Vocabulary

bill n – счёт; вексель; (AmE) банкнота

utility ~ счёт за коммунальные услуги

treasury ~ – казначейский вексель

cost n (syn. expenses, expenditures) – издержки, затраты, стоимость

historical ~ – цена приобретения, уплаченная за активы в период их первоначального приобретения или строительства

replacement ~ – восстановительная стоимость

exchange n – средство, обмен

medium of ~ – средство международных расчетов

forgone interest – упущенные проценты

fee n – вознаграждение; денежный взнос

monetary adj – денежный

~ base–денежная база (часть денежной массы, которая признаётся в качестве резервов банковской системы)

~ policy–денежно-кредитная политика

money n – деньги

precautionary demand for ~ – спрос на деньги для непредвиденных расходов

speculative demand for ~ – спекуляционный спрос на деньги

transactions demand for ~ – спрос на деньги для совершения сделок

~ multiplier – денежный мультипликатор

fiat/token ~ – неразменные бумажные деньги, денежные знаки

IOU (I owe you) ~ – деньги, которые будут получены по необеспеченному обязательству платежа

securities n–ценные бумаги

government ~ – государственные ценные бумаги

tender n–тендер, предложение

legal ~ –законное средство платежа ( виды денег, которые кредитор обязан по закону принимать при погашении долга)

velocity n – скорость обращения денег

withdrawal penalties – несение убытков в результате отвлечения капитала

Glossary

• Medium of exchange is the most important function of money. This means that money is widely accepted in payment for goods and services.

• Unit of account is another important function of money. Money is used to measure relative values by serving as a common yardstick for valuing goods and services.

• Store of value is the ability of money to hold its value over time. Money is said to be highly liquid, which means it is readily usable in exchange.

• The demand for moneyin the Keynesian view consists of three reasons why people hold money: (1) Transactions demand is money held to pay for everyday predictable expenses. (2) Precautionary demand is money held to pay unpredictable expenses. (3) Speculative demand is money held to take advantage of price changes in nonmoney assets.

• An excess quantity of money demanded causes households and businesses to increase their money balances by selling bonds. This causes the price of bonds to fall, thus driving up the interest rate.

• An excess quantity of money supplied causes households and businesses to reduce their money balances by purchasing bonds. The effect is to cause the price of bonds to rise, and, thereby, the rate of interest falls.

• Monetarism is the simpler view that changes in monetary policy directly change aggregate demand and thereby prices, real GDP, and employment. Thus, monetarists focus on the money supply, rather than on the rate of interest.

• Monetary base is the stock of an economy’s most liquid financial assets.

3.6. Fiscal policy

The only good budget is a balanced budget.

Adam Smith of Glasgow (1776)

DISCOVERING CONNECTIONS

In the early 1980s, under President Ronald Reagan, the federal government reduced personal income tax rates by 25 percent. The goal was to expand aggregate demand and boost national output and employment in order to end the recession of 1980-1981. During the 1996 presidential campaign, one of President Bill Clinton's programs was supposed to stimulate economic growth by boosting government spending on long-term investment. This investment program included highways, bridges, fiber-optic communications networks, and education.

Examples of what are both Reagan's tax cut and Clinton's investment spending programs? Is it one of the issues that touch everyone's life?

Does an increase in government spending or a tax cut of equal amount provide the greater stimulus to economic growth? Can Congress fight a recession without taking any action? Why did Ronald Reagan think the federal government could increase tax revenues by cutting taxes?

READING

Text 1

Scan the text and find definitions of the following terms: fiscal policy, deficit, surplus. Read the text and do the tasks that follow.