5. Explain the meaning of the following words:

salary, the homeless, fee, the unemployed, to lend, to borrow, loan.

6. Answer the questions

1. Do you study Finance at your university?

2. Is finance one of your favorite subjects?

3. Are you going to major in finance?

4. Do you regard financial security as the most important thing in family finances?

5. Do you know how to handle your finances?

6. Do you live within your means? Do you sometimes have to borrow mon­ey?

7. Do you have the means to buy things you need?

8. Do you agree that testing is the usual means by which students' progress is measured?

9. Do small businesses have the means to develop and grow fast?

10. Do many people in Russia have bank accounts now?

11. What accounts are most popular?

12. Do you think it is easy to open a bank account?

13. Is it convenient to have a bank account?

14. Does a current account pay an interest? What about a saving account?

15. Is the idea of "living on credit" popular in Russia?

16. Is consumer credit used by the general public in Russia?

17. What purchases can be financed by consumer credit? How?

7. Translate into English.

1. Он получает доход от своей работы.

2. Вы получаете доход от средств, которые вы держите в банке?

3. Он не получает доход от сдачи в аренду своей собственности.

4. Дает ли вам доход вложение средств в акции?

8. Develop the following ideas. Make use of the words from the text.

1. People earn money in different ways.

2. The worst-off people are the unemployed, the homeless, and people liv­ing at a subsistence level.

9. Read the text and fill each gap with a suitable word from the list: sold, pension, costs, poverty, invested, contrast, on credit, unemployment, income.

Do you agree that there is a contrast between wealth and poverty in many countries of the world?

Our way of life is closely linked to our economic circumstances. In my retirement, I really have a very good life. When I retired I... my big house and bought a very small cottage. I ... the money in securities and that gives me a large part of my .... The rest comes from my ... and savings. So I'm comfort­ably off.

In many countries there is a ... between the wealth of a small number of people and the ... of the masses. It's very difficult to manage if you are poor because everything ... much more. You have to buy .... The more things you buy on credit, the more you have to pay for them. The poorest seem to suffer most in periods of recession in which output falls and ... rises.

Words and word combinations you may need

to link — связывать

contrast — противоположность, кон траст

retirement — выход на пенсию

(the) rest — остаток, остальное

to manage - справляться, управлять

to be comfortably off — быть хорошо обеспеченным

to suffer — страдать

recession — спад (деловой активности)

10. Get into pairs and discuss with your partner how people can earn money. Give examples from your family's life, the life of your friends and relatives.

11. Sum up the text “Personal Finances” and work with the situation.

Situation: You and your mate are going to get married. You want a flat, furniture and a TV. You are students and your families are not well off. Dis­cuss with your mate how to solve the problems, consider the following: The flat - borrowing some money from a bank; getting a mortgage to buy a flat; renting a flat. The other things - buying furniture by hire purchase.

12. Read the text “Personal Finances” once more and give answers to the questions.

1. What do people regard as the most important thing in family life?

2. What do people need for day-to-day living?

3. Why do some people live on credit?

4. How do people earn money?

5. Who are the worst-off people?

6. To what people are banks unwilling to lend money?

Personal Expenditure

The modern market economy is populated by three types of eco­nomic agents, whose interaction constitutes economic activity: consumers, producers, and the government. The main purpose of the econ­omy is to produce goods and services for the satisfaction of the needs of consumers.

Consumers, typically representing households, spend their income to buy consumer goods and services or to save.

How does a consumer distribute the income earned by him amongst a variety of goods and services offered in the market?

There are different factors affecting his decisions. For instance, a fall in the price of a good or service will increase his consumption of it, while a rise in its price will have the opposite effect.

Then a rise in his real income will naturally result in an increased consumption of goods and services, a fall in real income having the opposite effect¹.

The pattern of consumer expenditure is also influenced by tastes, consumer preferences and family circumstances. As incomes rise, ex­penditure on basic goods will form a smaller proportion of total spend­ing. The terms "necessities" and "luxuries" are of little use in analyzing consumer expenditure because what are today's luxuries will probably be tomorrow's necessities.

It should be stressed here, that some customers, however, want to have high-quality products even when quality means a higher price. Some other customers prefer foreign products.

The amount spent on goods and services and changes in this vari­able have a big impact on the level of economic activity: the increase in consumer spending creates new employment opportunities and causes better living standards.

Note on the Text

¹ ... a fall in real income having the opposite effect - ... при этом падение реального дохода будет иметь обратный результат.