Inflation and deflation

An inflationary development is characterized by rising prices within a certain

period of time.

The rising prices is a consequence of an uneven development in the quantity

of goods on offer and the quantity of money available, which is self determines the

demand and is the inflation rate.

The causes of inflation are generally complex and can arise either from the

goods or from the monetary side.

The consequences of inflation are extremely damaging for the economy. In-

flation becomes stagflation when economic growth decreases or comes to a halt,

but inflation continues to rise.

If the state does not take measures to combat stagflation, this leads to defla-

tion.

Deflation, the opposite development to inflation, represents a reduction in the

supply of money in comparison with the supply of goods.

4. Нығайту:

Закрепление:

Write down the sentences or parts of sentences which describe:

– inflation;

– stagflation;

– deflation.

Translate the text into Russian.

ENQUIRES

Business transactions usually start with enquiries.

As a rule the prospective buyer gets the name and the address of the prospec-

tive seller either at an exhibition, from an advertisement in a newspaper, maga-

zine, and thanks to a television or radio commercial. All these channels of infor-

mation are very important.

Enquiries can be sent by mail, by telex or by fax. Sometimes enquiries can be

made orally, by telephone.

In the enquiry the prospective buyer states in what goods exactly he is inter-

ested and asks for details on the price and terms of sale.

Here is a specimen enquiry:

The Sales Department 12 May, 19..

Southern Importers Ltd.

Dane Street

Northam

Southampton S09 4YQ

Dear Sirs,

We are a large record store in the centre of Manchester and would like to know

more about the tapes and cassettes you advertised in this month’s edition of Hi

Fi News. Could you tell us if the cassettes are leading brand names, or made by

small independent companies, and if they would suitable for recording classical

music or only dictations and messages?

It would also be helpful if you could send us some samples.

If they are of the standard we require, we will place a substantial order.

We would also like to know if you are offerring any trade discounts.

We are looking forward to hearing from you in the near future.

Yours faithfully,

J. Allen

Director

4. Нығайту:

Закрепление:

I. Find the answers in the text.

1. With what formal letters do business transactions usually start?

2. How can a person or a company learn the name and address of the exporter?

3. How can enquiries be sent?

4. What statements, questions or requests do enquiries usually contain?

II. Sum up what the text says about enquiries in general.

OFFERS

After considering the enquiry for some time the prospective seller sends an

offer in reply.

The offer usually quotes the price and stipulates terms of delivery, terms of

payment, time of delivery and some other necessary details.

Here is a specimen reply-offer:

Mr. J. Allen 16 May 19…

Director

A.C. Records Ltd.

41 Broadway

Manchester M2 5BP

Dear Mr. Allen,

Thank you for your enquiry of 12 May in which you asked about the tapes we

advertised in this month’s edition of Hi Fi News.

The cassettes are ferrous based and high quality chromium dioxide which as you

know means they would be suitable for any type of recording. They are Kolby

products which is brand name you will certainly recognize. Our prices are low

and quite competitive as we are working on a small profit margin, therefore we

will not be offering any trade discounts on this consignment.

But we sell a wide range of cassettes and we enclose a pricelist giving you de-

tails of trade, quantity, and cash discounts on our other products.

We have sent, by separate post, samples of the advertised cassettes and other

brands we stock. We would urge you to place an order as soon as possible as

there has been a huge response to our advertisement.

Thank you for your interest and await your reply.

Your faithfully.

B. Lyndon

Southern Importers Ltd.

Encl. price-list

4. Нығайту:

Закрепление:

Find the answers in the text.

1. What information do offers usually give?

2. How did Mr. Lyndon mention the enquiry received?

3. What did Mr. Lyndon say about the quality of the cassettes?

4. Why did he say he could not give a discount?

5. What did he say about other products of the company?

PRICES AND TERMS OF DELIVERY

When sellers quote prices in their offers they usually state on what terms, at

this price, they will deliver the goods. The price will certainly depend on the terms

of delivery. The most popular terms of delivery in foreign business transactions are:

– fob (free on board);

– cif (cost, insurance and freight);

– с & f (cost and freight);

– for (free on rail).

If the goods are offered on fob terms the price will practically include the

cost of the goods and transportation expenses to the port of shipment.

If the goods are offered on cif terms the price will cover the cost of the

goods, insurance expenses and freight or transportation expenses, to the port of

destination. If the goods are offered on с & f terms the price will cover the cost of

the goods and freight to the port of destination. If the goods are offered on for

terms the price will include the cost of the goods and transportation expenses to

the railway station only. These terms are similar to fob terms. The only difference

is the mode of transportation. In case of fob terms the goods are shipped on board

ships. In case of for terms the goods are transported by railway.

Here are a few examples of how terms of delivery can be mentioned in offers:

– The price is USD 2,000.00per ton fob New York.

– The quoted price is GBP 1,200.00 each cif Murmansk.

– We can offer the goods at the price of GBP 78.00per metre с & f Liverpool.

– The goods are offered on a for basis.

4. Нығайту:

Закрепление:

Complete the sentences, as in the text.

1. When sellers quote prices in their offers they usually ...

2. The price will certainly depend on ...

3. The most popular terms of delivery in foreign business transactions are ...

4. If the goods are offered on fоb terms the price ...

5. If the goods are offered on cif terms the price ...

6. If the goods are offered on с & f terms ...

7. If the goods are offered on for terms ...

WOULD YOU LIKE

TO START A BUSINESS?

If you want to start a business, you are to know some definite information

about it. We suggest you to see how a company is formed from the very beginning.

A company can be also called a firm or a business. When it is producing goods or

trading, we say it is in business. A company which is just starting up is going into

business and a firm which stops operating goes out of business. If a firm becomes

bigger, it expands. The expansion means that a company will produce more goods

or sell more products. A manufacturer produces goods. They are its products.

When a manufacturing company expands, it means that it increases its production.

A company selling goods in large quantities (in bulk) is called a wholesaler.

A person or a company buying in bulk (wholesale) and selling goods in small

quantities is a retailer. Many local shops sell goods retail. Two or more companies which sell or manufacture the same product are competitors. They are in

competition and they compete for customers. To be ahead of its rivals the company must be competitive.

An area where there is a demand for certain goods is called a market. A company selling locally sells its goods in the local market. If a company sells its goods

at the same place where they are produced, it uses the home or domestic market. A

firm selling abroad is an exporter. It sells on the international or overseas market.

The goods it exports are exports. An importer buys goods abroad and imports

them into his own country.

4. Нығайту:

Закрепление:

Complete the sentences using the text.

1. A wholesaler is a person or a company selling ...

2. A retailer is a person or a company selling ...

3. A customer is a person ...

4. A competitor is a person or a company ...

Find the information containing in the text.

1. When a company is producing goods or trading, we say it is in business.

2. Any manufacturer always thinks about expansion of his company.

3. When a company expands, it increases its production.

4. When you sell retail, you sell more expensive.

5. Selling in bulk, you sell cheaper.

THE BUSINESS PARTNERSHIP

When a proprietor wants to expand the business, one way to do so is to form

a partnership, a business formed for profit by two or more co-owners. The rights

and duties of a partnership are regulated by laws of the state where it is formed

and by a legal agreement entered into by the co-owners. Usually an agreement

specifies the amount of money each is investing and the duties each partner as-

sumes. A partnership agreement also may provide for a “silent partner” who does

not take part in the management, but who invests money in the business.

The partnership has the advantage of pooling managerial talent. One partner

may be qualified in production, another in marketing. The partnership, like indi-

vidual ownership, is exempt from most of the reporting that the government re-

quires of corporations. Furthermore, it has a favourable tax position when com-

pared with the corporation. Federal taxes are paid by individual partners on their

share of earnings; beyond that the business is not taxed.

A major disadvantage of the partnership is that each member is liable for all

the debts of the partnership; the act of any partner is legally binding upon all the

others. If one partner takes a large amount of money from the business and

squanders it, the others must pay the dept. Partnerships suffer another major dis-

advantage: decision-making is shared. If partners have serious disagreements, the

business is bound to suffer.

Nevertheless, the partnership remains a vital part of the overall business

economy.

4. Нығайту:

Закрепление:

Answer the following questions.

1. What are advantages and disadvantages of a business partnership?

2. Compare a partnership with a sole proprietorship. What are principal simi-

larities and differences?

3. Which form of business organization would you choose? Why?

SUCCESS IN BUSINESS

For many companies “success” means constant growth and expansion.

The large corporation has grown to its present size in part because it has

found innovative ways to raise new capital for further expansion. Five primary methods used by corporations to raise new capital are:

Issuing Bonds. A bond is a written promise to pay a specific amount of money at a certain date in the future or periodically over the course of a loan, during which time interest is paid at a fixed rate on specified dates. Should the holder of the bond wish to get back money before the note is due, the bond may be sold to someone else. When the bond reaches “maturity”, the company promises to pay

back the principal at its face value.

Bonds are desirable for the company because the interest rate is lower than in most other types of-borrowing. Also, interest paid on bonds is a tax deductible business expense for the corporation. The disadvantage is that interest payments ordinarily are made on bonds even when no profits are earned. For this reason, a smaller corporation can seldom raise much capital by issuing bonds.

SALES OF COMMON STOCK. Holders of bonds have lent money to the company, but they have no voice in its affairs, nor do they share in profits or losses. Quite the reverse is true for what are known as “equity” investors who buy common stock. They own shares in the corporation and have certain legal rights including, in most cases, the right to vote for the board of directors who actually

manage the company. But they receive no dividends until interest payments are made on outstanding bonds. If a company’s financial health is good and its assets sufficient, it can create capital by voting to issue additional shares of common stock. For a large company, an investment banker agrees, to guarantee the purchase of a new stock issue at a set price. If the market refuses to buy the issue at a minimum price, the banker will take them and absorb the loss. Like printing paper money, issuing too much stock diminishes the basic value of each share.

ISSUNG PREFERRED STOCK. This stock pays a “preferred” dividend. That is, if profits are limited, the owners of preferred stock will be paid dividends before those with common stock. Legally, the owners of this stock stand next in line to the bondholders in getting paid. A company may choose to issue new preferred stock when additional capital is desired.

Borrowing. Companies can also raise short-term capital- usually working capital to finance inventories-in a variety of ways, such as by borrowing from lending institutions, primarily banks, insurance companies and savings-and-loan establishments. The borrower must pay the lender interest on the loan at a rate determined by competitive market forces. The rate of interest charged by a lender can be influenced by the amount of funds in the overall money supply available for loans. If money is scarce, interest rates will tend to rise because those seeking loans will be competing for funds. If plenty of money is available for loans, the rate will tend to move downward.

4. Нығайту:

Закрепление:

Answer the following questions.

1. What do many companies raise new capital for?

2. What methods of raising new capital do you know?

3. Why are bonds desirable for the company?

SAVINGS AND LOAN ASSOCIATIONS

Savings and loan associations (S & Ls) obtain funds primarily through sav-

ings deposits and time and checkable deposits. The acquired funds have tradition-

ally been used to make mortgage loans. S& Ls are the second largest group of fi-

nancial intermediaries, numbering in the USA around 2000. In the 1950s and

1960s, S & Ls grew much more rapidly than commercial banks, but when interest

rates climbed sharply from the late 1960s to the early 1980s, S & Ls encountered

difficulties that slowed their rapid growth. Because many mortgages are long-term

loans, with maturities in excess of 25 years, many in existence today were made

years ago when interest rates were substantially lower. When interest rates rose,

S & Ls frequently found that the income from their mortgages was well below the

cost of acquiring funds. Many of them began to suffer large losses; many have

gone out of business. Until 1980, savings and loan associations were restricted to

making mortgage loans and could not establish checking accounts. Their troubles

encouraged Congress to pass legislation in the early 1980s allowing them to offer

checking accounts, make consumer loans, and pursue many activities previously

restricted to commercial banks. In addition, they are now subject to the same re-

quirements as the commercial banks regarding deposits with the Federal Reserve

Banks. The result of this legislation is that the distinction between savings and

loan associations and commercial banks is being blurred, and these intermediaries

have become more competitive with each other.