5. Find in the text English equivalents for the following

головна (ключова) риса (2 варіанти); засіб платежу; засіб обігу; міра вартості; засіб заощадження (засіб збереження вартості); одиниця обліку; засіб погашення боргу; в обмін на; може бути згодом використано; обмінюватися товарами і послугами; бартерна економіка; виміряти(ся); знецінений; платити відсотки; купівельна спроможність; промислове використання; споживче використання; гроші - товар; грошові знаки (символічні гроші); грошова вартість; обмеження права; вклад у банку; банківська позичка; законний платіжний засіб; боргове зобов'язання

6. Explain in English

double_coincidence of wants; deferred payment; medium of exchange; purchasing power, monetary value; legal tender; IOU

7. Answer the questions

1. Why do people accept money?

2. Dwell on the functions of money.

3. Dwell on different kinds of money.

4. What's a barter economy? Why is trading expensive in a barter economy?

5. What currency can be used as the unit of account? Speak on the current situation in Ukraine.

6. What does IOU stand for?

8. Translate into English using all the active possible

1. Існує кілька функцій грошей. По-перше і насамперед, гроші є засобом платежу, чи обігу; гроші можна використовувати при покупці і продажі товарів і послуг. Гроші виступають також мірою вартості. Суспільство вважає зручним використовувати грошову одиницю як масштаб для порівняння відносних вартостей різних благ і ресурсів.

Гроші є засобом заощадження. Оскільки гроші є найбільш ліквідним товаром, тобто таким, котрий можна без проблем продати (обміняти), то вони є дуже зручною формою збереження багатства. Це, однак, не єдина форма збереження багатства. Під час занепаду в економіці, при високій інфляції і знеціненні грошей, населення, швидше за все, буде зберігати багатство у вигляді нерухомості чи інших дорогих товарів - предметах мистецтва, коштовностях.

2.Гроші, що, по суті, є борговими зобов'язаннями держави, комерційних банків і ощадних установ, мають вартість завдяки товарам і послугам, що здобуваються за них на ринку.

Unit 21 the role of banks

The following story is going to explain the role of banks. In the past most societies used different objects as money. Some of these were valuable because they were rare and beautiful, others - because they could be eaten or used. Early forms of money like these were used to buy goods. They were also used to pay for marriages, fines and debts. But although everyday objects were extremely practical kinds of cash in many ways, they had some disadvantages, too. For example, it was difficult to measure their value accurately, divide some of them into a wide range of amounts, keep some of them for a long time, use them to make financial plans for the future. For reasons such as these, some societies began to use another kind of money, that is, precious metals.

People used gold, gold bullion, as money. Those were dangerous times, and people wanted a safe place to keep their gold. So they deposited it with goldsmiths, people who worked with gold for jewellery and so on and also had a guarded vault to keep it safe in. And when people wanted some of their gold to pay for things with, they went and fetched it from the goldsmith.

Two developments turned these goldsmiths into bankers. The first was that people found it a lot easier to give the seller a letter than it was to fetch some gold and then physically hand it over to him. This letter transferred some of the gold they had at the goldsmith's to the seller. This letter we would nowadays call a cheque. And, of course, once these letters or cheques became acceptable as a way of paying for goods, people felt that the gold they had deposited with the goldsmith, was just as good as gold in their own pockets. And as letters or cheques, were easier to carry around than gold, and a lot less dangerous, people started to say that their money holdings were what they had with them plus their deposits. So a system of deposits was started. The second development was that goldsmiths realized they had a great deal of unused gold lying in their vaults doing nothing. This development was actually of greater importance than the first.

Now let's turn to the first bank loan ever and see what happened. A firm asked a goldsmith for a loan. The goldsmith realized that some of the gold in his vault could be lent to the firm, and of course he asked the firm to pay it back later with a little interest. Of course, at that moment the goldsmith was short of gold, it wasn't actually his gold, but he reckoned it was unlikely that everyone who had deposited gold with him would want it back at the same time, at any rate — not before the firm had repaid him his gold with a little interest. He thought it safe enough.

To understand what actually happened in this simple transaction let's consider the following table.

Tabl. 6. Goldsmiths as bankers

	Assets	Liabilities
1.Old-fashioned goldsmith 2. Gold lender Deposit lender: Step 1 4. Deposit lender: Step 2	Gold $100 Gold $90+loan $10 Gold $100+loan $10 Gold $90+loan $10	Deposits $100 Deposits $100 Deposits $110 Deposits $100

The first row shows what the goldsmith did before he made this loan. He had a hundred dollars of gold, which he owed to the people who had deposited it with him, so his assets and liabilities were the same. But when he lent, say, $10 of gold to the firm, he actually had only $90 of gold in his vault plus the value of his loan. His assets still equalled his liabilities, but he was going to get some interest.

It so happened that the firm, that took out the loan, didn't really want to carry that $10 of gold around, so it asked the goldsmith if, instead of actually taking the gold, it could be given a deposit. The third row of Tabl.6 shows what happened then. Although the goldsmith's assets and liabilities were the same, but were then worth $110, not $100. When the firm wrote a cheque for $10, and that person came in to collect his $10 worth of gold, the goldsmith's assets failed, but so did his liabilities (the fourth row of the table). The important point to notice here is that it made no difference to the goldsmith whether his initial loan was in actual gold or in a form of a deposit.

Now let's turn to the question of reserves. Reserves are the amount of gold that is immediately available in the vault to meet depositors' demands. People originally deposited $100 of gold with the goldsmith. The goldsmith lent $10, leaving himself with $90. As a banker he was relying on the fact that not everyone would want his or her gold back at the same time. If they had done, he couldn't have paid out. His reserves of $90 were not enough.

The goldsmith in the table has a 100% reserve ratio. The reserve ratio is the ratio of reserves to deposits. Once he has made his loan, he has a 90% deposit ratio. This is a small risk with a small profit. How much dare he lend out in order to make a profit through his interest charges? What are the risks involved? Suppose the goldsmith took too much of a risk. He lent 80% of the gold he had. This panicked people. They doubted he could pay them all back; he was bound to lose some of the gold he had lent, so they rushed to get their gold back before it was too late. That was what we would now call a run on the bank, a financial panic. And the financial panic leads to exactly what people fear, the bank cannot pay them, goes bankrupt, and they go bankrupt as well.