§ 2. Functions:

• the gerund often functions in general statements as an uncountable noun with no article. It can also be replaced by it. Leading a team is a key management function. It is very important,

• sometimes the gerund functions as a countable noun which can be replaced by it (singular) or they (plural). Shaw often gave readings of his plays. They were very popular,

• we can use a gerund after determiners like a, the, this, a lot of and some, or after possessives and adjectives: Your quick thinking saved us all;

• the gerund also has some of the characteristics of a verb: e. g., it can be followed by an adverb or adverbial phrase: Working effectively is difficult. It can take an object: We risk losing our position as market leader. It can have a perfect form and even a passive: / am sorry for having wasted yourtime. I can't forgive myselfforhaving been taken by surprise.

§ 3. Use. The gerund can be used in the following ways:

• as a subject of a sentence when action is being considered in a general sense. Advertising in trade journals has created a lot of interest in our products;

• in short prohibitions: No smoking;

• in compound nouns: waiting list. The gerund here carries the main stress;

• as a complement of a verb: Her duty is handling problems with custo­mers.

Gerunds after prepositions. When a verb is placed immediately after a preposition the gerund form must be used: He is thinking of investing. What else can we do besides buying bonds?

• A number of verb + preposition/adverb combinations ("phrasal verbs") take the gerund. The most common are be accustomed to, be for/aga­inst, care for, give up, keep on, leave off, look forward to, put off, see about, take to, be used to. We are looking forward to hearing from you. He is used to controlling his company.

• The most important verbs followed by the gerund are: admit, antici­pate, appreciate, avoid, consider, defer, delay, deny, detest, disli­ke, dread, enjoy, escape, fancy = imagine, finish, forgive, imagine, involve, keep = continue, loathe, mean, mind = object, miss, par­don, postpone, practise, prevent, propose = suggest, recollect, re­member = recollect, resent, resist, risk, save, stop, suggest, un­derstand. She admitted taking the money.

• The gerund is also used after the expressions can't stand (= endure), can't help (= prevent/avoid), it's no use/good and after the adjecti­ve worth. It's no use arguing.

• Verbs + possessive adjective/pronoun object + gerund. Compare: He insisted on doing it. He insisted on my doing it. Verbs and expressi­ons which can take either construction are: dislike, dread, fancy, in­volve, like, mean, mind, propose, recollect, remember, resent, sa­ve, stop, suggest, understand, approve/disapprove of, insist on, it's no good/use, object to, there is no point in, what's the point of. Whats the point of trying so hard? What's the point of your trying so hard?

• 'Excuse', 'forgive', 'pardon' and 'prevent' are not followed directly by the gerund but take either possessive adjective/pronoun + gerund or pronoun + preposition + gerund: I can't prevent him spending his own money.

F.l. Identify all the gerund forms in the text "Effectiveness of Mone­tary Policy" and translate the sentences into Russian.

F.2. Choose a word from the box to complete the spaces in the artic­le. After that write down each '-ing' form into the appropriate column: the gerund or the present participle.

willing multiplying rising spending easing

slashing citing falling strengthening allowing

treating causing lending eversing

Bank of Japan Eases Monetary Policy

David Pilling, "Financial Times"

The Bank of Japan on Wednesday surprised markets by (1) ... monetary policy sharply, (2) ... uncertainty in Japan's financial markets and the pos­sible negative impact on the economy of the Sars crisis.

The central bank said it would raise the target for current accounts held at the central bank to ¥ 22,000 bn - ¥ 27,000 bn ($ 184 bn - $ 225 bn), from the previous level of ¥ 17,000 bn — ¥ 22,000 bn. Under the bank's qu­antitative (3) ... policy, begun in March 2001, the BoJ has flooded the mar­ket with enough liquidity to drive interest rates down to virtually zero.

Because of "uncertainty regarding the economic and financial situation, the bank thought it appropriate to raise the target balance of current acco­unts held at the bank to maintain financial market stability, thereby (4) ... support for economic recovery," the BoJ said in a statement.

Analysts said the announcement showed that Toshihiko Fukui, who be­came BoJ governor in March, was (5) ... to be more aggressive than his predecessor, Masaru Hayami. In his short time at the helm, Mr. Fukui has called an unprecedented emergency meeting, raised the amount of shares the BoJ can buy from banks and initiated a scheme for the bank to buy asset-backed securities from small and mecjium companies.

Even so, Mamoru Yamazaki, chief economist at Barclays Capital, said the policy moves would have almost no effect on the real economy or on prices, which have been (6) ... for seven years. He said the supply of more liquidity would, however, reassure the edgy financial markets, which have been battered by a sharply (7) ... stock market.

On Wednesday, the Nikkei average responded to the news by (8) ... 2.9 per cent to 7,831.4. Bank shares, which have been battered recently, rallied sharply. Of the big four, Mizuho rose 8.5 per cent, UFJ 11.6 per cent, Sumitomo Mitsui Financial Group 14 percent and Mitsubishi Tokyo Financial Group 14.1 percent.

The Bq] also signalled its intention to help in the workout of bad loans, which have paralyzed the banks, by (9)... loans to the Industrial Revitali-zation Corporation (IRC) as collateral in its money market operations. The IRC, which begins business next month, is due to buy up to ¥ 10,000 bn of loans owed by weak, but salvageable, companies in an effort to get them off banks' books and clear them through the market.

The BoJ has long argued that its monetary policy cannot work properly unless commercial banks are restored to health, (10) ... them to fulfill their function of (11) ... base money into credit. Risk averse-banks have been (12)... their loan books in an attempt to bolster their precarious capital-adeq­uacy ratios, (13)... bank (14) ... to fall for more than 60 straight months.

Mr. Yamazaki said that, until bad loans had worked through the system, BoJ policy was likely to prove impotent in terms of (15)... deflation. Only if the government asked the bank to directly fund more (16) ... could the price fall be halted he said. "Without such a big policy change, it's very difficult to alter the current price situation."

The gerund	The present participle

G. Speak up

G.l. Answer the questions.

1. Who controls monetary policy in Russia?

2. What are particular features of monetary policy in Russia?

G.2. Analyze current economic conditions and formulate monetary policy for your country.

H. Reading the English newspaper

H.l. Read the article and do the exercises.

Restoring the Fiscal Option

"The Economist"

Governments seem unable to use budgets to temper recessions. That is a pity.

The traditional Keynesian remedy for recession — deficit spending, and plenty of it -- went out of fashion years ago. As it had come to be applied, it deserved to. Many governments were using budget deficits not merely to cushion recessions but, fatally, to boost economic growth year in year out. That did not work, for the result was chronic inflation and higher taxes. But such past abuses should not blind governments to the role that budge­tary policy can play in tempering the economic cycle. The fiscal option is often useful-and sometimes vital.

Yet politicians everywhere, it seems, are intent on denying themselves this option. Europe's governments were so worried that their new single currency would promote fiscal irresponsibility that they devised a "stabi­lity pact," which sternly discourages deficit spending. In the United Sta­tes, nine months after the recession began, Republicans and Democrats are quarrelling over which ill-conceived measures to include in their stimulus package — as if to prove right of those who say that fiscal expansion always comes too late to be of any use. And in Japan, where fiscal stimulus has been tried and tried, the policy has apparently been a total failure. Go­vernments of the world's big economies have either rejected the idea of active fiscal policy, or are proving that it would be better if they had.

Money Has Its Limits

This is a dangerous state of affairs. Monetary policy cannot carry the whole burden of stabilizing economies, especially when it has succeeded in driving inflation right down. Low inflation means low interest rates over the course of the cycle; and, since interest rates cannot fall below zero, they cannot then be cut by much should recession strike. The contribution that fiscal policy can make to cushioning the economy in a downturn may then become crucial.

However desirable this cushioning might be, does Japan not show that fiscal policy is impotent in the face of powerful deflationary forces? Actu­ally, no. Japan used fiscal policy hesitantly and incompetently during the 1990s. When a big budget stimulus was briefly delivered, in 1995, the eco­nomy picked up; but fiscal policy then turned contractionary again. Bud­gets have not been used in a sustained and determined way to spur reco­very. Now the government fears adding to its debt burden (the result of years of stagnation and contraction, note, not of years of seriously at­tempted reflation). The fear is misplaced. Fiscal reflation combined with monetary easing — "monétisation" of the deficit — would increase debt held by the central bank, not by the public. Even now, then, it is neither too late nor too costly for Japan to use fiscal policy.

What about the shambles over America's economic-stimulus bill? Does that not prove the folly of fiscal activism? It shows the dangers, no questi­on. If fiscal policy is to play its part in softening a recession, without je­opardizing the goal of budget balance over the longer term, Congress must be ready, when circumstances require, to pass simple measures that are po­litically undemanding and plainly temporary, and to do it quickly. With urgency at a premium, bigger one — off tax rebates, for instance, would make better sense than a bitterly contested rejigging of taxes and spen­ding, with bad long-term implications for the budget whoever wins. Is it too much to ask that Congress "prioritie": deal with the recession first, and argue about long-term taxes and spending later?

Let us hope the politicians can rise to the challenge. If low inflation is here to stay, governments need to learn to use fiscal policy more intelli­gently. Japan shows how bad the alternative can be.

H.2. Answer the following questions.

1. Why did the traditional Keynesian remedy for recession go out of fashion?

2. Why did Europe's governments devise a "stability pact"?

3. Why can't monetary policy carry the whole burden of stabilizing eco­nomies?

4. What would increase the debt held by the central bank?

5. Why do governments need to learn to use fiscal policy more intelli­gently?

H.3. Decide whether these statements are True (T) or False (F).

1. Budgetary policy can play an active role in tempering the economic cycle.

1. Japan failed to use fiscal stimulus effectively.

2. If recession strikes interest rates will be cut by much.

2. The congress must be ready to pass undemanding and temporary me­asures if fiscal policy jeopardizes the goal of budget balance.

3. Japan managed to use fiscal policy with careful consideration.

H.4. Match up the words and definitions and translate them into Rus­sian:

1. reflation; a) to urge or encourage forcefully to work harder;

2. contractionary; b) great disorder, (as if) the result of destruction;

3. to spur; c) an amount of money that is paid back to you when you

have paid too much;

4) to pick up; d) policy of increasing the amount of money being used

in a country, usually leading to more demand for goods and more industrial activity;