Paper money and gold standard

Тема 1. Функции денег. Бумажные деньги

Study the words and the word-combinations.

сommodity — товар;

medium of exchange — средство обмена;

facilitate — содействовать;

discharge of debt — погашение долга;

discharge of contract — исполнение договора;

unit of account — расчетная единица;

price system — ценовая система;

keep an account — вести счет;

cost — стоимость;

profit — прибыль;

loss — убыток;

deferred payment — отсроченный платеж;

defer payment — откладывать платеж;

loan — ссуда;

future transactions / futures — сделки на срок (купля-продажа товаров по фиксируемой в момент заключения сделки цене с исполнением операций через определенный промежуток времени);

store of wealth — хранение материальных ценностей;

Specify — точно устанавливать;

value — стоимость;

bullion — слиток золота или серебра;

insecure — небезопасный;

mode — способ;

convey — перевозить;

issue — пускать в обращение;

redeemable in gold — обратимый в золото;

redeem — выкупать;

settle — улаживать;

transfer — перемещение;

collapse — обвал;

suspend — приостанавливать;

precious — драгоценный;

quote — дать расценку;

ounce — унция (28.35 grams)

I. Scan through the text.

Money and its functions

Money is a commodity commonly accepted as a medium of economic exchange. The idea of money as a universal equivalent is familiar to us since our childhood. Money circulates from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth. Money has four functions: [1] to serve as a medium of exchange, a commodity universally accepted in exchange for goods and services and for the discharge of debts or for the discharge of contracts; [2] to act as a unit of account, the unit that makes the operation of the price system possible and provides the basis for keeping accounts and calculating cost, profit, and loss; [3] to serve as a standard of deferred payments, the unit in which loans are made and future transactions are fixed; and [4] to provide a store of wealth, a convenient form in which to hold any income not immediately required for use.

1) What is meant by the term “money”? 2) How many functions does money have? 3) What does money serve as? 4) What does money act as? 5) What does money make? 6) What does money provide? 7) What does money calculate? 8) What is the third function of money? 9) What is the fourth function of money?

II. Agree or disagree with the following statements.

1) Money is a medium of communication. 2) The idea of money as a universal equivalent is unfamiliar to us. 3) Money has five functions. 4) Money is used in exchange for goods and services. 5) Money is used for the discharge of defendant. 6) Money is used for the discharge of agreements. 7) Money acts as a trustee. 8) Money makes the operation of the price system impossible. 9) Money ensures the basis for keeping accounts. 10) Money counts cost, profit, and loss. 11) Money is exercised as a standard of deferred payments. 12) Money serves as the unit in which borrowings are made. 13) Money serves as the unit in which futures are fixed. 14) Money provides a store of        material values.

III. Translate the following words, phrases and statements from Russian into English.

Обмен; удобный; держать; доход; немедленно; требовать; необходимый; возможный; хорошо знакомый; экономический; обыкновенно; эквивалент; товар; средство обмена; служить в качестве; общепринятый; товары; услуги; погашение долга; расчетная единица; ценовая система; обеспечивать; вести счет; подсчитывать; стоимость; прибыль; убыток; отсроченный платеж; ссуда; сделка на срок; хранение материальных ценностей; употребление; содействовать; исполнение договора.

Деньги – это металлические и / или бумажные знаки, являющиеся мерой стоимости при купле-продаже и выполняющие роль всеобщего эквивалента, то есть выражающие стоимость всех других товаров и обмениваемые на любой из них. Деньги — это особый товар, выполняющий роль всеобщего эквивалента.

IV. Complete the following statements.

1) Money is … 2) The idea of money as a universal equivalent is … 3) Money has … 4) Money serves as … 5) Money is used in exchange for … 6) Money is used for the discharge of … 7) Money acts as … 8) Money makes … 9) Money provides … 10) Money calculates … 11) Money serves as a standard of … 12) Money is the unit in which … 13) Money provides a store of … 14) Money is a convenient form in which …

V. Scan through the text.

Paper money and gold standard

Metals, especially gold and silver, have been used for money for at least 4,000 years. For perhaps 2,600 years, standardized coins have been the form in which money metals circulate. Gold and silver coins contain legally specified amounts of gold or silver and are theoretically equal in value to that quantity of the metal. Coins or uncoined bullion, however, can be an inconvenient and insecure mode for conveying large quantities of value. For large transactions, various forms of paper notes came into use. In the late 18th and early 19th centuries, banks began issuing such notes – banknotes. Each banknote was redeemable for gold or silver. This paper money became the principal money of growing industrial economies. Up to 1931, paper money was backed by a reserve of gold and any settlement of international debts was settled by the transfer of gold from one country to another. With the collapse of the gold standard in 1931, many countries suspended the movement of gold, but gold still being a precious metal is still quoted each day on the market in ounces against the US $.

1) What has been used for money for 4,000 years? 2) What form did money metals circulate in? 3) What do gold and silver coins contain? 4) What can be inconvenient and insecure for conveying large quantities of value? 5) What came into use for large transactions? 6) When did banks begin issuing banknotes? 7) What was each banknote redeemable for? 8) What did this paper money become? 9) What was paper money backed by up to 1931? 10) What was settled by the transfer of gold from one country to another? 11) Why did many countries suspend the movement of gold? 12) What is still quoted each day on the market?

VI. Agree or disagree with the following statements.

1) Metals were not used for money. 2) Money metals moved around in the form of coins. 3) Gold coins had legally specified amounts of gold as a part. 4) Coins might be convenient and secure for conveying large quantities of value. 5) Paper notes came out of use for large transactions. 6) Banks ceased issuing banknotes. 7) Each banknote might be bought in for gold. 8) This paper money became the most important money of economies. 9) Paper money was supported by a reserve of gold. 10) Any settlement of debts was ended by the transfer of gold. 11) Gold standard failed in 1931. 12) Gold is estimated each day on the market. 13) The gold standard means the use of the value of gold as a fixed standard on which to base the value of money.

VII. Translate the following words, phrases and statements from Russian into English.

Стандартизировать; выкупать; урегулирование; улаживать; перемещение; обвал; приостанавливать; драгоценный; дать расценку; унция; слиток золота или серебра; небезопасный; способ; перевозить; сделка; пускать в обращение; обратимый в золото; быть в обращении; юридически; точно устанавливать; равный; стоимость; золотой стандарт.

Золотой стандарт — это денежная система, при которой цена валюты, выраженная в золоте, устанавливается законом, и органы власти должны быть готовы обменять по требованию золото на валюту по установленному курсу. Для золотого стандарта характерны свободные чеканка и обращение золотых монет. В большинстве стран золотой стандарт был отменен в 1931 г.

VIII. Complete the following statements.

Gold and silver have been used for … 2) Money metals circulate in the form of … 3) Gold and silver coins contain … 4) Gold and silver coins are equal in … 5) Coins or uncoined bullion can be … 6) Various forms of paper notes came into use for … 7) Banks began … 8) Each banknote was redeemable for … 9) This paper money became … 10) Paper money was backed … 11) Any settlement of debts was settled by … 12) Many countries suspended … because of … 13) Gold is still quoted …