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SUPPLEMENTARY READING

Text 1

A MIXED ECONOMY: THE ROLE OF THE MARKET

The American free enterprise system emphasizes private ownership. Private businesses produce most goods and services, and almost two-thirds of the nation's total economic output goes to individuals for personal use (the remaining one-third is bought by government and business). The consumer role is so great, in fact, that the nation is sometimes characterized as having a "consumer economy."

This emphasis on private ownership arises, in part, from American beliefs about personal freedom. From the time the nation was created, Americans have feared excessive government power, and they have sought to limit government's authority over individuals -- including its role in the economic realm. In addition, Americans generally believe that an economy characterized by private ownership is likely to operate more efficiently than one with substantial government ownership.

Why? When economic forces are unfettered, Americans believe, supply and demand determine the prices of goods and services. Prices, in turn, tell businesses what to produce; if people want more of a particular good than the economy is producing, the price of the good rises. That catches the attention of new or other companies that, sensing an opportunity to earn profits, start producing more of that good. On the other hand, if people want less of the good, prices fall and less competitive producers either go out of business or start producing different goods. Such a system is called a market economy. A socialist economy, in contrast, is characterized by more government ownership and central planning. Most Americans are convinced that socialist economies are inherently less efficient because government, which relies on tax revenues, is far less likely than private businesses to heed price signals or to feel the discipline imposed by market forces.

There are limits to free enterprise, however. Americans have always believed that

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some services are better performed by public rather than private enterprise. For instance, in the United States, government is primarily responsible for the administration of justice, education (although there are many private schools and training centers), the road system, social statistical reporting, and national defense. In addition, government often is asked to intervene in the economy to correct situations in which the price system does not work. It regulates "natural monopolies," for example, and it uses antitrust laws to control or break up other business combinations that become so powerful that they can surmount market forces. Government also addresses issues beyond the reach of market forces. It provides welfare and unemployment benefits to people who cannot support themselves, either because they encounter problems in their personal lives or lose their jobs as a result of economic upheaval; it pays much of the cost of medical care for the aged and those who live in poverty; it regulates private industry to limit air and water pollution; it provides lowcost loans to people who suffer losses as a result of natural disasters; and it has played the leading role in the exploration of space, which is too expensive for any private enterprise to handle.

In this mixed economy, individuals can help guide the economy not only through the choices they make as consumers but through the votes they cast for officials who shape economic policy. In recent years, consumers have voiced concerns about product safety, environmental threats posed by certain industrial practices, and potential health risks citizens may face; government has responded by creating agencies to protect consumer interests and promote the general public welfare.

The U.S. economy has changed in other ways as well. The population and the labor force have shifted dramatically away from farms to cities, from fields to factories, and, above all, to service industries. In today's economy, the providers of personal and public services far outnumber producers of agricultural and manufactured goods.

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Text 2

REGULATION AND CONTROL IN THE US ECONOMY

The U.S. federal government regulates private enterprise in numerous ways. Regulation falls into two general categories. Economic regulation seeks, either directly or indirectly, to control prices. Traditionally, the government has sought to prevent monopolies such as electric utilities from raising prices beyond the level that would ensure them reasonable profits.

At times, the government has extended economic control to other kinds of industries as well. In the years following the Great Depression, it devised a complex system to stabilize prices for agricultural goods, which tend to fluctuate wildly in response to rapidly changing supply and demand. A number of other industries -- trucking and, later, airlines -- successfully sought regulation themselves to limit what they considered harmful price-cutting.

Another form of economic regulation, antitrust law, seeks to strengthen market forces so that direct regulation is unnecessary. The government -- and, sometimes, private parties -- have used antitrust law to prohibit practices or mergers that would unduly limit competition.

Government also exercises control over private companies to achieve social goals, such as protecting the public's health and safety or maintaining a clean and healthy environment. The U.S. Food and Drug Administration bans harmful drugs, for example; the Occupational Safety and Health Administration protects workers from hazards they may encounter in their jobs; and the Environmental Protection Agency seeks to control water and air pollution.

American attitudes about regulation changed substantially during the final three decades of the 20th century. Beginning in the 1970s, policy-makers grew increasingly concerned that economic regulation protected inefficient companies at the expense of consumers in industries such as airlines and trucking. At the same time, technological changes spawned new competitors in some industries, such as telecommunications,

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that once were considered natural monopolies. Both developments led to a succession of laws easing regulation.

While leaders of both political parties generally favored economic deregulation during the 1970s, 1980s, and 1990s, there was less agreement concerning regulations designed to achieve social goals. Social regulation had assumed growing importance in the years following the Depression and World War II, and again in the 1960s and 1970s.

But during the presidency of Ronald Reagan in the 1980s, the government relaxed rules to protect workers, consumers, and the environment, arguing that regulation interfered with free enterprise, increased the costs of doing business, and thus contributed to inflation. Still, many Americans continued to voice concerns about specific events or trends, prompting the government to issue new regulations in some areas, including environmental protection.

Some citizens, meanwhile, have turned to the courts when they feel their elected officials are not addressing certain issues quickly or strongly enough. For instance, in the 1990s, individuals, and eventually government itself, sued tobacco companies over the health risks of cigarette smoking. A large financial settlement provided states with long-term payments to cover medical costs to treat smoking-related illnesses.

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Text 3

DIRECT SERVICES AND DIRECT ASSISTANCE IN THE US ECONOMY

Direct Services. Each level of government provides many direct services. The federal government, for example, is responsible for national defense, backs research that often leads to the development of new products, conducts space exploration, and runs numerous programs designed to help workers develop workplace skills and find jobs. Government spending has a significant effect on local and regional economies -- and even on the overall pace of economic activity.

State governments, meanwhile, are responsible for the construction and maintenance of most highways. State, county, or city governments play the leading role in financing and operating public schools. Local governments are primarily responsible for police and fire protection. Government spending in each of these areas can also affect local and regional economies, although federal decisions generally have the greatest economic impact.

Overall, federal, state, and local spending accounted for almost 18 percent of gross domestic product in 1997.

Direct Assistance. Government also provides many kinds of help to businesses and individuals. It offers low-interest loans and technical assistance to small businesses, and it provides loans to help students attend college. Governmentsponsored enterprises buy home mortgages from lenders and turn them into securities that can be bought and sold by investors, thereby encouraging home lending. Government also actively promotes exports and seeks to prevent foreign countries from maintaining trade barriers that restrict imports.

Government supports individuals who cannot adequately care for themselves. Social Security, which is financed by a tax on employers and employees, accounts for the largest portion of Americans' retirement income. The Medicare program pays for many of the medical costs of the elderly. The Medicaid program finances medical care

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for low-income families. In many states, government maintains institutions for the mentally ill or people with severe disabilities. The federal government provides Food Stamps to help poor families obtain food, and the federal and state governments jointly provide welfare grants to support low-income parents with children.

Many of these programs, including Social Security, trace their roots to the "New Deal" programs of Franklin D. Roosevelt, who served as the U.S. president from 1933 to 1945. Key to Roosevelt's reforms was a belief that poverty usually resulted from social and economic causes rather than from failed personal morals. This view repudiated a common notion whose roots lay in New England Puritanism that success was a sign of God's favor and failure a sign of God's displeasure. This was an important transformation in American social and economic thought. Even today, however, echoes of the older notions are still heard in debates around certain issues, especially welfare.

Many other assistance programs for individuals and families, including Medicare and Medicaid, were begun in the 1960s during President Lyndon Johnson's (19631969) "War on Poverty." Although some of these programs encountered financial difficulties in the 1990s and various reforms were proposed, they continued to have strong support from both of the United States' major political parties.

Critics argued, however, that providing welfare to unemployed but healthy individuals actually created dependency rather than solving problems. Welfare reform legislation enacted in 1996 under President Bill Clinton (1993-2001) requires people to work as a condition of receiving benefits and imposes limits on how long individuals may receive payments.

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Text 4

POVERTY AND INEQUALITY IN THE USA

Americans are proud of their economic system, believing it provides opportunities for all citizens to have good lives. Their faith is clouded, however, by the fact that poverty persists in many parts of the country. Government anti-poverty efforts have made some progress but have not eradicated the problem. Similarly, periods of strong economic growth, which bring more jobs and higher wages, have helped reduce poverty but have not eliminated it entirely.

The federal government defines a minimum amount of income necessary for basic maintenance of a family of four. This amount may fluctuate depending on the cost of living and the location of the family. In 1998, a family of four with an annual income below $16,530 was classified as living in poverty.

The percentage of people living below the poverty level dropped from 22.4 percent in 1959 to 11.4 percent in 1978. But since then, it has fluctuated in a fairly narrow range. In 1998, it stood at 12.7 percent.

What is more, the overall figures mask much more severe pockets of poverty. In 1998, more than one-quarter of all African-Americans (26.1 percent) lived in poverty; though distressingly high, that figure did represent an improvement from 1979, when 31 percent of blacks were officially classified as poor, and it was the lowest poverty rate for this group since 1959.

Families headed by single mothers are particularly susceptible to poverty. Partly as a result of this phenomenon, almost one in five children (18.9 percent) was poor in 1997. The poverty rate was 36.7 percent among African-American children and 34.4 percent among Hispanic children.

Some analysts have suggested that the official poverty figures overstate the real extent of poverty because they measure only cash income and exclude certain government assistance programs such as Food Stamps, health care, and public housing. Others point out, however, that these programs rarely cover all of a family's

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food or health care needs and that there is a shortage of public housing.

Some argue that even families whose incomes are above the official poverty level sometimes go hungry, skimping on food to pay for such things as housing, medical care, and clothing. Still others point out that people at the poverty level sometimes receive cash income from casual work and in the "underground" sector of the economy, which is never recorded in official statistics.

In any event, it is clear that the American economic system does not apportion its rewards equally. In 1997, the wealthiest one-fifth of American families accounted for 47.2 percent of the nation's income, according to the Economic Policy Institute, a Washington-based research organization. In contrast, the poorest one-fifth earned just 4.2 percent of the nation's income, and the poorest 40 percent accounted for only 14 percent of income.

Despite the generally prosperous American economy as a whole, concerns about inequality continued during the 1980s and 1990s. Increasing global competition threatened workers in many traditional manufacturing industries, and their wages stagnated. At the same time, the federal government edged away from tax policies that sought to favor lower-income families at the expense of wealthier ones, and it also cut spending on a number of domestic social programs intended to help the disadvantaged. Meanwhile, wealthier families reaped most of the gains from the booming stock market.

In the late 1990s, there were some signs these patterns were reversing, as wage gains accelerated -- especially among poorer workers. But at the end of the decade, it was still too early to determine whether this trend would continue.

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Text 5

THE GROWTH OF GOVERNMENT IN THE USA

The U.S. government grew substantially beginning with President Franklin Roosevelt's administration. In an attempt to end the unemployment and misery of the Great Depression, Roosevelt's New Deal created many new federal programs and expanded many existing ones. The rise of the United States as the world's major military power during and after World War II also fueled government growth.

The growth of urban and suburban areas in the postwar period made expanded public services more feasible. Greater educational expectations led to significant government investment in schools and colleges. An enormous national push for scientific and technological advances spawned new agencies and substantial public investment in fields ranging from space exploration to health care in the 1960s. And the growing dependence of many Americans on medical and retirement programs that had not existed at the dawn of the 20th century swelled federal spending further.

While many Americans think that the federal government in Washington has ballooned out of hand, employment figures indicate that this has not been the case. There has been significant growth in government employment, but most of this has been at the state and local levels. From 1960 to 1990, the number of state and local government employees increased from 6.4 million to 15.2 million, while the number of civilian federal employees rose only slightly, from 2.4 million to 3 million.

Cutbacks at the federal level saw the federal labor force drop to 2.7 million by 1998, but employment by state and local governments more than offset that decline, reaching almost 16 million in 1998. (The number of Americans in the military declined from almost 3.6 million in 1968, when the United States was embroiled in the war in Vietnam, to 1.4 million in 1998.)

The rising costs of taxes to pay for expanded government services, as well as the general American distaste for "big government" and increasingly powerful public employee unions, led many policy-makers in the 1970s, 1980s, and 1990s to question

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whether government is the most efficient provider of needed services. A new word -- "privatization" -- was coined and quickly gained acceptance worldwide to describe the practice of turning certain government functions over to the private sector.

In the United States, privatization has occurred primarily at the municipal and regional levels. Major U.S. cities such as New York, Los Angeles, Philadelphia, Dallas, and Phoenix began to employ private companies or nonprofit organizations to perform a wide variety of activities previously performed by the municipalities themselves, ranging from streetlight repair to solid-waste disposal and from data processing to management of prisons.

Some federal agencies, meanwhile, sought to operate more like private enterprises; the United States Postal Service, for instance, largely supports itself from its own revenues rather than relying on general tax dollars.

Privatization of public services remains controversial, however. While advocates insist that it reduces costs and increases productivity, others argue the opposite, noting that private contractors need to make a profit and asserting that they are not necessarily being more productive. Public sector unions, not surprisingly, adamantly oppose most privatization proposals. They contend that private contractors in some cases have submitted very low bids in order to win contracts, but later raised prices substantially. Advocates counter that privatization can be effective if it introduces competition. Sometimes the spur of threatened privatization may even encourage local government workers to become more efficient.

As debates over regulation, government spending, and welfare reform all demonstrate, the proper role of government in the nation's economy remains a hot topic for debate more than 200 years after the United States became an independent nation.

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Text 6

BASIC INGREDIENTS OF THE US ECONOMY

The first ingredient of a nation's economic system is its natural resources. The United States is rich in mineral resources and fertile farm soil, and it is blessed with a moderate climate. It also has extensive coastlines on both the Atlantic and Pacific Oceans, as well as on the Gulf of Mexico. Rivers flow from far within the continent, and the Great Lakes -- five large, inland lakes along the U.S. border with Canada -- provide additional shipping access. These extensive waterways have helped shape the country's economic growth over the years and helped bind America's 50 individual states together in a single economic unit.

The second ingredient is labor, which converts natural resources into goods. The number of available workers and, more importantly, their productivity help determine the health of an economy. Throughout its history, the United States has experienced steady growth in the labor force, and that, in turn, has helped fuel almost constant economic expansion.

Although the United States has experienced some periods of high unemployment and other times when labor was in short supply, immigrants tended to come when jobs were plentiful. Often willing to work for somewhat lower wages than acculturated workers, they generally prospered, earning far more than they would have in their native lands..

The quality of available labor - how hard people are willing to work and how skilled they are - is at least as important to a country's economic success as the number of workers. In the early days of the United States, frontier life required hard work, and what is known as the Protestant work ethic reinforced that trait. A strong emphasis on education, including technical and vocational training, also contributed to America's economic success, as did a willingness to experiment and to change.

Labor mobility has likewise been important to the capacity of the American economy to adapt to changing conditions. When immigrants flooded labor markets on

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the East Coast, many workers moved inland, often to farmland waiting to be tilled. Similarly, economic opportunities in industrial, northern cities attracted black Americans from southern farms in the first half of the 20th century.

Labor-force quality continues to be an important issue. Today, Americans consider "human capital" a key to success in numerous modern, high-technology industries. As a result, government leaders and business officials increasingly stress the importance of education and training to develop workers with the kind of nimble minds and adaptable skills needed in new industries such as computers and telecommunications.

But natural resources and labor account for only part of an economic system. These resources must be organized and directed as efficiently as possible. In the American economy, managers, responding to signals from markets, perform this function. The traditional managerial structure in America is based on a top-down chain of command; authority flows from the chief executive in the boardroom, who makes sure that the entire business runs smoothly and efficiently, through various lower levels of management responsible for coordinating different parts of the enterprise, down to the foreman on the shop floor. Numerous tasks are divided among different divisions and workers. In early 20th-century America, this specialization, or division of labor, was said to reflect "scientific management" based on systematic analysis.

Many enterprises continue to operate with this traditional structure, but others have taken changing views on management. Facing heightened global competition, American businesses are seeking more flexible organization structures, especially in high-technology industries that employ skilled workers and must develop, modify, and even customize products rapidly.

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Text 7

TAX PLANNING

We all like it when our professional career is going great and we are earning more money. However, with more money, we have to pay more income tax and this is a thing which many people are quite tensed about. Tax planning is not at all difficult if you are aware of all the rules and regulations of the tax authorities. There are many tax experts who can help you with estate tax planning and paying other taxes. Tax planning basically involves two things: firstly paying the right amount of tax at the right time and secondly, seeking tax deductions wherever possible and reduce your tax liabilities. In the next paragraph, we shall see, how effective tax planning can help in reducing your taxable income.

Reducing Taxable Income with Tax Planning

In tax planning, to reduce your tax liabilities, what you can do is reduce your adjusted gross income. At this point of time, things will become more clear if you understand the definition of adjusted gross income properly. Adjusted gross income is nothing but your total income from all the sources after deducting the adjustments to the income, if applicable.

So, what you need to do is simply increase your adjustments as much as you can. For this, you should be aware of what kind of adjustments are available these days. Payment of alimony, payment of loan interest, in case of, student loans and traditional IRA contribution. Taxes can also be reduced if you can save for your personal retirement with the help of the popular 401(k) plans.

In tax planning, another way of reducing your taxable income is to raise your tax deductions as much as possible. There are certain expenses which can be included in the tax deduction and help you lower your annual income. These are mainly the interest payment you make on home mortgage, personal investments made in funds,

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gifts in the form of money given by you to a charitable foundation, money spent for availing health care facilities from hospitals, payment of taxes on estates and properties, and your state tax payment. Till date, it has been found that interest on mortgage is the best way of reducing your total income substantially.

Finally, making use of the available tax credits is also one of best tax planning measures which you can adopt. So, the tax credits related to expenses on college education, child adoption or savings made for retirement planning can help in reducing our taxable income. In the next section, let us discuss how to complete your tax formalities successfully.

Method for Tax Payments

Tax planning needs to be done by individuals as well as corporate business houses. There are authorized auditors who can assist you in filing your taxes. The procedure is simple and requires you to visit your certified accountant with your income details at the end of the financial year. After discussing with you different aspects related to tax planning, he will start the computation of the tax to be paid by you.

At this time, you can get the benefit of tax deductions as per the rules laid down by the tax department. Once the accounting and auditing job is complete, you need to file the tax yourself in the concerned office before the last date given to you. As a consistent tax payer, you can get the benefit of securing easy loans by producing your tax payment proofs before the bank authorities.

By following the above mentioned tips on tax planning, you will be able to save a lot of money and complete your formalities properly. So, use this knowledge practically and work smartly. Good luck!

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Text 8

IMPORTANCE OF FINANCE

Finance is a very wide term and it can be said to be the study of the science of managing funds. Usually finance includes the areas of public finance, personal finance and business finance. It includes things related to lending, spending and saving money. An important aspect of finance is that individuals and corporations deposit money in a financial institution, especially banks, who in turn lend out money and charge an interest for their services. Here we take a look at the importance of finance and its management, whether it's for an individual or a corporation.

Importance of Corporate Finance

Corporate finance deals with financial decisions which an organization makes, whether it's investments, analysis of credit, selling of assets or products or acquiring assets. Maximizing corporate value and at the same time manage risks associated with investing in a particular product or project is the main aim of corporate finance. Moreover, corporate finance also studies the short-term and long-term implications of a decision and looks in to matters related with dividends to shareholders debt or equity. Matters related to taxes which a corporation has to pay are also taken into consideration when dealing with corporate finance.

Importance of Finance in Business

Finance for a business can't be undervalued and can be said that it's the lifeline of a business and is required for its well being. It can be said to be a lubricant which keeps the business running. Whether you have a small, medium or large business, you will always need finance, right from the beginning to promoting and establishing your product, acquiring assets, employ people, encouraging them to work for the development of your product and create a brand name. In addition to that, a current

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business may need finance for expansion or making changes to its products as per the market requirements.

Importance of Personal Finance

Personal finance budgeting is an important part of your long term plans to gain financial stability, especially after retirement. You need to have a clear idea of what you want in future such as the amount of money you want after retirement, the location of a place to live in, etc. You need to have a plan and goal of translating these ideas into reality. You also need to consider the things you have purchased in the past and the kind of things which you will purchase later on. This is an important step as this reflects that your will come up with a retirement planning for the future. You must be capable of identifying the good as well as bad choices you make.

While thinking of a long term plan, budgeting savings becomes an important part of personal finance. Savings would help you to make investments in the future so that you have a secure life. But then, having said that, you also need to take care to keep your expenses to the minimum, which is one of the most important personal finance tips which you should use.

Some of the most common expenses which you can reduce are electricity and water bills. Use these as sparingly as possible, especially when you leave a room, make sure that you switch of the lights. You may also like to know about personal finance planning for the layman, so that you know financial planning.

So these were the importance of finance management, whether for an individual or corporation. Finance is such a thing which it can't be substituted by anything, so make sure you use your finances in the proper order, so that you can secure your future.

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Text 9

ACCOUNTING PRINCIPLES

What is accounting? This was the first question in my first accounting book, from my first ever accounting class. The official definition in the book provided by the American Accounting Association said, the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information. The main elements and activities of accounting means, firstly, any process of data which identifies, classifies and summarizes the financial events that occur within any organization. And secondly, a reporting system which transmits applicable financial data for concerned people that allow them to evaluate performance, make essential decisions and check the economic resources in the organization.

Basic Accounting Principles

The 4 basic accounting principles mentioned below make up the GAAP in the U.S. Almost all businesses record and report their financial earnings and/or losses for the accounting period under the accounting rules. Issued by the Financial Accounting Standards Board, these rules usually are in alignment with other government entities.

Although, accountants are not asked to follow these rules specifically, these rules have to be followed as closely as possible. They help businesses set criteria which need to be met to assure correct accounting activity, comprehensibility and equivalence of the data. We will break the basic accounting concepts and principles in order to understand them properly.

The Cost Principle

Businesses need to register and report all their assets depending on the actual cost received to the businesses, while gaining those assets rather than the free-market rate

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of the assets themselves. Cost principle is a reliable method to record and report data. Also, it decreases the chance for elements like predetermined market values to step in with the accounting. Although cost principle is looked as irrelevant, since it refers to the actual value of assets.

The Accrual Principle

Businesses need to register and report revenue when it's earned or made and realized or recognized, and definitely not once the cash for the revenue is received. The accrual principle basically shows the work finished by the company/business and not the work that needs to be done for the future.

The Matching Principle

Businesses get to analyze current expenses and revenues. The matching principle shows the market, how well companies/businesses are doing financially and effective they really are. Similar to accrual principle, the expenses in matching principle can only get recorded and reported when revenue is actually earned.

The Disclosure Principle

Businesses have to disclose their records, so that judgment over their financial status can be made accordingly. But revealing the accounting and financial data of the companies/businesses should not make them decrease unjustified expenses or make incorrect notions.

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Text 10

ACCOUNTANT JOB DESCRIPTION

Every company has financial transactions that needs to be maintained everyday. Especially, a big organization have to maintain its daily profits and expenditures so that it becomes easier to calculate the overall profit and loss. That is why an accountant is always a must for every company.

Accountant Duties

General and primary accountant responsibilities include, preparing general entries, maintaining balance sheets, ledgers and petty cash accounts on everyday basis. Given below are some of the additional accountant duties that are included in account job descriptions of many companies.

•Maintaining daily accounts.

•Preparing profit and loss statements annually or whenever required.

•Maintaining the document of daily transactions on the computer as well as in hard copy format.

•Preparing financial accounting reports and sending them to concerned authorities.

•Paying attention to taxation issues and preparing taxation reports.

•Dealing with accounting and financial irregularities.

•Analyzing financial information and preparing financial transaction reports.

•Finishing the given tasks within financial deadlines.

•Establishing sound accounting procedures.

•Coordinating implementation of financial rules and regulations.

•Reviewing the budgets of the company allotted to different tasks.

•Explaining staff members, clients, business partners, investors, and associated about the billing invoices and financial and accounting policies of the company.

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•Assigning tasks to junior accountants and supervising all the data documentation and complete accounting procedures.

These were some of the accountant duties. Part from this, some accountant job descriptions also include, preparing audit reports or helping the CA with audit reports, developing budgets, financial program planning, an salary recommendations etc.

Qualification Required for Accountancy

The accountant job descriptions of some companies may ask for accounting degree or diploma or commerce background. But some companies give priority to experienced personnel. But if you have both then your chances of getting hired by a good company are maximum. There are different types of accounting careers such as, public accounting, management accounting, government accounting, and auditor accounting etc. Each of the type requires different set of skills. So you must have the relevant qualifications. Apart from this, accounting is also industry specific, such as banking, investment, marketing, etc. so you must have the industry specific qualification, skills, and experience. But some of the common accounting job skills included in all the accountant job descriptions are given below

•An eye for details

•Accuracy and perfection

•Planning and prioritizing, and organizing skills

•Knowledge of economics and accounting process

•Networking and communication skills

•Knowledge of relevant financial policies, laws, rules and regulations

•Knowledge of relevant accounting software

•Problem solving skills

•Ability to handle pressures

•Neat and tidy work practices.

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Text 11

TYPES OF ACCOUNTING CAREERS

Any educated individual with an analytical understanding of finances can aspire to be an accountant. Interpersonal skills, ability to communicate and market awareness play a key role in understanding the complex and changing financial environment. Following are the different types of accounting careers:

Financial Accounting

The work of the financial accountant is to make analytical observations that would influence the investment and credit decisions.

Public Accounting

This type of accounting is the most varied type and includes bookkeeping, account management and financial analysis for individuals, private businesses, public firms, government or NGOs, which are based either nationally or internationally. A public accounting business can have one or more accountants and both certified and non-certified accountants can provide public accounting services to their clients. A public accountant can also be involved in external auditing or forensic accounting. Public accounting involves analyzing historical financial data to check for any discrepancies such as money laundering, embezzlement, frauds and any other illegal financial transaction and draw it to the attention of the law enforcement authorities.

Government Accounting

This form of public accounting is specific to government agencies and ensures all revenues and expenditure are in accordance to law. The conventional accounting methods of double entry system in ledgers and journals are used here. Government

accounting is differentiated from other types of accounting in respect of providing

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service that is not profit based but service based. Government accountants are employed by the federal government.

National Income Accounting

This type of accounting is predominantly for the government and is responsible for providing the general public the data with reference to the gross national product about all market-related information, such as the value of the country's goods and services provided and its purchasing power.

Management Accounting

Accountants who specialize in this type of accounting are also known as private, industrial or corporate accountants. Management accountants provide their services to business houses for recording and studying the company's financial data. Their portfolio in the private firms includes cost and asset management, budgeting and performance evaluation.

Fiduciary Accounting

Accounting performed for a trust is called as fiduciary accounting and is done by the administrator, executor or the trustee, who also controls all property subjected to the trust.

Tax Accounting

An accountant who helps either an individual or a firm in filing a income tax return or planning taxes is known as a tax consultant. The tax accountant must be aware of the rules and regulations pertaining to tax policies.

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Text 12

BOOKKEEPING: METHODS AND JOB DESCRIPTION

Bookkeeping is a task that relates to creating and maintaining a detailed record of all transactions which finances include. This procedure is to be carried out by all companies, whether a small firm or a large organization. The transactions recorded in bookkeeping usually comprise sales, purchases, due payments, earnings, etc. Some people might think bookkeeping to be the same as accounting. However, both are slightly different in the method of operation. Bookkeeping is a primary task and pertains to taking direct information and details from the transactions conducted. On the other hand, accounting is concerned with referring to bookkeeping records and then preparing reports accordingly. Read on to understand more about the basic concepts of bookkeeping.

Methods of Bookkeeping

Typically, there are two fundamental methods used in the process of bookkeeping: single-entry bookkeeping system and double-entry bookkeeping system.

Single-entry Bookkeeping System

Single-entry bookkeeping system is a method of bookkeeping wherein simple and uncomplicated transactions are maintained in the books. This method is largely used by companies on a small scale. Financial records associated with cash, accounts receivable, accounts payable, and taxes are generally created in a singleentry bookkeeping system. Other details such as inventory, assets and property, aggregate revenue, and expenditure are not recorded in financial books.

Double-entry Bookkeeping System

In a double-entry bookkeeping system, after every transaction, changes are made in

a minimum of two accounts. In this system, both debit and credit accounts are

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maintained; which helps the company to find out any errors in calculations. If the debit amount does not match the credit amount, a transaction has been missed. This necessarily does not mean there cannot be errors in the books even if the debit and credit amount matches. Standard books in a double-entry bookkeeping system include daybooks, journals, ledgers, and petty cash book.

About Bookkeeping Jobs

The bookkeeper job description includes most of the single and double-entry tasks. A bookkeeper has to collect all the information and use it for preparing statistical reports for financial management of the company. This professional can even be asked to oversee the functioning of accounting and payroll practices. For those thinking how to become a bookkeeper, you need to have a educational background in math, banking, and finance. You can either opt for a diploma or an associate's degree in any field related to bookkeeping. After obtaining relevant education qualification, you can look forward to work as a bookkeeper. To become a certified bookkeeper, you will need to show a work experience of two years in the field. Remember that the salary range for a job as a bookkeeper depends a lot on the certification. Other bookkeeping skills required are logical thinking, good communication, and a liking to work with figures and numbers.

Note that bookkeeper duties may vary from company to company and the practices adopted. Bookkeeping is definitely very significant for a business to realize its income over expenditure.

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Text 13

HOW TO BECOME A BOOKKEEPER

There are many professions that are not very well-known, yet are attracting a good demand in the job market. A career opportunity as a bookkeeper is one such job. There is a common misconception among people about careers as certified bookkeepers. It is generally believed that bookkeeping is a recently developed profession. However, this profession has been around for approximately 500 years, and was first practiced by a person named Luca Pacioli. Every company, be it big or small, is required to implement bookkeeping as a standard practice. As a result, the demand for certified bookkeepers is soaring significantly. In the following article, you will get to know about the bookkeeper job description and how to become a bookkeeper.

In the bookkeeper job description, a majority of the responsibilities include assessing the financial details of an organization and suggesting proper financial management for the future. A standard task is to gather company data for the purpose of developing statistical reports involving sales, profits and losses, expenditures, and other financial aspects. A full time bookkeeper can be asked to manage the accounting department and oversee the employee payroll process. Typically, the roles and responsibilities of a bookkeeper are not much different from those of accountants. Let us now get to know how to become a bookkeeper.

How to Become a Bookkeeper?

Since the bookkeeper duties consist of handling financial matters of an organization, you need to be good at handling and keeping a record of money. If you are wondering how to become a bookkeeper; you need to be good in subjects like economics and math in high school. In secondary school, you should prefer to do majors in subjects such as accounting, banking, finance, etc.

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The knowledge gained from these subjects will serve as a base for becoming a bookkeeper in the future. It is also a good idea to become proficient in handling applications and software which are related to financial data management. There are many ways in which you can gain basic knowledge in the bookkeeping field. You can enroll for a vocational course in financial management and accounting, or go in for a full time course in bookkeeping at the university.

You can also do a diploma or an associates degree in subjects such as business management, accounting, banking and finance, or similar ones. It is always better to do a reputed course that would make you eligible for job as a bookkeeper. After you have the right educational qualifications in your hand, you need to search for a job as a bookkeeper. Remember that for being certified, you need to have at least few years of work experience as a bookkeeper.

In order to be eligible to sit for the certified bookkeeper exam, you need two years of experience. The certification is administered by the National Institute of Certified Bookkeepers, one of which is the American Institute of Professional Bookkeepers. With passing the exam, you will be required to sign a code of conduct for being certified. If you are thinking about how to become a freelance bookkeeper, it is better that you back your career with education and the necessary certifications. By taking some advanced bookkeeping courses, you can certainly add some credit to your educational qualifications.

Keep in mind that being certified is not at all a mandatory requirement, but is beneficial for obtaining a higher salary range for job as a bookkeeper. If you are working as a freelance bookkeeper, the bookkeeper salary range would largely depend on the clients you deal with. I hope by now you might have understood the standard procedure regarding how to become a bookkeeper.

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Text 14

INTERNATIONAL TRADE

International economics is concerned with the effects upon economic activity of international differences in productive resources and consumer preferences and the institutions that affect them. It seeks to explain the patterns and consequences of transactions and interactions between the inhabitants of different countries, including trade, investment and migration.

Scope and methodology of international trade

The economic theory of international trade differs from the remainder of economic theory mainly because of the comparatively limited international mobility of the capital and labour. In that respect, it would appear to differ in degree rather than in principle from the trade between remote regions in one country. Thus the methodology of international trade economics differs little from that of the remainder of economics. However, the direction of academic research on the subject has been influenced by the fact that governments have often sought to impose restrictions upon international trade, and the motive for the development of trade theory has often been a wish to determine the consequences of such restrictions.

The branch of trade theory which is conventionally categorized as "classical" consists mainly of the application of deductive logic, originating with Ricardo’s Theory of Comparative Advantage and developing into a range of theorems that depend on their practical value upon the realism of their postulates. "Modern" trade theory, on the other hand, depends mainly upon empirical analysis.

Classical theory

The law of comparative advantage provides a logical explanation of international trade as the rational consequence of the comparative advantages that arise from inter-

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regional differences - regardless of how those differences arise. Since its exposition by John Stuart Mill the techniques of neo-classical economics have been applied to it to model the patterns of trade that would result from various postulated sources of comparative advantage. However, extremely restrictive (and often unrealistic) assumptions have had to be adopted in order to make the problem amenable to theoretical analysis.

The best-known of the resulting models, the Heckscher-Ohlin theorem (H-O) depends upon the assumptions of no international differences of technology, productivity, or consumer preferences; no obstacles to pure competition or free trade and no scale economies. On those assumptions, it derives a model of the trade patterns that would arise solely from international differences in the relative abundance of labour and capital (referred to as factor endowments). The resulting theorem states that, on those assumptions, a country with a relative abundance of capital would export capitalintensive products and import labour-intensive products. The theorem proved to be of very limited predictive value, as was demonstrated by what came to be known as the "Leontief Paradox" (the discovery that, despite its capital-rich factor endowment, America was exporting labour-intensive products and importing capital-intensive products). Nevertheless the theoretical techniques (and many of the assumptions) used in deriving the H-O model were subsequently used to derive further theorems.

The Stolper-Samuelson theorem, which is often described as a corollary of the H-O theorem, was an early example. In its most general form it states that if the price of a good rises (falls) then the price of the factor used intensively in that industry will also rise (fall) while the price of the other factor will fall (rise). In the international trade context for which it was devised it means that trade lowers the real wage of the scarce factor of production, and protection from trade raises it.

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Text 15

THE EFFECTS OF TRADE: GAINS AND TERMS

There is a strong presumption that any exchange that is freely undertaken will benefit both parties, but that does not exclude the possibility that it may be harmful to others. However (on assumptions that included constant returns and competitive conditions) Paul Samuelson has proved that it will always be possible for the gainers from international trade to compensate the losers. Moreover, in that proof, Samuelson did not take account of the gains to others resulting from wider consumer choice, from the international specialisation of productive activities - and consequent economies of scale, and from the transmission of the benefits of technological innovation. An OECD study has suggested that there are further dynamic gains resulting from better resource allocation, deepening specialisation, increasing returns to R&D, and technology spillover. The authors found the evidence concerning growth rates to be mixed, but that there is strong evidence that a 1 per cent increase in openness to trade increases the level of GDP per capita by between 0.9 per cent and 2.0 per cent. They suggested that much of the gain arises from the growth of the most productive firms at the expense of the less productive. Those findings and others have contributed to a broad consensus among economists that trade confers very substantial net benefits, and that government restrictions upon trade are generally damaging.

Factor price equalisation

Nevertheless there have been widespread misgivings about the effects of international trade upon wage earners in developed countries. Samuelson‘s factor price equalisation theorem indicates that, if productivity were the same in both countries, the effect of trade would be to bring about equality in wage rates. As noted above, that theorem is sometimes taken to mean that trade between an industrialised country and a developing country would lower the wages of the unskilled in the industrialised

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country. However, it is unreasonable to assume that productivity would be the same in a low-wage developing country as in a high-wage developed country.

It has been argued that, although there may sometimes be short-term pressures on wage rates in the developed countries, competition between employers in developing countries can be expected eventually to bring wages into line with their employees' marginal products. Any remaining international wage differences would then be the result of productivity differences, so that there would be no difference between unit labour costs in developing and developed countries, and no downward pressure on wages in the developed countries.

Terms of trade

There has also been concern that international trade could operate against the interests of developing countries. Influential studies published in 1950 by the Argentine economist Raul Prebisch and the British economist Hans Singer suggested that there is a tendency for the prices of agricultural products to fall relative to the prices of manufactured goods; turning the terms of trade against the developing countries and producing an unintended transfer of wealth from them to the developed countries.

Their findings have been confirmed by a number of subsequent studies, although it has been suggested that the effect may be due to quality bias in the index numbers used or to the possession of market power by manufacturers. The Prebisch/Singer findings remain controversial, but they were used at the time - and have been used subsequently - to suggest that the developing countries should erect barriers against manufactured imports in order to nurture their own “infant industries” and so reduce their need to export agricultural products. The arguments for and against such a policy are similar to those concerning the protection of infant industries in general.

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Text 16

THE EFFECTS OF TRADE: INFANT INDUSTRIES AND TRADE POLICIES

The term "infant industry" is used to denote a new industry which has prospects of becoming profitable in the long-term, but which would be unable to survive in the face of competition from imported goods. That is a situation that can occur because time is needed either to achieve potential economies of scale, or to acquire potential learning curve economies. Successful identification of such a situation followed by the temporary imposition of a barrier against imports can, in principle, produce substantial benefits to the country that applies it – a policy known as “import substitution industrialization”. Whether such policies succeed depends upon governments’ skills in picking winners, and there might reasonably be expected to be both successes and failures. It has been claimed that South Korea’s automobile industry owes its existence to initial protection against imports, but a study of infant industry protection in Turkey reveals the absence of any association between productivity gains and degree of protection, such as might be expected of a successful import substitution policy.

Another study provides descriptive evidence suggesting that attempts at import substitution industrialisation since the 1970s have usually failed, but the empirical evidence on the question has been contradictory and inconclusive. It has been argued that the case against import substitution industrialisation is not that it is bound to fail, but that subsidies and tax incentives do the job better. It has also been pointed out that, in any case, trade restrictions could not be expected to correct the domestic market imperfections that often hamper the development of infant industries.

Trade policies

Economists’ findings about the benefits of trade have often been rejected by government policy-makers, who have frequently sought to protect domestic industries against foreign competition by erecting barriers, such as tariffs and quotas, against imports. Average tariff levels of around 15 per cent in the late 19th century rose to

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about 30 percent in the 1930s, following the passage in the United States of the Smoot-Hawley Act. Mainly as the result of international agreements under the auspices of the General Agreement on Tariffs and Trade (GATT) and subsequently the World Trade Organisation (WTO), average tariff levels were progressively reduced to about 7 per cent during the second half of the 20th century, and some other trade restrictions were also removed. The restrictions that remain are nevertheless of major economic importance.

The largest of the remaining trade-distorting policies are those concerning agriculture. In the OECD countries government payments account for 30 per cent of farmers’ receipts and tariffs of over 100 per cent are common. OECD economists estimate that cutting all agricultural tariffs and subsidies by 50% would set off a chain reaction in realignments of production and consumption patterns that would add an extra $26 billion to annual world income.

Quotas prompt foreign suppliers to raise their prices toward the domestic level of the importing country. That relieves some of the competitive pressure on domestic suppliers, and both they and the foreign suppliers gain at the expense of a loss to consumers, and to the domestic economy, in addition to which there is a deadweight loss to the world economy. When quotas were banned under the rules of the General Agreement on Tariffs and Trade (GATT), the United States, Britain and the European Union made use of equivalent arrangements known as voluntary restraint agreements (VRAs) or voluntary export restraints (VERs) which were negotiated with the governments of exporting countries (mainly Japan) - until they too were banned. Tariffs have been considered to be less harmful than quotas, although it can be shown that their welfare effects differ only when there are significant upward or downward trends in imports. Governments also impose a wide range of non-tariff barriers that are similar in effect to quotas, some of which are subject to WTO agreements.

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Text 17

EXCHANGE RATES AND CAPITAL MOBILITY

A major change in the organisation of international finance occurred in the latter years of the twentieth century, and economists are still debating its implications. At the end of the second world war the national signatories to the Bretton Woods Agreement had agreed to maintain their currencies each at a fixed exchange rate with the United States dollar, and the United States government had undertaken to buy gold on demand at a fixed rate of $35 per ounce. In support of those commitments, most signatory nations had maintained strict control over their nationals’ use of foreign exchange and upon their dealings in international financial assets.

But in 1971 the United States government announced that it was suspending the convertibility of the dollar, and there followed a progressive transition to the current regime of floating exchange rates in which most governments no longer attempt to control their exchange rates or to impose controls upon access to foreign currencies or upon access to international financial markets. The behaviour of the international financial system was transformed. Exchange rates became very volatile and there was an extended series of damaging financial crises. One study estimated that by the end of the twentieth century there had been 112 banking crises in 93 countries, another that there had been 26 banking crises, 86 currency crises and 27 mixed banking and currency crises - many times more than in the previous post-war years.

The outcome was not what had been expected. In making an influential case for flexible exchange rates in the 1950s, Milton Friedman had claimed that if there were any resulting instability, it would mainly be the consequence of macroeconomic instability, but an empirical analysis in 1999 found no apparent connection. Economists began to wonder whether the expected advantages of freeing financial markets from government intervention were in fact being realised.

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Neoclassical theory had led them to expect capital to flow from the capital-rich developed economies to the capital-poor developing countries - because the returns to capital there would be higher. Flows of financial capital would tend to increase the level of investment in the developing countries by reducing their costs of capital, and the direct investment of physical capital would tend to promote specialisation and the transfer of skills and technology. However, theoretical considerations alone cannot determine the balance between those benefits and the costs of volatility, and the question has had to be tackled by empirical analysis.

A 2006 International Monetary Fund working paper offers a summary of the empirical evidence. The authors found little evidence either of the benefits of the liberalisation of capital movements, or of claims that it is responsible for the spate of financial crises. They suggest that net benefits can be achieved by countries that are able to meet threshold conditions of financial competence but that for others, the benefits are likely to be delayed, and vulnerability to interruptions of capital flows is likely to be increased.

Although the majority of developed countries now have "floating" exchange rates, some of them – together with many developing countries – maintain exchange rates that are nominally "fixed", usually with the US dollar or the euro. The adoption of a fixed rate requires intervention in the foreign exchange market by the country’s central bank, and is usually accompanied by a degree of control over its citizens’ access to international markets.

A controversial case in point is the policy of the Chinese government who had, until 2005, maintained the renminbi at a fixed rate to the dollar, but have since "pegged" it to a basket of currencies. It is frequently alleged that in doing so they are deliberately holding its value lower than if it were allowed to float (but there is evidence to the contrary).

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Text 18

WHAT IS FOREIGN EXCHANGE INTERVENTION?

Definition and the Legal Status of Intervention

Foreign exchange intervention is defined generally as foreign exchange transactions conducted by the monetary authorities with the aim of influencing exchange rates. It is the process by which the monetary authorities attempt to influence market conditions and/or the value of the home currency on the foreign exchange market. Intervention usually aims to promote stability by countering disorderly markets, or in response to special circumstances.

In Japan, the Minister of Finance is legally authorized to conduct intervention as a means to achieve foreign exchange rate stability. In the United States, the Government and Federal Reserve Board (FRB); in Euro Area, the European Central Bank (ECB); in the United Kingdom, the Bank of England (BOE) operates it.

General Ideas of Foreign Exchange Market

Foreign Exchange Market

To invest in other countries or to buy foreign products, firms and individuals may first need to acquire the currency of the country with which they intend to deal with. In addition, exporters may demand to be paid for their goods and services either in their own currency or in U.S. dollars, which are accepted worldwide. The Foreign Exchange Market, or "Forex" market, in which international currencies trades take place, is called foreign exchange market.

Exchange Rate

Each country has a currency in which the prices of goods and services are quoted - the dollar in the United States, the euro in Germany, the pound sterling in Britain, the yen in Japan, etc. Exchange rates play a central role in international trade because they

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allow us to compare the prices of goods and services produced in different countries. A foreign exchange rate is the relative value between two currencies. In particular, it is the quantity of one currency required to buy or sell one unit of the other currency. The exchange rate can be quoted in 2 ways: as the price of the foreign currency in terms of home currency (direct terms) or as the price of home currency in terms of foreign currency (indirect terms).

Three Exchange Rate Regimes

In theory, there are three exchange rate regimes, namely flexible, intermediate and fixed. Under a flexible currency regime, the external value of a currency is determined more or less by the force of market supply and demand. Because floating exchange rate permitting enough flexibility to adjust fundamental disequilibria under international supervision, it can prevent competitive depreciation. On the other hand, under a fixed exchange rate arrangement, the monetary authority pegs the domestic currency to one or a basket of foreign currencies. Exchange rates between currencies that are set at predetermined levels and do not move in response to changes in supply and demand. The authority has to intervene in the foreign exchange market whenever the prevailing rate deviates from the specific one. Intermmediate exchange rate arrangement has a medium flexibility lying between flexible and fixed.

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Text 19

TYPES OF FOREIGN EXCHANGE INTERVENTION

Entrustment Intervention

Entrustment Intervention" means intervention that is conducted in overseas markets with funds of local monetary authorities. It is different from the intervention that is conducted in overseas markets with funds of respective foreign monetary authorities.

Reverse-Entrustment Intervention

Similarly, when foreign monetary authorities need to intervene in a country's foreign exchange market, say Tokyo market, the central bank of Japan can conduct interventions on their behalf upon request. This is called "Reverse-Entrustment Intervention".

Concerted or Coordinated Intervention

There are cases where two or more monetary authorities implement intervention jointly by using their own funds at the same time or in succession. This is called "Concerted or Coordinated Intervention."

Sterilization and Non-sterilization

Studies of foreign exchange intervention generally distinguish between intervention that does or does not change the monetary base. The former type is called nonsterilized intervention while the latter is referred to as sterilized intervention. Central banks sometimes carry out equal foreign and domestic assets transaction in opposite directions to nullify the impact of their foreign exchange operations on the domestic money supply. When a monetary authority buys (sells) foreign exchange, its own monetary base increases (decreases) by the amount of the purchase (sale). In order to prevent the money stock from increasing (decreasing), the monetary authorities can

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sterilize the effect of the exchange market intervention by selling (buying) short-term domestic assets to (from) the banking system leaving the monetary base of the country unchanged. Since sterilized intervention does not affect the money supply, it does not affect prices or interest rate and so does not influence the exchange rate. Rather, sterilized intervention might affect the foreign exchange market through two routes: the portfolio-balance channel and the signaling channel.

According to the portfolio-balance channel, it is assumed that risk-averse wealth holders diversify their portfolio across assets denominated in different currencies. Let's use the United States and Japan as an example. The portfolio balance channel theory holds that sterilized purchases of yen raise the dollar price of yen because investors must be compensated with a higher expected return to hold the relatively more numerous U.S. bonds. To produce a higher expected return, the yen price of the U.S. bonds must fall immediately. That is, the dollar price of yen must rise.

In contrast, the signaling channel assumes that intervention affects exchange rates by providing the market with new relevant information, under an implicit assumption that the authorities have superior information to other market participants. The authorities are willing to reveal this information through their actions in the foreign exchange market. Because private agents may change their exchange rate expectation after intervention, the exchange rate then will be expected to change immediately after the effect occurs.

Indirect Intervention

Recall that while official intervention is generally defined as foreign exchange transactions of monetary authorities designed to influence exchange rates, it can also refer to other (indirect) policies for that purpose. There are innumerable methods of indirectly influencing the exchange. These methods involve capital controls (taxes or restrictions on international transactions in assets like stocks or bonds) or exchange controls (the restriction of trade in currencies).

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Text 20

EFFECTIVENESS OF CENTRAL BANK INTERVENTION

Most of the interventions were aiming at stabilizing the disorderly exchange rate market; unfortunately, many studies revealed that intervention could not smooth the exchange rate movement.

Intervention may Decrease Volatility

Central bank intervention may reduce exchange rate volatility if it resolves uncertainty by market participants about future monetary policy. For example, if the market is uncertain about the stance of monetary policy, then intervention to halt a drop in the dollar may signal that the Federal Reserve is committed to a tight monetary policy. The resolution of uncertainty about future monetary policy may then lead to less exchange rate volatility.

Central bank intervention may also reduce exchange rate volatility by reducing the likelihood of a speculative bandwagon. Suppose the dollar exchange rate falls from 120$ to 115$. As speculators see the dollar falling, they may jump on the bandwagon thinking the dollar may fall further to 110$. Under this scenario, speculators who sell $1 million at 115$ could make a profit if the dollar falls to 110$ and they reacquired dollars at the lower value. However, if the central bank intervenes at 115$ and pushes the dollar back to 120$, then speculators could suffer a loss. Speculators may therefore become reluctant to push the dollar down too rapidly if they believe the central bank will intervene to prevent the dollar from falling. By reducing selling pressure when the dollar starts to fall, central bank intervention could reduce speculative bandwagons and thereby reduce volatility.

Intervention may Increase Volatility

Central bank intervention could actually increase exchange rate volatility if

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intervention increases private sector uncertainty about central bank policies. Suppose the central bank surprises traders by intervening to increase the value of the dollar but announces neither the intervention's magnitude nor its motivation. In making their trades, foreign exchange traders have to guess the meaning of the intervention and attempt to infer the implications of the action for future policy. Because their trades are based on incomplete information, traders will need to revise their currency positions once more information about intervention policy becomes available. These changes in currency positions imply changes in the exchange rate and hence greater exchange rate volatility. Market uncertainty about the likelihood of future central bank intervention could also lead to greater exchange rate volatility. Because central banks do not announce their plans for intervention, foreign exchange traders must base their currency positions on their best guesses of whether and when central banks will intervene. These currency positions and hence exchange rates will change over time as traders reassess the likelihood of central bank intervention. Uncertainty over central bank intervention policy can contribute to exchange rate volatility. Central bank intervention can also increase exchange rate volatility by increasing the likelihood of speculative bandwagons. For instance, intervention might increase volatility if market participants think the central bank is unable or unwilling to prevent speculative forces from pushing the exchange rate in a particular direction. Suppose the dollar exchange rate falls from 120$ to 115$ and that speculators expect the dollar to fall further to 110$. As before, a speculator selling the dollar at 115$ might expect to realize a profit if the dollar falls to 110$. The expected profit opportunity encourages other speculators to jump on the bandwagon, thereby actually pushing down the dollar. Since the traders are uncertain about the intervention policy. The uncertainty about intervention policy may encourage speculation and cause price changes and exchange rate volatility to be higher than in the absence of such intervention.

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Библиографический список Oсновная литература

l. Anikin V. English-Russian Dictionary of Economics and Finance / V. Anikin. – St.Petersburg : The School of Economics Press, 2009. – 612 p.

2. Collin P.H. Dictionary of Business / P.V. Collin. – London : Peter Collin Publish, 200. – 472 p.

3.Flower G. Build Your Business Vocabulary / G. Flower. – England : Language Teaching Publications, 2006. – 96p.

4.Grussendorf, M. English for Presentations: Express series/ M. Grussendorf Oxford: OUP, 2008. – 80p.

5.Longman Dictionary of English and Culture, – England : Person Education Limited, 2000. – 1568 p.

6.Murphy R. English Grammar in Use for intermediate students/ R. Murphy. – Cambridge:CUP, 2009. – 328p.

7.Swan M. How English works. A Grammar Practice book/ M.Swan, C.Walter. – Oxford: OUP, 2009. – 358p.

8.Гуринович В.В. Деловая переписка на английском языке: учебносправочное пособие / В.В. Гуринович. – Мн.: Харвест, 2007. –256 с.

9.Де Вриз М. Международная деловая переписка как средство достижения успеха / М. Де Вриз. – М.: Весь Мир, 2001. – 386 с.

10.Сайпрес Л. Практика делового общения : Путеводитель по миру делового английского / Л. Сайпрес. – Рольф Айрис-пресс, 2001 . – 336 с.

11.Слепович B.C. Деловой английский / В.С. Слепович. – М: Тетра Системс, 2002. – 256 с.

Электронные ресурсы http://www.forestnet.com

http://www.oup.com/elt/students/?view=student&cc=ru

http://en.wikipedia.org/wiki/Economy

Видеоматериалы в сети Интернет : http://www.real-english.com/ http://infoenglish.info/publ/bideouroki

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Учебное издание

The Basics of Business Intercultural Communication (Основы деловой межкультурной коммуникации)

Учебное пособие

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