, in an attempt to avoid the crowds near Christmas. The official

start of the holiday shopping season is the day after Thanksgiving, which falls on

the fourth Thursday in November.

According to industry analysts, the typical US family spends nearly $1,000 on

holiday gifts. Research also shows that shoppers are beginning to deviate from

traditional purchases. Consumers are buying more unusual gifts. This trend already

has many retailers yearning for the good old days when they could count on selling

a lot of their stock of clothing, jewelry, books, CDs and other ordinary items. But

some other retailers are pleased: many gift lists now consist of luxury items, such

as the latest in high-tech equipment or expensive cars.

If the economy is in good shape, most retailers emerge from the slower

months with a healthy profit. December is the month of the highest sales. This is

expected because of the custom of gift giving on Christmas Day, December 25th.

Furthermore, many consumers wait for the post-holiday sales that begin right after

Christmas. December 26th is now one of the busiest days in retailing: That's the

day when people go to stores not only to exchange their gifts and use their gift

certificates, but also to look for items to buy at post-holiday prices. Shoppers are

often sorry about the prices they had to pay for items they purchased before

December 25th.

The next two months, January and February, show the lowest sales of the

year. After all consumers have paid for their holiday gifts, they don't want to spend

any more money. In spring, sales pick up as consumers look forward to summer:

the time for travel and many outdoor activities. Spending reaches the second

highest level of the year in August, with back-to-school sales. With the approach

of another holiday season, spending predictably picks up again. People don't worry

so much about debt, and start thinking about happy times together - and gift giving

- among friends and family. Children start asking for the toys they've been 83

dreaming about all year, and the retailers begin once again to concentrate on their

holiday sales promotions.

1. When is Thanksgiving?

2. Is December the month of the highest sales? Why?

3. How much does the typical US family spend on holiday gifts?

4. Why December 26th one of the busiest days in retailing now?

5. Many consumers wait for the post-holiday sales, don't they?

6. Does spending reach the second highest level in August? Why?

7. When do the shops have the lowest sales of the year?

Shopping in New-York

Any visitor to New York will inevitably include shopping in their plan of

action. The City is the consumer capital of the world: a shopper's paradise which is

a constant source of entertainment, with dazzling window displays and a

staggering display of goods.

Whether you have $50,000 or $5, New York is the place to spend it.

Opening Hours

Most shops in New York are normally open from 10 a.m. to 6 p.m., Monday

to Saturday. Many department stores, though, are open all day Sunday and until 9

p.m. at least two nights a week. The best time to avoid crowds is weekday

mornings. The most crowded times are lunch hours (noon to 2.30 p.m.), Saturday

mornings, sales and holidays.

Taxes

The New York City sales tax, 8.25%, is added to the price when you pay. But

you may still be asked to pay duty on goods at customs if you exceed the

allowance. If the goods are sent direct, you won't have to pay sales tax.

Department Stores

Most of New York's large department stores are in midtown Manhattan.

Allow plenty of time to explore as all these stores tend to be enormous, with an

84

amazing range of goods. Prices are often high, but you can get bargains during the

sales.

Stores such as Saks Fifth Avenue, Bloomingdale's and Macy's provide a

diverse and extraordinary range of shopping services, including doing the shopping

for you. But then you would miss out on what may be the shopping experience of a

lifetime.

Abraham & Strauss, more familiarly known as A&S, is a bustling store which

carries reasonably priced ready-to-wear fashions for adults and children. It is the

centerpiece of an Art Deco-style mall, the largest in Manhattan.

Barney s New York is a favorite among the young professional New Yorkers.

It specializes in excellent, but expensive, designer clothes. A branch for men is

located in the glittering World Financial Center.

Berdor J Goodman is luxurious, very elegant and understated. It carries top

quality contemporary fashions at high prices, specializing in European designers.

The men's store is right across the street. Almost every visitor to New York

includes Bloomingdale s on their sightseeing list. 'Bloomies' is the Hollywood film

star of the department stores, with many eye-catching displays and seductive

goods. Its ambience is of a luxurious Middle Eastern bazaar, filled with wealthy,

immaculately dressed New Yorkers seeking out the newest trendiest fashions.

Bloomingdale's also has a high reputation for household goods and gourmet food -

it has a shop devoted entirely to caviar. Extensive shopping services and amenities

include a noted restaurant, Le Train Bleu, and a theatre ticket discount agency.

Lord & Taylor is renowned for its classic and much more conservative

fashions for men and women. The store places an emphasis on US designers. You

need a strong pair of legs, comfy shoes and lots of spare time to wander around.

Macy s, the self-proclaimed largest store in the world, manages to sprawl over

an entire city block. It has ten floors, and sells everything imaginable from tiny tin

openers to massive TVs.

85

Saks Fifth Avenue is synonymous with style and elegance. It has long been

considered one of the city's top-quality department stores, with service to match. It

sells stunning designer clothes for men, women and children.

1. Have you ever been to New York?

2. What is the sales tax in New York City?

3. Most of New York's large department stores are in midtown Manhattan,

aren't they?

4. What are the most famous department stores in New York?

5. Are prices high in those stores?

Shops and markets in London

London is still one of the loveliest shopping cities in the world. Within just a

few minutes' walk you can find both vast department stores, with glittering

window displays, and tiny, cluttered rooms where one customer almost fills the

entire shop. Many of the most famous London shops are in Knightsbridge or

Regent Street, where prices can be steep, but Oxford Street, which is packed with a

huge number of shops offering quality goods at a range of prices, is also worth a

visit. All over London, there are plenty of places tucked away down side-streets -

and don't forget to try the markets for antiques, crafts, household goods, food and

clothing.

When to shop

In Central London, most shops open somewhere between 9 a.m. and 10 a.m.

and close between 5 p.m. and 6 p.m. on weekdays; some earlier on Saturdays. The

Tate night' shopping (until 7 p.m. or 8 p.m.) is on Thursdays in Oxford Street and

the rest of the West End, and on Wednesdays in Knightsbridge and Chelsea; some

shops in tourist areas, such as Covent Garden and the Trocadero, are open until 7

p.m. or later every day, including Sundays. A few street markets and a slowly

growing number of other shops are also open on Sundays.

Best of the Department stores

86

The King of London's department stores, by tradition, is Harrod's, with its

300 departments and staff of 4,000. Prices are not always as high as you may well

expect. The spectacular food hall, decorated with Edwardian tiles, has splendid

displays of fish, cheese, fruit and vegetables; other specialties include fashions for

all ages, china and glass, electronics and kitchenware. Though Harrod's is still just

as popular, especially with well-heeled visitors, Londoners often head instead for

nearby Harvey Nichols, which aims to stock the best of everything with the price

tags to match. Clothes are particularly strong, with the emphasis firmly on very

high fashion, with many talented British, European and American names

represented. There is also an impressive menswear section. The food hall, opened

in 1992, is one of the most stylish in London.

Selfridge s vast building on Oxford Street houses everything from Gucci bags

and Hermes scarves to household gadgets and bed-linen. Miss Selfridge, the

popular high street fashion chain, also has a branch in the store.

The original John Lewis was a draper and his shop still has a gorgeous

selection of fabrics and haberdashery. Its china, glass and household items make

John Lewis, and its well-known Sloane Square partner, Peter Jones, equally

popular with Londoners.

Liberty, the last privately owned department store in London, still sells the

hand-blocked silks and other oriental goods it was famed for when it opened in

1875. Look out for the famous scarf department.

Fortnum and Mason s ground floor provisions department is so engrossing

that the upper floors of classic fashion remain peaceful. The food section stocks

everything from baked beans to the beautifully prepared hampers.

Marks and Spencer

Marks and Spencer has come a long way since 1882 when Russian émigré

Michael Marks had a stall in Leeds's Kirkgate market under the sign, 'Don't ask the

price - it's a penny!' It now has over 680 stores worldwide and everything in them

is 'own label'. It stocks reliable versions of more expensive clothes - Marks and 87

Spencer's underwear in particular is a staple of the British wardrobe. The food

department concentrates entirely on up market convenience foods. The main

Oxford Street branches at the Pantheon (near Oxford Circus) and Marble Arch are

the most interesting and well stocked.

1. Have you ever been to London?

2. What are the most famous department stores in London?

3. Prices are always very high at Harrod's, aren't they?

4. Which store only sells goods carrying its own label?

Know your rights

Complaining about faulty goods or bad service is never easy. Most people

dislike making a fuss. However, when you are shopping, it is important to know

your rights. The following extract is taken from a leaflet produced by the British

'Office of Fair Trading', and it gives advice to consumers.

Your rights when buying goods.

When you buy something from a shop, you are making a contract. This

contract means that it's up to the shop - not the manufacturer - to deal with your

complaints if the goods are not satisfactory. What do we mean by satisfactory?

The goods must not be broken or damaged and must work properly. This is

known as 'merchantable quality'. A sheet, say, which had a tear in it, or a clock that

didn't go when you wound it would not pass this test.

The goods must be as described - whether on the pack or by the salesman.

A hairdryer which the box says is blue should not turn out to be pink; a pair of

shoes the salesman says is leather should not be plastic.

The goods should be fit for their purpose. This means the purpose for which

most people buy those particular goods. If you wanted something for a special

purpose, you must have said exactly what for. If, for instance, the shop assures you

that certain glue will mend broken china and it don’t you have a right to return it?

If things go wrong.

88

If goods are faulty when you first inspect or use them, go back to the shop,

say that you cancel the purchase and ask for a complete refund. If you prefer, you

can accept a repair or replacement.

If the goods break down through no fault of yours, after you have used them

for a time, you may still be entitled to some compensation. In some cases it would

be reasonable to expect a complete refund - if, for instance, without misuse your

shoes came apart after only one day's wear, or your washing machine irreparably

broke down after only three wash days. But if your washing machine worked

perfectly for a while and then broke, you could only expect some of the purchase

price back. You and the supplier must negotiate a reasonable settlement.

You need never accept a credit note for faulty goods. If you do so, then later

find you do not want anything else in the shop or store, you may not get your

money back.

If you have to spend money as a direct result of goods being faulty, you can

also claim this from the shop. You could, for example, claim the cost of using a

laundry while the washing machine wasn't working. But you must keep such

expenses down to a minimum.

There are four golden rules:

1. Examine the goods you buy at once. If they are faulty, tell the seller

quickly.

2. Keep any receipts you are given. If you have to return something, the

receipt will help to prove where and when you bought it.

3. Don't be afraid to complain. You are not asking a favor to have faulty

goods put right. The law is on your side.

4. Be persistent (but not aggressive). If your complaint is justified, it is

somebody's responsibility to put things right.

Remember: You can't complain about defects that were pointed out to you, or

that you could reasonably have been expected to notice. Stop using the item as

soon as you discover a fault. You are entitled to compensation if you simply

change your mind about wanting the goods.89

1. What does 'merchantable quality' mean?

2. In what cases can you return the goods you bought in the shop?

3. In what cases may you be entitled to some compensation?

4. What rules should you follow when buying goods?

5. What purposes do clothes serve?

6. What are versatile items?

7. What product characteristics do you take into consideration in choosing

clothing?

8. Why is it important to have a shopping list?

9. Are prices and quality the same in different stores?

10. Is it cheaper to shop in supermarket or small neighborhood store?

90

КОНТРОЛЬНО-ТРЕНИРОВОЧНЫЕ УПРАЖНЕНИЯ

Part I

1. Образуйте множественное число следующих существительных.

Student, teacher, pen, chair, table, doctor, map, match, class, baby, leaf, shelf,

potato, man, woman, foot, goose, datum, nucleus, formula, sheep, an Englishman,

a German.

2. Перефразируйте следующие словосочетания, употребляя притяжательный

падеж.

The office of the manager,

the letter of Mr. Brown,

the setting of the sun,

the most famous department store of London,

the toys of the child,

the toys of the children,

the rights of the women,

the title of the book,

the house of my father-in-law,

the flat of his parents,

the report of the auditor,

the gold markets of the world.

91

3. Переведите следующие словосочетания на английский язык, употребляя

притяжательный падеж.

Письмо его сестры, библиотека университета, сын моей сестры,

младшая дочь его сестры, книги учеников, словари студентов, деньги

налогоплательщиков, экономические партнеры Британии.

4. Употребите определённый или неопределённый артикль.

1) This is ... banknote.... banknote is old and not valid any more.

2) She is ... accountant. Her daughter is ... accountant too.

3) Where is ... Stock Exchange? ... Stock Exchange is in the City.

4) ... Bank of England is the central bank of the UK.

5) There is ... green carpet in his room. ... carpet is thick and warm.

6) It's ... good idea to go on ... diet.

7) ... Thames is ... most important river in England.

8) What... fine day we are having today. ... sky is blue. ... sun is shining

brightly.

5. Вставьте артикль, где необходимо.

1) In ... morning we have ... breakfast, in ... afternoon we have ... dinner, and

in ... evening we have ... supper. In England and other countries they have ... lunch

in ... afternoon, and they have ... dinner in ... evening.

2) ... Black Sea is in ... South of our country.

3) ... freedom is more important than ... wealth.

4) Cricket is ... most popular summer sport in Britain.

5) How many students are there in ... class?

6) He is ... manager.

7) In ... future ... Earth will be hotter.

8) New ... cars are expensive.

9) She gets up at ... half past six in ... morning and goes to ... bed at... quarter

to ten in ... evening.

92

10) What is ... date today? It is ... ninth of May.

6. Употребите нужную форму личных местоимений.

1)1 often see (she, her) at the University.

2) Are you waiting for (we, us)?

3) This land was made for you and (I, me).

4) He teaches (they, them) management.

5) I know (he, him) very well.

6) Can you help (I, me)?

7) We are proud of (they, them).

8) (They, them) always sit together in class.

9) (He, him) is fond of football.

7. Употребите нужную форму притяжательных местоимений.

1) She washed ... hands and face.

2) What is ... phone number? May I phone you?

3) Give me ... photo and I'll give you....

4) This is Mary. And this is ... brother ... name is David.

5) Their horse was faster than ... (our, ours).

6) People fight for ... rights.

7) We were tired after ... long business trip.

8) Computers are getting deeper and deeper into ... life.

8. Заполните пропуски глаголом to be, употребляя соответствующую форму

Present Simple.

1) He ... a lawyer.

2) She ... an accountant.

3) They ... absent from class today.

4) I ... fond of playing chess.

5) Ben ... a student.93

6) ... your sister a typist? - No, she ... not a typist. She ... a laboratory

assistant.

7) ... you a bookkeeper? - Yes, I ... .

8) These computers ... of the latest type.

9) They ... very good at skiing.

10) Where ... you from?

11) How old ... you? How old is your sister?

9. Заполните пропуски глаголом to be, употребляя соответствующую форму

Past Simple.

1) I ... busy all day yesterday.

2) They ... good friends.

3) The driving lesson ... difficult.

4) It ... kind of you to invite me.

5) He ... afraid to open the door.

6) The exercise ... hard to do.

7) I ... glad to meet my old friends again.

8) We ... sorry to hear your bad news.

9) It ... quite an interesting story.

10. Заполните пропуски глаголом to be, употребляя соответствующую форму

Future Simple.

1) In the future the Earth ... hotter.

2) She ... our English teacher.

3) In 3 years they ... be accountants.

4) It ... a difficult task.

5) ... it ... easy? - No, it ... not.

6) It ... of great help.

7) There ... enough room for everybody.

94

11. Употребите оборот there is (are).

1) ... different types of banks in Great Britain.

2) ... someone at the door.

3) ... nobody in the room now.

4) ... many museums in London.

5) ... only 28 days in February.

6) ... various forms of businesses in the USA. 1) ... little time left.

8) ... no need to hurry.

9) ... three or four types of account in this bank.

12. Поставьте следующие предложения во множественное число.

1) This house is very large.

2) This woman is an accountant.

3) This man works at our office.

4) That woman is a lawyer.

5) This strawberry is already ripe.

6) She keeps her toy in a box.

7) There is a mouse in this room.

8) There is a shelf over that table.

9) Will you close that window?

10) Is that a knife?

11) Is this a sheep?

12) On that farm we could see a cow, a sheep, an ox and a goose

13) This chain is made of silver.

14) This small business is an important part of the economy.

13. Напишите следующие предложения в вопросительной и отрицательной

формах.

Образец: John walks to school every day.

Does John walk to school every day?

95

John doesn't walk to school every day.

1) Accounting has a long history.

2) The train leaves at 7 p. m.

3) He speaks English fluently.

4) They grow different kinds of vegetables in their garden.

5) Martin washes the dishes after dinner.

6) I go shopping on Saturdays.

7) We visit our parents on Sundays.

8) Individuals pay income tax.

9) Imports exceed exports in this country.

14. Употребите глаголы, данные в скобках, в форме Past Simple.

1) Paul (buy) a new bicycle yesterday.

2) Laura (do) her homework last night.

3) Pete (wash) the dishes after dinner.

4) Margaret (fail) in her English last term.

5) The conference (last) about three hours.

6) Bob (cook) dinner for his family Saturday night.

7) Storm (kill) 10 people in Moscow.

8) In the 20th century the volume of world's exports increased.

9) Britain (join) the European Economic Community in 1973.

15. Напишите следующие предложения в вопросительной и отрицательной

формах.

Образец: Не planned his work well.

Did he plan his work well?

He didn't plan his work well.

1) He arrived home late.

2) John went to Spain last year.

3) Sarah won the first prize.96

4) We watched TV all night yesterday.

5) They met three years ago.

6) We celebrated Sasha's birthday last week.

7) Philips and Sony marketed the first CDs in 1982.

16. Напишите следующие предложения в вопросительной и отрицательной

формах.

Образец: George will fly to New-York on Delta.

Will George fly to New-York on Delta?

George won't fly to New-York on Delta.

1) They will meet him at the airport.

2) The plane will leave Moscow at 10 a. m. on Tuesday.

3) I will finish the work in May.

4) We will receive letters from Nick.

5) I will (shall) study English next year.

6) She will plant roses next week.

7) Technology will play a great role in teaching and learning in the future.

17. Образуйте степени сравнения прилагательных и наречий.

Small, young, long, quick, big, old, nice, wide, near, late, fast, easy, good, bad,

beautiful, important, difficult, clearly, attentively, carefully, interesting, far, early,

well, dry, warm, cold, hot, polite, popular.

18. Переведите следующие предложения на русский язык.

1) Kuwait is one of the biggest oil producers in the world.

2) He earns as much money as his brother.

3) The climate in Florida is as mild as that of California.

4) Your accent is not as strong as my mother's.

5) I feel much better today than I did last week.

6) This encyclopedia costs twice as much as the other one.

97

7) J The sooner you leave, the earlier you will arrive at your destination

8) The more you study, the more you know.

9) The more you get, the more you spend.

19. Запишите следующие предложения в вопросительной и в отрицательной

формах.

Образец: This house was built in 1925.

Was this house built in 1925?

This house was not built in 1925.

1) The letters were sent by the secretary.

2) The salary will be paid next month.

3) The instructions were given by the administration.

4) I was given two days to make my decision.

5) This room is cleaned every day.

6) Nissan UK Limited was founded in 1969.

7) The bank was established in 1694.

8) The Bank of England was nationalized in 1946.

9) The European Economic Community was established in 1957.

10) The American dollar is subdivided into one hundred cents.

20. Напишите следующие предложения в вопросительной форме, используя

вопросительные слова, данные в скобках.

1) Jane visits her parents (How often?)

2) Her parents live in London (Where?)

3)1 have dinner in the afternoon (What time/usually?)

4) John plays football (How often?)

5) Mary is an accountant (What?)

6) Mike is fond of computer games (Who?)

7) She went to Moscow (Why?)

8) Philips and Sony marketed the first CDs in 1982 (Who?)98

9) He taught accounting last year (What?)

Part 2

1. Поставьте следующие предложения в вопросительную и отрицательную

формы:

Образец: The child is sleeping.

Is the child sleeping?

The child is not sleeping.

1) The birds are flying south.

2) It is getting dark.

3) I am waiting for you.

4) He is going to Los-Angeles.

5) Tom is going to play tennis on Friday afternoon.

6) Its going to rain.

2. Употребите глаголы, данные в скобках, в форме Past Progressive или

Future Progressive.

1) Tom burnt his hand when he (cook) the dinner.

2) He fell asleep when he (watch) television.

3) It (rain) hard when I got up this morning.

4) If you come at 6 p. m., I (work) in the garden.

5) Mary (teach) at school at 9 o'clock tomorrow morning.

6) ... you (wait) for me when I arrived?

7) Joanna (not work) tomorrow evening in the Mall.

3. Раскройте скобки.

1) Ann usually (get up) at 7.

2) Look! It (rain) again.

3) Ann (spend) a lot of money yesterday. She (buy) some food and a big

dictionary.99

4) You (wait) for Mrs. Morgan?

5) He (play) chess on Tuesday afternoon.

6) She ... (go) to England.

7) What time ... the film (begin)?

8) She ... (not belong) to a political party.

9) She (teach) Accounting next year.

10) Everybody (enjoy) the party last night.

11) Mrs. Morgan is an English teacher. She (work) at the University.

12) My sister (speak) fluent Arabic.

13) Water (consist of) two elements: oxygen and hydrogen.

14) In the future, people (live) much longer.

4. Переведите предложения на русский язык, обращая внимание на

употребление времен группы Perfect.

1) I have stopped smoking.

2) I've just started a new job.

3) When I returned, the room was empty - everyone had left.

4) He told me his first wife had died in a car accident.

5) By next autumn, we'll have moved to Moscow.

6) I have never been to Berlin.

7) When they get to the cinema the film will have already started.

8) I've changed my clothes.

9) She hadn't seen the film before.

10) I didn't recognize Mr. Brown. He had changed a lot.

11) Prices fell last month but now they have risen again.

12) Many countries have introduced computers into agriculture, education,

transport and many other spheres.

5. Переведите следующие предложения на русский язык.

1)1 must be going - I'm late for work.

100

2) We all need to be more active.

3) We should avoid using the lift when possible.

4) We should try to walk up the stairs whenever we can.

5) People shouldn't smoke in no smoking areas, should they?

6) Tony can speak Spanish very well.

7) I can't find my pen anywhere.

8) Can you drive a car?

9) I couldn't finish all my work yesterday, but I hope I can tomorrow.

10) We weren't allowed to use our calculators in the math test because it was

against the rules.

11) I have to get up early in the morning, since I must be in my office at 8

o'clock.

12) You needn't do this exercise in the written form.

6. Переведите предложения, обращая внимание на much, many, little, a little,

few, a few, а также a lot of plenty of.

1) Hurry up! We haven't got much time.

2) There were not many people at the party.

3) Have you got many friends?

4) He's got so much money; he doesn't know what to do with it.

5) There is no need to hurry. We've got plenty of time.

6) We don't need to go to a petrol station. We've got plenty of petrol.

7) This car is expensive to run. It uses a lot of petrol.

8) He has very few friends.

9) She doesn't speak German. Only a few words.

10) There has been very little rain recently.

11) Have you got any money? - Yes, a little.

7. Переведите следующие предложения, обращая внимание на both (both of),

both ... and, neither (neither of), neither ... nor, either (either of), either ...or.101

1) Did you go to England or Scotland for your holidays? - I went to both. A

week in England and a week in Scotland.

2) Is she a secretary or an accountant? - Neither. She is a manager.

3) Neither of his parents is alive. Both of them died last year.

4) We have got neither time nor money to go on holiday.

5) Her name is either Diana or Elizabeth.

6) We can visit them either in May or June.

7) Both Ann and Dale were late.

8) Do you want ice-tea or hot tea? - Either. I don't mind.

8. Поставьте следующие предложения в вопросительной и отрицательной

формах.

1) Kate bought some new shoes yesterday.

2) We learned some new facts about the accident.

3) There is someone at the door.

4) She has something important to say to you.

5) They will ask you some questions.

6) There are some museums in that city.

7) Britain had some advantages.

8) Some students have their own computers.

9) He got some E-mail messages.

10) There are some new words in the text.

11) There are some letters for you.

9. Заполните следующие предложения местоимениями somel any/no и их

производными.

1) Would you like ... more coffee? - No, thanks, ... more for me.

2) He left home without... money.

3) He refused to say ... .

4) You can sit... you want.102

5) If you have ... questions, please ask.

6) Is ... there?

7) You can phone ... time you like.

8) There was an accident but fortunately ... was injured.

9) I telephoned her several times, but... answered the telephone.

10) How much money have you got? - ...

11) ... came to visit me when I was in hospital.

12) Where did you go for your holidays? - ..., I stayed at home.

10. Переведите следующие предложения на русский язык, обращая внимание

на местоимения one (ones), that (those).

1) One of the passengers was injured.

2) This book is more interesting than that one.

3) This computer is better than that one.

4) These shops are cheaper than those.

5) There was only one person who could help him.

6) One must study hard to learn to speak English well.

7) One should exercise more in order to be healthy.

8) I enjoy listening to English songs as well as Russian ones.

9) This lecture is more informative than that I attended last week.

11. Переведите предложения на русский язык, обращая внимание на

эмфатический оборот: It is (was) ... that (who).

Образец: It was my friend who helped me in. my work.

Именно мой друг помог мне в работе.

1) It is her kindness that he admires most of all.

2) It was Henry Ford who transformed the world.

3) It was Alexander Bell who invented the first telephone in 1876.

4) It was in 1876 when Alexander Bell invented the first telephone.

5) It was the Americans who landed on the Moon, not the Russians.103

6) It was Nick who met you, not Henry.

7) It was at our University that the conference took place.

8) It was in June 1999, when we celebrated Pushkin's bicentennial.

Part 3

1. Переведите следующие предложения на русский язык, обращая внимание

на времена группы Perfect Continuous.

1) Не has been learning French for a long time.

2) Its been raining since I got up this morning.

3) Mary has been living in Kirov since May.

4) We've been waiting for twenty minutes.

5) What have you been doing since we last met?

6) I haven't seen her for ages.

7) They had been waiting long before the train arrived.

8) She said that she had been feeling all right until I turned up.

9) He said that he had been working for that firm for 5 years. 10) Tom's

father has been a manager for 10 years.

2. Замените в следующих предложениях действительный залог стра-

дательным, обращая внимание на времена группы Indefinite (Simple)

Образец: They did not adopt the resolution yesterday.

The resolution was not adopted yesterday.

1) They will finish the airport next spring.

2) Someone stole his wallet.

3) Somebody built this house.

4) We can solve this problem.

5) They will publish the book soon.

6) Alexander Fleming discovered Penicillin.

7) Philips and Sony marketed the first CDs in 1982.

8) Joseph Swan invented the light bulb in 1879.

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9) The committee will announce the names of the Nobel Prize winners in

May.

10) They will sell the tickets beforehand.

11) They established the European Monetary Institute in Frankfurt/Main in

1994.

12) Germany, France, and the US instituted the gold standard in the 1870s.

3. Замените в следующих предложениях действительный залог

страдательным, обращая внимание на времена группы Continuous

(Progressive).

Образец: They are building a new road round the city.

A new road is being built round the city.

1) They are publishing the result on Tuesday.

2) Somebody was cleaning the window when I came in.

3) I didn't realize that someone was recording my presentation.

4) They are building a new church in our city.

5) They are repairing his car.

6) His parents are building a big house.

7) They are looking through the mail.

4. Замените в следующих предложениях действительный залог

страдательным, обращая внимание на времена группы Perfect.

Образец: The committee has discussed the draft resolution today.

The draft resolution has been discussed by the committee today.

1) Terrorists have kidnapped them.

2) They have planted the trees.

3) They have delayed the flight.

4) They will have typed the letter by tomorrow.

5) They had done it earlier.105

6) The maid had prepared the room before their arrival.

5. Переведите предложения на русский язык, обращая внимание на форму

глагола придаточных предложений.

1) Не asked me what the time was.

2) She told him that the voyage had taken 3 months.

3) The secretary told us that the manager would be back in 2 hours.

4) He said he was the president of the corporation.

5) Helen said that Mike had never been to an English-speaking country.

6) Mike said that he was thinking of going to Australia.

7) Helen said that she had won that trip to Great Britain.

8) She knew she would not visit Scotland.

9) Helen said that she had been traveling a lot lately. 10) He was sure that he

would pass his examinations successfully.

6. Преобразуйте следующие предложения из прямой речи в косвенную.

Переведите предложения на русский язык.

Образец: Не asked me, 'What's the time?'

He asked me what the time was.

1) Helen said, ‘I am leaving in the evening.'

2) He asked me, 'Can you do me a favor?'

3) James said, 'I have to get up early in the morning.'

4) They asked, 'What country are you from?'

5) He said. ‘I will be a manager.'

6) They asked me, 'Are you pleased to be home?'

7) She said, ‘I feel very tired.'

8) He said, 'I don't often read the newspaper.'

9) Mary said, 'Sydney is surrounded by national parks.'

7. Переведите следующие предложения, обращая внимание на форму

сказуемых в главном и придаточном предложениях.

106

1) If you recycle newspapers, you'll save trees.

2) If you turn off lights when not in use, you will save energy.

3) When you see Jane again, you will not recognize her.

4) If we clear the forest, many animals will die.

5) If it rains, I won't go out.

6) I'll let you know as soon as I make up my mind.

7) If you book your summer holiday in December, you'll get a discount.

8) I'll go to the USA, if I manage to save up enough money.

9) If you open a deposit account, you get interest.

8. Переведите следующие предложения, обращая внимание на

сослагательное наклонение.

1) If the trees didn't make oxygen, we wouldn't be able to live.

2) If I were you, I would go to England.

3) If I passed my driving test first time, I'd think about buying a car.

4) I would go to Canada if I had enough money.

5) If he had reminded me, I would have arrived on time.

6) If I had enough money, I'd go to Great Britain.

7) What would you do if you lost your passport in a foreign country?

8) I wish Barbara could come to the party.

9) If my parents didn't live so far away, I would visit them more often.

10) What would happen if the sun stopped shining?

11) If they had cleared the forest, many animals would have died.

12) If he had gone to the party last Saturday, he would have seen Mary.

9. Переведите следующие предложения, обращая внимание на форму и

функцию инфинитива.

1) She offered to help him.

2) They promised to invite her for lunch.

3) I'd like to be invited to the theatre.107

4) This coffee is too hot to drink.

5) We arrived early to get a seat.

6) She was pleased to receive your invitation.

7) He is not to be trusted.

8) The topic to be discussed at the conference is of great importance.

9) It takes him 20 minutes to get to the University.

10) He was glad to have spent his vacation out of town. It did him a lot of

good.

11) What makes you think so?

12) Why not go to the theatre tonight?

10. Переведите следующие предложения, обращая внимание на форму и

функцию герундия.

1) I don't like eating alone in restaurants.

2) He is fond of playing chess.

3) Please, stop making that noise.

4) Preparing a meal every day is hard work.

5) I don't like being interrupted.

6) He denied having taken the money.

7) I am looking forward to hearing from you.

8) The book is worth reading.

9) He gave up smoking.

10) She left without saying good-bye.

11) Its worth going on a diet.

11. Переведите следующие предложения, обращая внимание на форму

причастий.

1) Do you know the employee talking to the manager? What is his name?

2) There were some children swimming in the pool.

3) The girl talking to the manager is our new secretary.108

4) Many people injured in last night's storm were taken to hospital.

5) He was woken up by the crying baby.

6) Having read the letter the assistant manager decided to respond it

immediately.

7) He sat at the table thinking of what had happened.

8) And having said this, he said good bye and left the room.

9) While translating the text he used a dictionary.

10) Being invited to the party she refused to go.

11) The work done by the student was very difficult.

12) Money is commodity accepted by general consent as a medium of

economic exchange.

12. Переведите следующие предложения, обращая внимание на независимый

причастный оборот.

1) The weather being fine, they went to the beach.

2) There being many unknown words in the text, the student had to use the

dictionary.

3) There being a lot of things to discuss, the meeting lasted for 2 hours.

4) Computers having become a necessity in the US workplace, students in

the 21 century need to become computer literate.

5) In London there are a lot of museums, the most famous being the British

Museum.

6) All the work being done, the secretary left the office.

7) Having traveled a lot, he can tell us a lot about other countries.

13. Переведите следующие предложения, обращая внимание на модальные

глаголы с перфектным инфинитивом.

1) You should have taken more money with you.

2) He should have stopped at the traffic lights.

3) They needn't have brought food to the party.109

4) They must have gone out, nobody answers the telephone.

5) You might have told me you would be late.

6) Why did you hire a car? You could have borrowed mine.

7) You needn't have taken a taxi.

8) She shouldn't have been driving so fast.

9) She can't find her bag anywhere. She might have left it in the shop.

10) She must have worked hard in her life.

11) This picture might have been taken during the War.

12) He needn't have withdrawn all his money.

14. Переведите следующие предложения, обращая внимание на сложное

дополнение.

1)1 saw him cross the street.

2) I want him to help me.

3) My Mum didn't want me to go out in such a cold weather.

4) I heard her singing.

5) They expect him to come tonight.

6) We saw her crossing the street.

7) We watched them planting the trees.

8) I should like you to play the piano.

9) His parents want him to think globally and act locally.

10) The manager wanted the secretary to type the letter immediately.

11) I saw him photographing the elephants.

15. Переведите следующие предложения, обращая внимание на сложное

подлежащее.

1) They are said to be living in Moscow.

2) He is believed to have robbed the bank.

3) She is said to be 10 years older than her husband.

4) He is supposed to have started his own business.110

5) He is thought to work for the Mafia.

6) The delegation is expected to arrive tomorrow.

7) William Shakespeare is known to have had three daughters.

8) Music is believed to be a universal language.

9) He is considered to be a good manager.

10) She seems to know German well.

11) She is said to be learning English in London now.

12) They are unlikely to work in the garden today.

13) Gold has been universally regarded to be a very valuable metal.

14) Lombard Street is considered to be the symbol of British banking.

Part IV

TESTS

Выберите правильный вариант ответа.

1. I ... a bad headache.A. amB. has gotC. have got

2. John ... to school every day.A. goB. goesC. went

3. There ... a policeman at the door.A. areB. be С. is

4. Where ... you live? A. areB. doC. does

5. Mary (speak) French?A. Do ... speakB. Does ... speak

111

C. is ... speak

6. The elevator ... very well.A. to workB. workC. works

7. Where the Smirnovs (live)?A. Where do the Smirnovs live?B. Where does the Smirnovs live?C. Where the Smirnovs live?

8. ... you speak English?A. areB. doC. does

Выберите правильный вариант ответа.

1. These days, most houses (built) of concrete.A. are builtB. is builtC. were built

2. The airport (finish) next spring.A. was finishedB. will be finished С. will finish

3. This is where the new railway station (build).A. builtB. will be built С. will build

4. His wallet (steal).A. stoleB. stolenC. was stolen

5. His books (translate) into many languages.A. are translatedB. is translatedC. will translate

6. The Tower of London (build) by William the Conqueror in 1078.112

A. builtB. was built С. will be built

7. Theatres in Britain (close) on Sundays.A. are closedB. closedC. is closedЗ. Выберите правильный вариант ответа.

1. The one pound banknote features

A. Alexander Fleming, British bacteriologist, who discovered penicillin in

1928 and shared a 1945 Nobel Prize.

B. Bernard Shaw, a famous English writer, who won the 1925 Nobel Prize

for literature.

C. Charles Darwin, British naturalist, who developed a theory of evolution,

based on natural selection.

D. Isaac Newton, a well-known English scientist, who made a few very

important discoveries including gravitation law.

2. The back of the five pound note portrays

A. Horatio Nelson, British admiral, who defeated the French and Spanish

naval forces at Trafalgar.

B. the Duke of Wellington, a famous Irish general, who defeated Napoleon

at Waterloo, Belgium in 1815.

C. Winston Churchill who served as Prime Minister, won the 1953 Nobel

Prize for literature.

D. Andrew Jackson who was President of the USA from 1829 to 1837.

3. On the back of the ten pound note one can see

A. Adam Smith, Scottish political economist and philosopher.

B. Charles Chaplin, British-born actor and filmmaker.

C. Florence Nightingale, founder of the nursing profession.113

D. Thomas Gainsborough, British painter.

4. The back of the twenty pound banknote features

A. Agatha Christie, British writer of more than 70 detective novels.

B. Oscar Wilde, a famous English writer of the 19th century.

C. Walter Scott, British writer of ballads and historical novels.

D. William Shakespeare, the greatest playwright of all time.

5. On the face of American one dollar bill one can see

A. Andrew Jackson who was President of the USA from 1829 to 1837.

B. George Washington, the first President of the USA.

C. Thomas Jefferson, the author of the Declaration of Independence.

D. Ulysses S. Grant who was the 18th President of the US.

6. The face of the five dollar bill portrays

A. Abraham Lincoln who was President from 1861 to 1865, and proclaimed

freedom of slaves of the South.

B. Benjamin Franklin, a very popular public figure, writer, diplomat and

scientist.

С. Franklin D. Roosevelt, the 32nd President of the USA.

D. Thomas Jefferson, the author of the Declaration of Independence.

7. On the face of the ten dollar bill one can see

A. Abraham Lincoln who was President from 1861 to 1865, and proclaimed

freedom of slaves of the south.

B. Alexander Hamilton, a famous American statesman, the first Secretary of

the Treasury.

C. Andrew Jackson who was President of the USA from 1829 to 1837.

D. John Adams who was President of the US from 1797 to 1801.

114

8. The face of the twenty dollar bill features

A. Andrew Jackson who was President of the USA from 1829 to 1837.

B. George Washington, the first President of the USA.

С. John Quincy Adams who was the 6th President of the US.

D. John Tyler, the 10th President of the US.

9. The face of the fifty dollar bill portrays

A. Benjamin Franklin, a very popular public figure, writer, diplomat and

scientist.

B. Ulysses S. Grant who was the 18th President of the US.

С. William H. Harrison who was the 9th President of the US, and served the

shortest term.

D. Zachary Taylor who was the 12th President of the US.

10. The face of the one hundred dollar bill features

A. Benjamin Franklin, a very popular public figure, writer, diplomat and

scientist.

B. Benjamin Harrison who was President of the US from 1889 to 1893.

С. James Madison who was President of the US from 1809 to 1817.

D. Ulysses S. Grant who was the 18th President of the US.

Business Letter constructor.

СТАНДАРТНЫЕ ФРАЗЫ ДЛЯ НАЧАЛА, ПРОДОЛЖЕНИЯ И ЗАВЕРШЕНИЯ ДЕЛОВОГО ПИСЬМА НА АНГЛИЙСКОМ

Вводные фразы

Благодарю Вас за Ваше письмо… Thank you for your letter …

Благодарим Вас за Ваше письмо (запрос) от 15-го мая …

We thank you for your letter (inquiry) of the 15th of May …

Благодаря тому, что … Due to the fact that …

В дополнение к нашему письму от 15-го In reply (answer) to your letter of (the) 15th of

115

мая … May …

В ответ на Ваше письмо от 15-го … Further to our letter of (the) 15th …

В ответ на Вашу телеграмму/телекс … In response to your cable/telex …

Всем, кого это может касаться … All whom it may concern …

В соответствии с Вашими указаниями, мы …

In conformity with your instruction we …

В соответствии с условиями нашего соглашения …

In accordance with the terms of our agreement …

В этом письме мы хотим сообщить Вам … We are writing to inform you …

Заметьте, пожалуйста, что … Kindly note that …

К сожалению, должен сообщить Вам … I regret to inform you …

Мне сообщили, что … I have been informed that …

Мы вынуждены сообщить Вам … We are forced to inform you …

Мы должны обратить Ваше внимание на следующее:

We wish to draw your attention to the following:

Мы обращаем Ваше внимание на тот факт …

We draw your attention to the fact …

Мы подтверждаем, что … We confirm that …

Мы подтверждаем получение … We acknowledge the receipt of …

Мы получили Ваше письмо от … We have received your letter of …

Мы с сожалением узнали о … We learn with regret of (about) …We regret to hear of (about) …

Мы с удивлением узнали, что … We are surprised to learn that …

Мы с удовольствием сообщаем Вам о … We are pleased to inform you of (about) …

Мы спешим ответить на Ваше письмо от … We (are) hasten to reply to your letter of …

Мы хотим сообщить Вам, что … We wish to advise you that …

Мы хотели бы напомнить Вам, что … We would like to remind you that …

Нам хотелось бы сообщить Вам о … We should like to inform you of (about) …

Настоящим довожу до Вашего сведения, что …

This is for your kind information that …

Настоящим мы подтверждаем … We hereby confirm …

Настоящим сообщаю Вам, что … This is to inform you that …

Настоящим мы подтверждаем получение We hereby acknowledge receipt of …

116

…

Настоящим ставим Вас в известность, что …

This is to inform you that …

Настоящим удостоверяется, что … This is to certify that …

Относительно Вашего письма от … Regarding your Letter of …

Просим Вас заметить, что … Will you please notice that …

Просим заметить, что … Please note that …Please take notice that …

Просим принять к сведению, что … Please note that …

Просим сообщить нам о … Please inform us about …

С благодарностью подтверждаем … We acknowledge with thanks …

Следуя Вашим указаниям, мы … Following youг instructions we …

Согласно Вашей просьбе … As requested …

Согласно договору … As per agreement …

Ссылаясь на Ваш запрос … With reference to your inquiry …

Ссылаясь на Ваше письмо … With reference to your letter …

Ставим Вас в известность, что … Please be informed that …

Я должен сообщить Вам … I have to inform you …

Я имею удовольствие сообщить Вам … I have the pleasure to inform you …

Подтверждение получения делового письма

Благодарим Вас за Ваше письмо, датированное 15 мая.

We thank you for your letter dated (the) 15th May.

Мы получили Ваше письмо от 15 мая. We have received your letter of (the) 15th May.

Мы своевременно получили Ваше письмо от …

We duly received your letter of …

Мы спешим подтвердить получение Вашего письма …

We hasten to acknowledge receipt of your letter …

Мы признательны за Ваше письмо от … We are obliged for your letter of …

Мы получили подтверждение … We have received confirmation …

Мы подтверждаем, что … We confirm that …

Мы с благодарностью подтверждаем получение Вашего письма …

We acknowledge with thanks receipt of your letter …

Настоящим мы подтверждаем получение We hereby acknowledge receipt of …

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…

Подтверждаем получение Вашего письма от …

We acknowledge (the) receipt of your letter of …

Ссылка на предыдущую переписку

В дополнение к нашему письму от 15-го февраля …

Further to our letter of the 15th February …

В соответствии с Вашими указаниями … In conformity (accordance) with your instruc-tions …

В соответствии с условиями нашего соглашения …

In accordance with the terms of our agreement …

Мы ссылаемся на наше (Ваше) письмо от …

We refer to our (your) letter of …

Из Вашего письма явствует, что … It appears from your letter that …

Относительно Вашего письма от … This has reference to your letter of …

Ссылаясь на Ваше письмо от … Referring to your letter of …

Ссылаясь на Ваш запрос … With reference to your inquiry …

В ответ на Ваше письмо от … In reply (In answer) to your letter of …

Мы возвращаемся к нашему письму от … We revert to our letter of …

Заключительные фразы

Благодарим Вас и надеемся на Ваш скорый ответ.

We thank you and hope to hear from you soon.

В заключение мы с удовольствием прилагаем при сем копии …

Finally we are pleased to attach herewith copies of …

В ожидании ваших сообщений … Hoping to hear from you …

В свете вышеизложенного, мы … In the light of the above we are …

Вы меня очень обяжете подтверждением получения …

You will greatly oblige me by acknowledging the receipt of …

Заранее благодарим … Thanks beforehand …

Заранее благодарим Вас.. . Thanking you in advance …

К сему прилагаем копии … We attach hereto copies of …

Мы будем делать все возможное … We should have done our best …

Мы будем благодарны за Ваше содействие в этом вопросе.

We shall appreciate your cooperation in this matter.

Мы будем Вам благодарны за Ваш скорый An early reply will be much appreciated.118

ответ.

Мы будем признательны за скорый ответ. An early reply will oblige.

Поэтому, мы возлагаем на Вас ответственность за …

We are, therefore, holding you responsible for …

Мы высоко ценим Ваше товарищеское сотрудничество.

We appreciate very much your friendly cooperation.

Мы ожидаем Вашего скорейшего ответа. We are awaiting your reply as soon as possible.

Мы просили бы Вас ускорить ответ. We would ask you to accelerate your reply.

Мы просили бы Вас подтвердить получение …

We would ask you to acknowledge the receipt of …

Мы просили бы Вас ускорить ответ на наше письмо …

We would ask you to accelerate your reply to our letter …

Мы просили бы Вас информировать нас своевременно о …

We would request you to inform us in due time of the …

Мы хотели бы, чтобы Вы сделали все возможное, чтобы …

We should like you to do the best to …

Надеемся на Ваш скорый ответ … We trust to get an early reply …

Остаемся с совершенным почтением … We remain, yours faithfully …

Очень просим ответить немедленно … We request the favor of a very early reply …

Пожалуйста, известите нас своевременно о …

Please let us know in due time of …

Прилагаем при сем … Please find herewith …

Принимая во внимание вышеизложенное, мы …

In view of the foregoing we are …

Просим передать всем наши поздравления и приветствия …

Our compliments and greetings to one and all …

При этом отправляем Вам … We are to rewarding to you here with …

Я буду держать Вас в курсе дальнейших событий …

I shall keep you well informed of further developments …

Я приму все меры, которые сочту необходимыми …

I’ll take all the steps that I consider necessary …

Я сделал все, что в моих силах (все, что мог) …

I did my very utmost …

Я сохраняю за собой право принять I reserve the right to reach a decision …

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решение …

Я с нетерпением и интересом жду Вашего ответа.

I look forward with interest to your answer.

ОБОРОТЫ С ПРЕДЛОГАМИ ДЛЯ СОСТАВЛЕНИЯ ДЕЛОВОГО ПИСЬМА

равно как; также как as well as

в силу (чего-либо); в результате (чего-либо); благодаря (чему-либо)

by virtue of; due to; thanks to

благодаря (чему-либо); из-за (чего-либо); вследствие (чего-либо)

owing to

более того moreover, more than that

вместо (чего-либо) instead of

ввиду (чего-либо) in view of

ввиду того, что in view of the fact that; inasmuch

в данный момент for the time being

в дополнение к further to; in addition to

вероятно likely; probably

в зависимости от depending on the

в крайнем случае in an emergency

вместе с тем; в то же время at the same time

во всяком случае; в любом случае in any case; at all events

во главе (чего-либо) at the head of

вопреки in despite of; contrary to

во что бы то ни стало; любой ценой at any price

в отличие от unlike

в отношении к in respect to; in relation to

в присутствии (кого-либо) in the presence of

в противном случае; иначе otherwise; in the contrary case

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в результате; вследствие in consequence of

в связи с in connection with

вследствие in consequence of; owing to

вследствие того, что due to the fact that

вследствие чего in consequence of which

в случае, если in the event of

в случае необходимости in case of need

в случае; на случай in case of; in the event of

в случае неисполнения (несоответствия, неподчинения)

failing to comply with

в случае отсутствия; в случае недостатка in case of absence; in case of lack

в случае неуплаты in default of payment

в соответствии с in compliance with; in accordance with; in conformity with

в то время как; пока while; whilst

в удостоверение чего; в подтверждение чего 

in witness whereof

в течение during; in the course of

в то время как as; while

в том случае, если provided that; in case of

даже если; хотя бы и even if

до сих пор up to now

для того чтобы; с намерением; с целью with the view of; with a view to

зависеть от depend on; depend upon

если имеется if any

за один раз at a time

за отсутствием failing; in default of

за неимением failing; in default of

за пределами out of; beyond the; outside of

из-за (чего-либо) by reason of; because of

иначе otherwise…

имея в виду, что on the understanding that

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к тому же; кроме того furthermore

как бы не; что бы не lest

как только as soon as

кроме того besides; moreover; furthermore

к тому времени by that time

на основании in virtue of

настаивать на to insist on

не без основания not for nothing

невзирая на опасность regardless of danger

несмотря на все усилия despite of all efforts

несмотря на; вопреки in spite of; notwithstanding

ни в коем случае in no case

никоим образом in no wise

однако however

одновременно; в то же время at the same time

оказался proved to be

относительно in regard to

что касается with regard to

пока; в то время как while, whilst

по возможности as far as possible

по мере возможности as far as possible

пока что; еще as yet

полагаться на to rely on

помимо; кроме того besides

помимо этого; кроме этого apart from this

пo просьбе at the request of

поскольку inasmuch as; seeing that

по сравнению с compared with; in comparison with

по всей видимости in all probability

при данных обстоятельствах under present circumstances

посредством by means of

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при наличии if any

при условии providing; subject to

ради for the sake of

сверх того; кроме того besides

согласно according to; as per

с тех пор как since

с целью; для того чтобы for the purpose of; with the view of

так же, как и as well as; also; too

таким образом hereby

так как; поскольку as; inasmuch; as far as; because of

тем не менее nevertheless

тогда как while; whilst

учитывая, что in respect that; seeing that

что касается as to; as for

этим, настоящим hereby

MAIN BUSINESS DOCUMENTS

авианакладная air bill

автодорожная накладная road bill

агентское соглашение agency agreement, agency contract

аккредитив letter of credit

гарантийное обязательство guarantee  certificate

генеральный полис open cover

график (поставок, монтажных работ) schedule (of deliveries, of erection works)

деталировочный чертеж detail drawing

договор agreement, contract

железнодорожная (транспортная) накладная

way bill

заказ-наряд order

исполнительный (рабочий) чертеж working drawing

импортная лицензия import license, import permit

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кавернот cover note, covering note

карантинное свидетельство quarantine certificate

коносамент bill of lading

контракт contract

консульская фактура consular invoice

манифест (декларация судового груза) (ship’s) manifest

общие условия поставок general conditions of deliveries

общие условия оказания технической помощи

general conditions of rendering technical assistance

отгрузочная спецификация shipping specifications

предварительный счет proforma invoice

приложение (к договору) appendix, supplement (to a contract)

протокол испытаний inspection report, inspection certificate

рабочие инструкции manual, set of instructions

разрешение на отгрузку release for shipment

сертификат (свидетельство) о прививках certificate of vaccinations

свидетельство о происхождении certificate of origin

сертификат о качестве certificate of quality

складская квитанция warehouse bill

соглашение (о поставках) contract (for deliveries)

сопроводительное письмо covering letter

спецификация specification

страховой полис insurance policy

счет invoice

таможенная декларация customs declaration

экспортная декларация export license

IRREGULAR VERBS

Infinitive Past Simple Past Participle Перевод

be was, were been быть, являться

beat beat beaten бить, колотить

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Infinitive Past Simple Past Participle Перевод

become became become становиться

begin began begun начинать

bend bent bent гнуть

bet bet bet держать пари

bite bit bitten кусать

blow blew blown дуть, выдыхать

break broke broken ломать, разбивать, разрушать

bring brought brought приносить, привозить, доставлять

build built built строить, сооружать

buy bought bought покупать, приобретать

catch caught caught ловить, поймать, схватить

choose chose chosen выбирать, избирать

come came come приходить, подходить

cost cost cost стоить, обходиться

cut cut cut резать, разрезать

deal dealt dealt иметь дело, распределять

dig dug dug копать, рыть

do did done делать, выполнять

draw drew drawn рисовать, чертить

drink drank drunk пить

drive drove driven ездить, подвозить

eat ate eaten есть, поглощать, поедать

fall fell fallen падать

feed fed fed кормить

feel felt felt чувствовать, ощущать

fight fought fought драться, сражаться, воевать

find found found находить, обнаруживать

fly flew flown летать

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Infinitive Past Simple Past Participle Перевод

forget forgot forgotten забывать о (чём-либо)

forgive forgave forgiven прощать

freeze froze frozen замерзать, замирать

get got got получать, добираться

give gave given дать, подать, дарить

go went gone идти, двигаться

grow grew grown расти, вырастать

hang hung hung вешать, развешивать, висеть

have had had иметь, обладать

hear heard heard слышать, услышать

hide hid hidden прятать, скрывать

hit hit hit ударять, поражать

hold held held держать, удерживать, задерживать

hurt hurt hurt ранить, причинять боль, ушибить

keep kept kept хранить, сохранять, поддерживать

know knew known знать, иметь представление

lay laid laid класть, положить, покрывать

lead led led вести за собой, сопровождать, руководить

leave left left покидать, уходить, уезжать, оставлять

lend lent lent одалживать, давать взаймы (в долг)

let let let позволять, разрешать

lie lay lain лежать

light lit lit зажигать, светиться, освещать

lose lost lost терять, лишаться, утрачивать

make made made делать, создавать, изготавливать

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Infinitive Past Simple Past Participle Перевод

mean meant meant значить, иметь в виду, подразумевать

meet met met встречать, знакомиться

pay paid paid платить, оплачивать, рассчитываться

put put put ставить, помещать, класть

read read read читать, прочитать

ride rode ridden ехать верхом, кататься

ring rang rung звенеть, звонить

rise rose risen восходить, вставать, подниматься

run ran run бежать, бегать

say said said говорить, сказать, произносить

see saw seen видеть

seek sought sought искать, разыскивать

sell sold sold продавать, торговать

send sent sent посылать, отправлять, отсылать

set set set устанавливать, задавать, назначать

shake shook shaken трясти, встряхивать

shine shone shone светить, сиять, озарять

shoot shot shot стрелять

show showed shown, showed показывать

shut shut shut закрывать, запирать, затворять

sing sang sung петь, напевать

sink sank sunk тонуть, погружаться

sit sat sat сидеть, садиться

sleep slept slept спать

speak spoke spoken говорить, разговаривать, высказываться

spend spent spent тратить, расходовать, проводить

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Infinitive Past Simple Past Participle Перевод

(время)

stand stood stood стоять

steal stole stolen воровать, красть

stick stuck stuck втыкать, приклеивать

strike struck struck, stricken ударять, бить, поражать

swear swore sworn клясться, присягать

sweep swept swept мести, подметать, смахивать

swim swam swum плавать, плыть

swing swung swung качаться, вертеться

take took taken брать, хватать, взять

teach taught taught учить, обучать

tear tore torn рвать, отрывать

tell told told рассказывать

think thought thought думать, мыслить, размышлять

throw threw thrown бросать, кидать, метать

understand understood understood понимать, постигать

wake woke woken просыпаться, будить

wear wore worn носить (одежду)

win won won победить, выиграть

write wrote written писать, записывать

Литература

1. Агабекян И.П., П.И. Коваленко. Английский язык для экономистов. Издание 4-е, серия «Высшее образование». Ростов Н/Д.: «Феникс», 2004 – 416с.

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2. Английский язык для делового общения: В 2-х т. Т. 1 (ч. 1, 2, 3) / Дудкина Г.А., Павлова М.В., Рей З.Г., Хвальнова А.Т. - Изд. 8-е, перераб. – М.: «Филоматис», 2008. – 688 с. (серия «Филология»).

3. Голицинский Ю. Б., Голицинская Н.А. Английский язык. Грамматика: Сборник упражнений. – Изд. 5-е: - СПб.: Издательство «КАРО», 2007. – 544с.

4. Глушенкова Е.В., Комарова Е.Н. Английский язык для студентов экономических специальностей. – М. Издательство «АСТ, Астрель», 2006. – 352с.

5. Грамматика современного английского языка) / под ред., Е.С.Петровой А.В. Зеленщикова. – СПб.: Филологический факультет СПбГУ; М.: Издательский центр «Академия», 2003.

6. Дудкина Г.А., Павлова М.В., Рей З.Г., Хвальнова А.Т. Английский язык для делового общения. Новый курс: В 2-х т. Т. 2 (ч. 4, 5, 6). М.: «Филоматис», 2007 – 684 с.

7. Дюканова Н.Ф. Английский язык для экономистов: Учебное пособие. – М.: Издательство «Инфра-М», 2010. – 320с.

8. Колесникова И.Л., Долгина О.А. Англо-русский терминологический справочник по методике преподавания иностранных языков. – СПб., 2001.

9. Макнамара Т. Языковое тестирование. – М.: RELOD, 2005.10. Осечкин В.В., Романова И.А. Англо-русский учебный словарь по

экономике и бизнесу. – М.: Феникс, 2008.11.Шевелёва С.А. Основы экономики и бизнеса: Учеб. пособие для студ.

сред. проф. учеб. заведений. / С.А. Шевелёва, В.Е. Стогов. - Изд. 3-е, перераб. и доп. - М.: Юнити - Дана, 2008. - 496 с.

12.Headaway (Elementary) Liz and John Soars, Oxford University Press 2005- 2006.

13.Essential Grammar in Use (a self-study reference book for Elementary students of English) Raymond Murphy. Cambridge University Press. 2005.

14.Virginia Evans, Ken Gilmore. Banking: Students Book. Career Paths. 2011 – 120.

15.John Taylor, Stephen Peltier. Accounting: Students book. Express Publishing, 2011 – 40.

16. http://www.native-english.ru/grammar/irregular-verbs17. http://www.englishforbusiness.ru/materials/correspondence/basics18. http://english-grammar.biz19. http://www.homeenglish.ru/Grammar.html

Содержание

1. Part I UK Economics 42. The UK Economy 43. The administration of welfare in the UK 4

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4. Social Policy of UK 55. Foreign trade of the UK 66. Types of the UK Companies 77. Part II. Money 98. Money 99. Glimpses of history of money 1010. Money and its function 1111. English banknotes and coins 1212. Monetary Policy 1213. Inflation 1414. Part III. Banks 1615. Banking 1616. Banks 1617. Types of Banks 18

18. Different bank systems 20

19. English Banks 2220. About Comerzbank 2321. Sberbank 2522. World Savings Banks Institute 2723. The dual banking system – 1860s 2824. The Federal Reserve System 2925. Bank mergers and closures 2926. Loans 3027. Part IV. The US economics 3328. The US Economy 3329. The US Consumer protection laws 3430. The US Tax System 3531. U.S. foreign trade 3832. Banking system of the USA 3933. Different economic texts 4134. Marketing Research: Key Players 4135. Decision Making Маnagement 42

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36. Privately-owned enterprise 4337. Aggregate demand and aggregate supply 4438. Black Economy 4639. Labor market 4740. Dealing with Numerical Data 4941. An Accounting Overview 5142. Theory of the consumer 5243. Consumer Protection 5444. Capital (economics) 5645. Capital market 5746. Acquisition of Capital 5947. Types of companies 6148. Less commonly seen types of companies are: 6249. Public Limited Companies PLCs 6550. Demand and Supply 6551. Economy of the USA 6652. The style of business letters 6853. The function of banks in national economy 6954. Taxation 7055. Value added tax in Great Britain 7356. The development of accounting thought 7557. Bookkeepers, accountants, controllers and auditors 7658. Marketing 7759. About business publications 7860. Advertising 8161. Shopping in the USA 8162. Shopping in New-York 8363. Shops and markets in London 8564. Know your rights 8765. Контрольно-тренировочные упражнения 9066. Business Letter constructor 11467. Main Business documents 12268. Irregular verbs 123

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69. Литература 129

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