Conversation practice.

Give the answers:

1. What is the role of money and what are its functions?

2. What is the gold standard and why was it abandoned?

3. What backs national currencies now?

4. Why do you think valuable metal has been replaced by paper money?

5. Who can issue paper notes?

6. What are money orders and what function do they perform?

7. In what case can one obtain large sums of credit and even pay for goods with a cheque?

8. What is purchasing power and what does it depend on?

9. How do we reckon the demand for money?

10. What is the demand for money related to?

11. What is inflation?

Translate the following sentences into English in written form. Look through the text first.

1. Все ценности в экономической системе измеряются деньгами. Товары и услуги продаются за деньги, а эти деньги обмениваются на другие товары и услуги. Термин «деньги» в широком смысле этого слова означает все, что используется как средство обмена.

2. Первоначально ценный металл служил как постоянное накопление стоимости. Даже сегодня американский доллар «поддерживается» запасом золота. Многие годы национальные валюты оценивались с точки зрения «золотого стандарта».

3. В настоящее время бумажные деньги заменили металл, и сила национальных валют оценивается силой национальной экономики, которая поддерживает их. Бумажные деньги, выпущенные эмиссионными банками, являются законным платежным средством.

4. Чеки и платежные поручения не являются государственным платежным средством. Они выполняют функцию представителя денежных средств и известны как кредитные обязательства.

5. Стоимость денег определяется их стоимостью как средства обмена или их покупательной способностью. Эта покупательная способность зависит от соотношения спроса и предложения.

6. Если в обращении слишком много денег, их стоимость снижается и падает их покупательная способность. Эта ситуация известна как инфляция.

Have a look at the text “ glimpses of history of money ” and…

…find the answers:

1. What commodities served as money in the past?

2. What are the requirements of a commodity to serve as money?

3. Why did precious metals start to serve as money?

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

5. Who were the first bankers?

6. How did coins come into existence?

7. What coins are called silver?

8. What are coppers?

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 weighed 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 their 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.