Money as a medium of exchange

Money is a medium of exchange in economy. It is a means of payment for goods and services and in settlement of debts. Money is also a standard of value for measuring the relative economic worth of different goods and services. The price of the commodity is the number of units of money required to buy this commodity. The main functions of money are a medium of exchange and the measure of value. Without the use of money, trade would be reduced to barter, that is to direct exchange of one commodity for another. Barter trade was the means used by primitive peoples, and it is still practiced in some parts of the world. In a barter economy, a person having something to trade must find another who wants it and has something acceptable to offer in exchange. In a money economy, the owner of a commodity may sell it for money and buy anything he wants for this money. So money may be regarded as a keystone of modern economic life.

Types of Money

The most important types of money are commodity money, credit money, and fiat money. The value of commodity money is about equal to the value of the material contained in it. The principal materials used for this type of money have been gold, silver, and copper. Credit money are documents with promises by the issuer to pay an equivalent value in the standard monetary metal. Fiat money is paper money the value of which is fixed by government. Most minor coins in circulation are also a form of fiat money, because the value of the material of which they are made is usually less than their value as money.

Both the fiat and credit forms of money are generally made acceptable through a government decree that all creditors must take the money in settlement of debts. Fiat money in the form of banknotes is referred to as legal tender.

Banknotes are usually made from special high-quality paper, with watermarks, metallic strips, and other features against forgery. Highly sophisticated printing techniques are used, and banknote designs have elements that are hard to copy. Fronts and backs of notes are printed separately, and serial numbers are added later.

Exercise 21: Translate the sentences into Russian:

a) Passive Infinitive in Complex Object and Complex Subject

1. All product prices are expected to be raised due to the new tax.

2. Lead (свинец) and zink are known to be found in the same ore.

3. Economists consider an alternative to finding a job to be provided by unemployment benefits.

4. I n many less developed countries, most food has been found to be pro­duced within the family.

b) Perfect Infinitive in Complex Object and Complex Subject

1. Microeconomics is said to have offered a thorough analysis of individ­ual decisions about particular commodities.

2. Every firm is known to have tried to reduce the use of oil-based prod­ucts in the 1970s when the price of oil increased six times.

3. Nationalized industries are said to have become the most important source of national income.

4. They believe the firm to have leased all its capital equipment.

c) Perfect-Passive Infinitive in Complex Object and Complex Subject

1. Advertising is assumed to have been made the most important tool of selling commodities.

2. Economists believe the US grain market to have been strongly affected by government agricultural policies and by competition inside and out­ side the country.

1. All the capital equipment of the firm is believed to have been leased.

2. Most decisions in Soviet block countries are known to have been made centrally by the government.

d) Progressive Infinitive in Complex Object and Complex Subject

1. We know the government to be considering the necessity of cutting tax­es in industry.

2. Economic conditions are assumed to be changing all the time.

3. The population of Russia has been found to be decreasing at a rapid rate.

4. The GDP was reported to be constantly falling in Russia.

5. Chemical firms are known to be working at substitutes for oil inputs.

e) Complex Infinitive with modal verbs

1. The work of a farm worker and a nurse are very different, but each can be measured in terms of payment.

2. Tax revenue could have grown with lower tax rates.

3. This financial capital could have been used elsewhere.

4. The government must be working at a scheme to stimulate domestic investment.

Exercise 22: Translate the sentences into Russian, paying attention to incomplete sentences:

3. A public good is a good that, even if consumed by one person, can still be consumed by other people.

4. Although different, all markets perform the same economic func­tion.

5. If provided with the necessary resources, an enterprise can increase its output.

6. When used, money makes an economy more efficient.

7. Although of high quality, the product is not in great demand due to its high price.

8. This enterprise may earn high profit, if managed well.

Exercise 24: Translate the sentences with complex Infinitive constructions into Russian.

1. In some countries, such as post-communist Eastern Europe, foreign currency is known to be used alongside domestic currency.

2. If properly kept, accounts could have provided valuable financial in­ formation necessary to make decisions about the future of the com­pany.

3. Capital, or property, should be distinguished from income received from that property during a given period.

4. The US administration is reported to be making efforts to eventually eliminate agricultural subsidies.

5. We know the exchange rate ceiling to have been imposed temporarily by the Central Bank of Russia for the period of reform in the mid-to-late 1990s.

6. The exchange of commodities between European countries is believed to have become more convenient and rapid due to Euro. Nowadays accounts for international trade are supposed to be kept in Euro rather than in national currencies.

7. The Central Bank must be keeping the exchange rate at a low level, or it would be much higher at present.

8. Enough essential foods must have been stored by the government to meet the needs of population in case of emergency (в случае крайней необходимости, в чрезвычайных обстоятельствах).