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МИНИСТЕРСТВО ОБРАЗОВАНИЯ И НАУКИ РОССИЙСКОЙ ФЕДЕРАЦИИ

Федеральное агентство по образованию

Санкт-Петербургский государственный университет сервиса и экономики

Кафедра «Межкультурные коммуникации»

Английский язык

Ознакомительное чтение

ПРАКТИКУМ

для студентов 1 и 2 курса экономических специальностей

Санкт-Петербург

2009

Одобрены на заседании кафедры «Межкультурные коммуникации», протокол №3 от 28.10.2008 г.

Утверждены УМСС 080502.65 «Экономика и управление на предприятии сферы сервиса», протокол №4 от 8.04.2009 г.

Стерина М.Б. Английский язык. Ознакомительное чтение. Практикум для студентов 1 и 2 курса экономических специальностей / М.Б. Стерина, Л.С. Маслова, Н.В. Тищук. – СПб.: Изд-во СПбГУСЭ, 2009. – 27 с.

Настоящий практикум предназначен для студентов I-II курсов экономических специальностей. Его задача способствовать развитию навыков ознакомительного чтения по изучаемой студентами специальности. Ознакомительное чтение предполагает общий охват содержания конкретной статьи, умение выделить в прочитанном материале проблемы и пути их решения. Материалом практики послужили статьи, публикуемые на сайте.

Рекомендуется для студентов СПбГУСЭ, а также для всех желающих повысить свой уровень владения английским языком в области экономики. Может быть использован как для занятий под руководством преподавателя, так и для самостоятельной работы.

Составители: ст. преп. М.Б. Стерина;

ст. преп. Л.С. Маслова;

асс. Н.В. Тищук

Рецензент: доц. М.А. Никитина

© Санкт-Петербургский государственный университет

сервиса и экономики

2009 г.

Оглавление

МИНИСТЕРСТВО ОБРАЗОВАНИЯ И НАУКИ РОССИЙСКОЙ ФЕДЕРАЦИИ 1

Ознакомительное чтение 1

для студентов 1 и 2 курса экономических специальностей 1

оглавление 3

1. French economic changes ahead 4

2. Zimbabwe's $10m banknotes 6

3. China economic growth 7

4. BA and Virgin to pay for price fixing 9

5. Teacake wrangle 11

6. Truckers strike worldwide 13

7. Germany, Liechtenstein in tax row 16

8. Commodities prices fall 18

9. Tax System in Russia 20

10. Monetary and Fiscal Policy 22

11. Monetary Policy 25

Список литературы 27

1. French economic changes ahead

The economy is one of the most important and urgent issues for Nicholas Sarkozy, France's new President. He focussed on change during his election campaign, but trade unions are expected to strongly disagree with some of the changes he is planning.

There's no doubting the scale of the economic problems facing Nicholas Sarkozy. France's unemployment rate hasn't fallen below 8 percent in a quarter of a century and its economic growth rate during 2006 was the slowest of any nation in the European Union, except Portugal. But the new President has promised change.

He wants to make it easier for businesses to hire and fire workers. Anyone who rejects a job offer will lose their unemployment benefit. The civil service will be slimmed down to help fund big tax cuts for both businesses and individuals. And any time the French work above the thirty-five hour week will be completely tax free.

These measures won't go down well with trade unions – who in the past have organised campaigns of open defiance to force French presidents with plans for painful reform to back down. But Mr. Sarkozy has made it an election pledge that unions will no longer be able to bring the country to a standstill. Workers in key areas like public transport will face new requirements to provide minimum levels of service even during strikes. The unions may not like it – but the new President's entire programme of reform depends on his winning any standoff.

a quarter of a century

twenty-five years – a century is one hundred years

hire and fire

employ and sack or dismiss from a job, e.g. because of poor work, bad behaviour or lack of money within the business

unemployment benefit

money that's paid to people to live on until they find a job

slimmed down

reduced, here, made up of a smaller number of people

won't go down well

will not be popular, seen as positive, easily accepted

open defiance

obvious disobedience, very public refusals to cooperate

to back down

to change their minds, discontinue their plans

to bring the country to a standstill

to completely stop the country from functioning normally

reform

planned changes for improvement

standoff

a tense time during which all negotiations have come to a stop and neither side will compromise

Answer the questions:

  1. On what did Nicholas Sarkozy focussed during his election campaign?

  2. What was the economic growth rate during 2006?

  3. What has the new President promised?

  4. Who will lose the unemployment benefit and why?

  5. And what will be with the French work above the thirty five hour week?

  6. What measures has Mr. Sarkozy taken that unions will no longer be able to bring the country to a standstill?

Find Russian equivalents to the following expressions from the text:

hire and fire, unemployment benefit, open defiance, to bring the country to a standstill.

Translate the following passage.

There's no doubting the scale of the economic problems facing Nicholas Sarkozy. France's unemployment rate hasn't fallen below 8 percent in a quarter of a century and its economic growth rate during 2006 was the slowest of any nation in the European Union, except Portugal. But the new President has promised change.

2. Zimbabwe's $10m banknotes

Zimbabwe's central bank is introducing new higher denomination banknotes today in an effort to ease the critical shortage of cash in the country. Zimbabwe's economic decline for the past eight years has caused annual inflation to be in excess of 50,000%.

The introduction of the new banknotes – or "bearer cheques" as they're officially called – is a further attempt to stabilise the Zimbabwean economy. There have been long queues every day at banks as people have struggled to withdraw cash.

The government's only response is to print more money, and that's seen as the main reason for the hyper-inflation. There have been no official inflation figures published for the past three or four months.

Zimbabwe's Reserve Bank Governor, Gideon Gono, has called on the business community not to increase prices every time new measures are taken to adjust the currency.

The new higher denomination banknotes are certain to cause more confusion, and they may only bring short-term relief. In the meantime, many people have become dependent upon imported goods, there are still severe shortages of fuel, and power supplies remain erratic.

a further attempt to stabilise

another step/measure to try to stop the decline of

struggled to withdraw cash

spent a lot of time in the queues to take out money from the banks

hyper-inflation

a very high continuous increase in prices

called on

asked, encouraged

to adjust the currency

here, to introduce new banknotes to improve the money situation

higher denomination

worth more money

are certain to cause more confusion

will definitely make the situation where people don't understand what is going on even worse

bring short-term relief

improve the situation for a short period of time

imported goods

goods produced abroad and brought into the country

power supplies remain erratic

sometimes electricity is available and sometimes it's not

Answer the questions:

  1. Why is Zimbabwe's central bank introducing new higher denomination banknotes?

  2. What has Zimbabwe's economic decline for the past eight years caused?

  3. How are the new banknotes officially called?

  4. What is the main reason for the hyper-inflation?

  5. On what has Zimbabwe's Reserve Bank Governor, Gideon Gono, called the business community?

  6. What can the new higher denomination banknotes cause?

Find Russian equivalents to the following expressions from the text:

to adjust the currency, a further attempt to stabilize, to ease the critical shortage of cash, economic decline, annual inflation, to withdraw cash.

Translate the following passage.

The new higher denomination banknotes are certain to cause more confusion, and they may only bring short-term relief. In the meantime, many people have become dependent upon imported goods, there are still severe shortages of fuel, and power supplies remain erratic.

3. China economic growth

China should move faster on opening its financial markets for the sake of its economic growth and stability, US treasury secretary Henry Paulson said on Thursday in a speech to business leaders in Shanghai.

China's well on the road to moving from a state controlled economy to a market driven one but the US treasury secretary says it needs to speed up reform in some areas. Henry Paulson told an audience in Shanghai that reforming the financial and banking system would be the only way to ensure that China's economic miracle is sustainable over the long term.

The country's success is built on low cost manufacturing but Mr Paulson says if it wants to offer more profitable goods and services then money needs to move more freely with fewer government controls. Despite extensive reforms China's banks are still state-owned. They're bureaucratic and unwilling to take risks. So they're unlikely to lend to new companies with innovative and potentially profitable ideas.

With the economy growing at 10 percent a year Mr Paulson said it is better to implement reforms during periods of economic strength rather than wait for things to go wrong and then try and fix them. The Chinese leadership recognises that the financial system here needs a lot of work. Mr Poulson's speech will be viewed as a friendly nudge in that direction. He's making good on his promise that the United States will no longer lecture China but work alongside it as it attempts to reform its economy.

well on the road

steadily moving (towards a goal), making good progress

to speed up reform

introduce positive changes more quickly

sustainable over the long term

able to continue for a long time

profitable

making money by selling goods or services

bureaucratic

involving a lot of complicated official rules and processes

unwilling to take risks

not wanting to do something because you know it may have bad results

innovative

new, different and better than what existed before

to implement reforms

to make, or introduce improvements

nudge

a gentle attempt to persuade or encourage someone to take a particular action

making good on his promise

keeping his promise, doing what he has promised to do

Answer the questions:

  1. For what should China move faster on opening its financial markets?

  2. What does the China’s economy need by the words of the US treasury secretary?

  3. Why is so important to reform the financial and banking system?

  4. On what is the country’s success built?

  5. Why China’s banks despite extensive reforms are still state-owned?

  6. What does the Chinese leadership recognize?

Find Russian equivalents to the following expressions from the text:

to speed up reform, sustainable over the long term, to implement reforms, to make good on its promise.

Translate the following passage.

The country's success is built on low cost manufacturing but Mr Paulson says if it wants to offer more profitable goods and services then money needs to move more freely with fewer government controls. Despite extensive reforms China's banks are still state-owned. They're bureaucratic and unwilling to take risks. So they're unlikely to lend to new companies with innovative and potentially profitable ideas.

4. BA and Virgin to pay for price fixing

Two airlines – British Airways and Virgin Atlantic – have agreed to pay a total of $200m in compensation in a row about price fixing on transatlantic routes. Individual passengers will be eligible for refunds of around $15 a flight.

The payout aims to settle a lawsuit brought on behalf of tens of thousands of passengers who claimed they were overcharged on transatlantic flights between August 2004 and March 2006. It follows last year's decision by regulators on both sides of the Atlantic to fine British Airways a total of 500 million dollars for colluding with Virgin Atlantic on the level of fuel surcharges. These are supplements to normal ticket prices to cover rising aviation fuel costs. Virgin escaped penalty by the regulators because it had volunteered the information that exposed the price fixing.

But both airlines have faced the wrath of passengers, who mounted a class action lawsuit before the US courts seeking compensation. The payout just agreed mainly relates to American passengers. The law firm that fought the case in the US is thinking of starting a similar action in the British courts seeking compensation for UK passengers. The settlement for American passengers allows them to claim a rebate for a third of the cost of the fuel surcharges – about fifteen dollars a flight.

Allegations of collusion between airlines go much wider than BA and Virgin. They are among fifteen airlines currently being investigated by European Union regulators for fixing freight rates for goods transported by air.

The payout aims to settle a lawsuit

this large sum of money will be paid to passengers so they stop asking a court to take measures against the airlines

overcharged

made to pay too much

colluding

acting together – secretly and/or illegally – in order to deceive or cheat someone

supplements

here, extra money that you pay after you buy the ticket (because fuel costs have gone up)

exposed the price fixing

showed to the public that the airlines had agreed to act together to keep the prices high

wrath

extreme anger

settlement

agreement (about something they couldn't agree on before)

to claim a rebate

to ask to be paid back

investigated

carefully looked into, examined

freight rates

prices for transporting goods, not people

Answer the questions:

  1. About what have two airlines agreed?

  2. What did tens of thousands of passengers claim?

  3. Why do the airlines need supplements to normal ticket prices?

  4. Why did Virgin escape penalty?

  5. What does the settlement for American passengers allow?

  6. How many airlines are investigated by European Union regulators?

Find Russian equivalents to the following expressions from the text:

the payout aims to settle a lawsuit, to be overcharged, supplements, the wrath of passengers.

Translate the following passage.

But both airlines have faced the wrath of passengers, who mounted a class action lawsuit before the US courts seeking compensation. The payout just agreed mainly relates to American passengers. The law firm that fought the case in the US is thinking of starting a similar action in the British courts seeking compensation for UK passengers.

5. Teacake wrangle

The European Court of Justice has ruled that the British retailer, Marks and Spencer, can claim back £3.5m in overpaid VAT on teacakes. For years, the British authorities defined a chocolate teacake as a biscuit – which attracts a sales tax – rather than a cake, which does not. So when is a cake not a biscuit?

Teacakes are not made out of tea but many British people enjoy eating them while drinking a cup of tea. The chocolate teacake, which has been discussed by international lawyers for more than a decade now, is made by a leading supermarket chain, Marks and Spencer. It's got a shortbread base, a marshmallow type filling and a chocolate shell. So the key question has been – does that make it a cake or a biscuit?

Long ago, the British tax authorities decided it was a biscuit, a luxury food eligible for sales tax. The supermarket maintained it was a cake, a basic food which is exempt from tax. The argument's been through many courts and the latest ruling from the European Court of Justice seems to come down on the cake side of the argument. Marks and Spencer should get a tax refund, said the judges.

But it's not over yet. The European Court says – ultimately, it's for the British authorities to decide the matter, meaning it's now likely to be discussed by Britain's highest court, the House of Lords. Marks and Spencer gave the decision a cautious welcome; in the meantime it continues to sell the teacakes and its customers can go on enjoying them regardless of the bitter legal arguments that they've caused.

a leading supermarket chain

a number of popular, profitable supermarkets located in different areas, towns or even countries that have the same owner and sell the same goods

shortbread

a type of sweet biscuit made with a lot of butter

marshmallow

a confection made from syrup, sugar, gelatine and albumen (i.e. uncooked whites of eggs) beaten to a soft consistency

a luxury food

a type of food that people consider to be a delicacy, is expensive but not essential

maintained

said all the time, insisted

is exempt from tax

should not be taxed by law, is not eligible for sales tax

to come down on the cake side of the argument

to agree that a teacake is a cake after all

a tax refund

the extra tax that they have paid to be returned/paid back to them

gave the decision a cautious welcome

said the decision was right, however they were not sure if it would not change in the future

regardless of the bitter legal arguments

whether or not courts will continue to (angrily) discuss what a teacake is

Answer the questions:

  1. What has the European Court of Justice ruled?

  2. When is a cake not a biscuit?

  3. By what chain is the chocolate teacake made?

  4. When did the British tax authorities decide it was a biscuit?

  5. What should Marks and Spencer get?

  6. Does it continue to sell the teacakes in the meantime?

Find Russian equivalents to the following expressions from the text:

shortbread base, a luxury food, a leading supermarket chain, regardless of the bitter legal arguments.

Translate the following passage.

Long ago, the British tax authorities decided it was a biscuit, a luxury food eligible for sales tax. The supermarket maintained it was a cake, a basic food which is exempt from tax. The argument's been through many courts and the latest ruling from the European Court of Justice seems to come down on the cake side of the argument. Marks and Spencer should get a tax refund, said the judges.

6. Truckers strike worldwide

Thousands of lorry drivers around the world are on strike in protest at rising fuel prices. Protests are taking place in Spain, Malaysia, South Korea and the UK. In Argentina food retailers have warned of shortages due to disruption caused by truckers.

In Spain, about 75,000 lorry drivers have been on strike since Sunday night and more than 70 have been arrested. The Spanish government has promised zero tolerance for any violence by the drivers, following a series of incidents which included an attack on a trucker who broke the strike. That attack left him with 25% burns to his body.

In Malaysia, security has been stepped up in the capital Kuala Lumpur for a rally the opposition hopes will bring more than 20,000 people onto the streets. Oil prices have risen by about 40% since the start of the year to an all-time high of more than a $139.

Truck drivers are also on strike in South Korea, affecting operations at major ports. They're demanding cuts in energy costs or an increase in transport fees as a result of a more than 30% increase in the price of diesel since the beginning of the year.

In Britain, fuel supplies to around 900 Shell petrol stations across the country stopped early on Friday because of a strike by tanker drivers employed by two haulage companies. The drivers have also set up picket lines outside a number of oil terminals.

And in Argentina, truck drivers are protesting against a protest. They say demonstrations by farmers are preventing them from working. The farmers have been blocking roads for the past three months in a dispute with the government over export taxes.

zero tolerance for any violence

when any use of physical force to injure somebody or damage something, even if not very serious, is treated as unacceptable and punished severely

broke the strike

continued to work despite the fact that most drivers have refused to work as a protest (here, against rising fuel prices)

security has been stepped up

more precautions have been taken (to keep somebody or something safe from attack or danger)

an all-time high

the highest they have ever been

affecting operations

here, stopping the ports from working normally

tanker

here, a vehicle built to carry liquid or gas

haulage

the business of moving goods by road or railway

set up picket lines

when people, such as striking workers, show their protest by standing in lines outside buildings to try to prevent other workers from going inside

a dispute

here, a prolonged disagreement between the government and workers involving a strike

export taxes

taxes that must be paid when selling goods abroad

Answer the questions:

  1. Why are thousands of lorry drivers around the world on strike?

  2. Where are protests taking place?

  3. What has the Spanish government promised?

  4. Where has security been stepped up?

  5. How have oil prices risen since the start of the year?

  6. What are truck drivers demanding?

Find Russian equivalents to the following expressions from the text:

tolerance, food retailers, an all-time high, an increase in transport fees.

Translate the following passage.

In Spain, about 75,000 lorry drivers have been on strike since Sunday night and more than 70 have been arrested. The Spanish government has promised zero tolerance for any violence by the drivers, following a series of incidents which included an attack on a trucker who broke the strike. That attack left him with 25% burns to his body.

7. Germany, Liechtenstein in tax row

The German Chancellor Angela Merkel has urged Liechtenstein to take rapid action to introduce measures aimed at creating greater transparency in its banking sector. Angela Merkel said she expected Liechtenstein to sign up to the EU directive on money laundering.

Amid a growing diplomatic row, Chancellor Merkel was fairly blunt after she held talks with the prime minister of Liechtenstein, Otmar Hasler. At a news conference, the German Chancellor called for more transparency and she put pressure on Liechtenstein to crack down on fraud and co-operate with tax authorities in other countries.

German prosecutors have been searching offices and banks across the country, as part of their investigation into hundreds of Germans suspected of dodging taxes by channelling money into Liechtenstein. It all started last week when Klaus Zumwinkel resigned as chief executive of Germany's postal group after police raided his home. Liechtenstein's secretive banks and foundations have come under intense scrutiny.

Speaking in Berlin, the prime minister, Otmar Hasler, was keen to point out his government had stepped up efforts to bring criminals to justice and, he said, Liechtenstein would reform the laws governing the controversial foundations.

German politicians claim Liechtenstein's secretive banking laws have encouraged tax dodgers to take refuge there. As prosecutors continue their investigation, this affair is far from over.

blunt

saying what you think without trying to be polite and avoid hurting someone else's feelings

called for more transparency

encouraged Liechtenstein's financial institutions to be less secretive and more open about the way they conduct business

to crack down on fraud

to start dealing with people who obtain money by deceiving others in a more severe way

dodging taxes

avoiding paying taxes

channelling money into Liechtenstein

transferring money so it is put into bank accounts in Liechtenstein

raided

entered suddenly (in order to find something)

come under intense scrutiny

begun to be carefully looked into/examined (by the authorities)

stepped up efforts

increased the speed and amount of action (that is needed to achieve something)

to take refuge

to look for protection from trouble

is far from over

will continue for a long time

Answer the questions:

  1. What measures has Angela Merkel urged Liechtenstein to introduce?

  2. What directive did Angela Merkel expect Liechtenstein to sign?

  3. What did the German Chancellor do at a news conference?

  4. What efforts had Liechtenstein’s government stepped up?

  5. What laws will Liechtenstein reform?

  6. What have Liechtenstein's secretive banking laws encouraged?

Find Russian equivalents to the following expressions from the text:

to introduce measures, prosecutors, to bring criminals to justice, to take refuge.

Translate the following passage.

Amid a growing diplomatic row, Chancellor Merkel was fairly blunt after she held talks with the prime minister of Liechtenstein, Otmar Hasler. At a news conference, the German Chancellor called for more transparency and she put pressure on Liechtenstein to crack down on fraud and co-operate with tax authorities in other countries.

8. Commodities prices fall

Prices for important food and industrial raw materials are falling on world markets, partly in response to the sudden strength of the dollar. Oil is just over $110 a barrel, and gold has fallen below $800 an ounce.

Raw materials, or commodities, have been hit hard by the effects of the stronger dollar. Most world commodities are priced in dollars, so when the dollar strengthens, commodity prices in other currencies rise, and people sell them.

The dollar's strength is based on a combination of factors; other economies may be slowing faster than the US, and American inflation is nearly 6%. That could trigger a rise in US interest rates, making the dollar even more attractive.

It's all part of a global upheaval in commodity prices which is reversing some of the gains of the last year or so. Brent crude oil in London is trading at $112 a barrel; gold has dropped to $787 an ounce (it peaked at just over $1,030 six months ago); silver is down 12%; and among foodstuffs, wheat and soya prices have fallen between two and 3 per cent.

Governments worried about inflation will be pleased. But the new downtrend in prices may not be enough to stop a round of higher wage demands among western economies in the months ahead, where workers have seen their earnings eroded by higher prices for food and manufactured goods. But some financial experts warn not to read too much into these price falls – this could simply be a correction, they say, and commodity prices could soon start to rise again.

hit hard

strongly affected

a combination of factors

a number of facts and situations that are present at the same time and affect the result of something

trigger

cause, become the reason for

a global upheaval

a strong and sudden change that is taking place across the world

peaked

reached its highest level, was the most expensive

downtrend in prices

a trend/tendency for commodities to become cheaper

a round of higher wage demands

a period when workers firmly and repeatedly request to be paid more money

seen their earnings eroded by higher prices for

been able to buy less for the money they receive for doing their work (because goods have become more expensive)

to read too much into

to see too much importance in, to pay excessive attention to

a correction

here, a slight change that reflects the current economic situation

Answer the questions:

  1. Why are prices for important food and industrial raw materials falling on world markets?

  2. On what is the dollar's strength based?

  3. What could trigger a rise in US interest rates?

  4. What is reversing some of the gains of the last year?

  5. Why may the new downtrend in prices not be enough to stop a round of higher wage demands?

  6. What do financial experts say?

Find Russian equivalents to the following expressions from the text:

commodities, a global upheaval, downtrend in prices, to read too much into.

Translate the following passage.

The dollar's strength is based on a combination of factors; other economies may be slowing faster than the US, and American inflation is nearly 6%. That could trigger a rise in US interest rates, making the dollar even more attractive.

9. Tax System in Russia

Set out below is a brief description of the tax structure in Russia.

Taxes are regarded as budgetary funds since the collections are remitted to federal, regional or local budgets from which a variety of federal, regional or local expenditures are made. Certain other charges, such as the Unified Social Tax, are collected by the federal budget and then allocated to the nonbudgetary funds (Pension Fund, Social Fund and Medical Fund).

Federal vs. Regional and Local Taxes

The tax structure follows the federal nature of Russia in that the various republics and regions of the Russian Federation have certain rights regarding levying taxes. For this reason, some taxes such as VAT are applied across Russia at uniform rates (20 percent); some taxes such as the profit tax are applied across Russia at a tax rate determined in part locally (tax is then allocated based on respective rates – e.g., the federal profit tax rate is 11 percent, with an additional regional component of zero to 24 percent).

The effective profit tax rate may actually be higher than indicated because certain deductions are severely limited (e.g., entertaining, advertising, training). Some taxes – such as sales taxes (regional) and land taxes (local) – are determined, applied and collected only by the local or regional authorities. In addition to the taxes of general applicability, taxes are imposed on special industries such as extractions (4 to 16 percent) and advertising services (5 percent).

Among other basic taxes, there is a tax on turnover, which applies even if no profit is earned; individual income tax (13 percent on residents' worldwide income and 30 percent on nonresidents ' Russian source income); unified social tax on payroll; and a general property tax of 2 percent. Note that the resident individual income tax rate makes Russia a virtual tax haven – but for how long is unclear.

Tax system can result in different tax burdens for businesses operating in different locations due to variations in the rates and the existence of additional local taxes in specific jurisdictions.

Tax concessions are also not uniform – a federal or regional tax concession may not apply at the regional or local level. This structure also creates the need for local accounting, filing and tax payments in the event that a single legal entity has multiple branches or operations in different tax jurisdictions.

1. Match the words with their definitions:

tax

expenditure

apply

collect

allocate

impose

– to use a particular method, process, law, etc;

– to get money from someone for a particular purpose;

– to officially give something to someone, or decide that something can be used for a specific purpose;

– to introduce something such as a new law or new system, and force people to accept it;

– an amount of money you have to pay to the government that it uses to provide public services and pay for the government institutions;

– money spent by a government, organization or person.

2. Answer the following questions:

  • What is the main feature of the tax system in Russia?

  • Name the taxes collected across Russia?

  • What is the VAT rate?

  • What is the federal profit tax rate?

  • Which industries have special taxes imposed in addition to the taxes of general applicability?

  • What is the abbreviation for 'value added tax'?

3. Find English equivalents for the following Russian terms:

НДС; единый социальный налог; налог на доход предприятий; налог с продаж; земельный налог; налог с оборота предприятий; подоходный налог на физических лиц; единый социальный налог с фонда заработной платы; общий налог на собственность; налоговые льготы.

10. Monetary and Fiscal Policy

The role of government in the American economy extends far beyond its activities as a regulator of specific industries. The government also managers the overall pace of economic activity, seeking to maintain high levels of employment and stable prices. It has two main tools for achieving these objectives: fiscal policy, through which it determines the appropriate level of taxes and spending; and monetary policy, through which it manages the supply of money.

Fiscal Policy – Budget and Taxes

The development of fiscal policy is an elaborate process. Each year, the president proposes a budget, or spending plan, to Congress. Lawmakers consider the president's proposal in several steps. First, they decide on the overall level of spending and taxes. Next, they divide that overall figure into separate categories – for national defense, health and human services, and transportation, for instance. Finally, Congress considers individual appropriations bills spelling out exactly how the money in each category will be spent. Each appropriations bill ultimately must be signed by the president in order to take effect. The budget process often takes an entire session of Congress; the president presents his proposals in early February, and Congress often does not finish its work on appropriations bills until September (and sometimes even later).

The federal government's chief source of funds to cover its expenses is the income tax on individuals, which in 1999 brought in about 48 percent of total federal revenues. Payroll taxes, which finance the Social Security and Medicare programs, have become increasingly important as those programs have grown. In 1998, payroll taxes accounted for one-third of all federal revenues; employers and workers each had to pay an amount equal to 7.65 percent of their wages to $68,400 a year. The federal government raises another 10 percent of its revenue from a tax on corporate profits, while miscellaneous other taxes account for the remainder of its income. (Local governments, in contrast, generally collect most of their tax revenue from property taxes. State governments traditionally have depended on sales and excise taxes, but state income taxes have grown more important since World War II).

Most debates about the income tax today revolve around three issues: the appropriate overall level of taxation; how graduated, or "progressive", the tax should be; and the extent to which the tax should be used to promote social objectives.

The overall level of taxation is decided through budget negotiations. Although Americans allowed the government to run up deficits, spending more than it collected in taxes during the 1970s, 1980s, and the early part of the 1990s, they generally believe budgets should be balanced. Most Democrats, however, are willing to tolerate a higher level of taxes to support a more active government, while Republicans generally favor lower taxes and smaller government.

Some economists – both Democrats and Republicans-have suggested that the economy would fare better if the government would eliminate the income tax altogether and replace it with a consumption tax, taxing people on what they spend rather than what they earn. Proponents argue that would encourage saving and investment. But as of the end of the 1990s, the idea had not gained enough support to be given much chance of being enacted.

Over the years, lawmakers have carved out various exemptions and deductions from the income tax to encourage specific kinds of economic activity. Most notably, taxpayers are allowed to subtract from their taxable income any interest they must pay on loans used to buy homes. Similarly, the government allows lower-and middle-income taxpayers to shelter from taxation certain amounts of money that they save in special Individual Retirement Accounts (IRAs) to meet their retirement expenses and to pay for their children's college education.

The Tax Reform Act of 1986, perhaps the most substantial reform of the US tax system since the beginning of the income tax, reduced income tax rates while cutting back many popular income tax deductions (the home mortgage deduction and IRA deductions were preserved, however).

1. Match the terms with the definitions:

Budget

Federal Reserve System

Fiscal policy

Monetary policy

Budget deficit

Budget surplus

– The amount each year by which government spending is greater than government income;

– The amount each year by which government income exceeds government spending;

– Federal Reserve System actions to influence the availability and cost of money and credit as a means of helping to promote high employment, economic growth, price stability, and a sustainable pattern of international transactions;

– The federal government's decisions about the amount of money it spends and collects in taxes to achieve full employment and non-inflationary economy;

– The principal monetary authority (central bank) of the United States, which issues currency and regulates the supply of credit in the economy;

– Spending plan.

2. Answer the following questions:

  • How is the money collected in taxes spent?

  • What is the federal government's main source of funds to cover its expenses?

  • What is the consumption tax?

  • Is it a good idea to replace the income tax with a consumption tax?

  • What advantage is there for the taxpayers who have mortgages on their houses?

3. Match the English and Russian equivalents:

funds

Medicare program

appropriations bill

revenue

финансовый законопроект

федеральная программа медицинского страхования «Медикэр»

годовой доход

денежные средства

11. Monetary Policy

While the budget remained enormously important, the job of managing the overall economy shifted substantially from fiscal policy to monetary policy during the later years of the 20th century. Monetary policy is the province of the Federal Reserve System, an independent US government agency. "The Fed" as it is commonly known, includes 12 regional Federal Reserve Banks and 25 Federal Reserve Bank branches. All nationally charted commercial banks are required by law to be members of the Federal Reserve System; membership is optional for state chartered banks. In general, a bank that is a member of the Federal Reserve System uses the Reserve Bank in its region in the same way that a person uses a bank in his or her community. The Federal Reserve Board of Governors administers the Federal Reserve System. It has seven members who are appointed by the president to serve overlapping 14-year terms. Its most important monetary policy decisions are made by the Federal Open Market Committee (FOMC), which consists of the seven governors, the president of the Federal Reserve Bank of New York, and presidents of four other Federal Reserve banks who serve on a rotating basis. Although the Federal Reserve System periodically must report on its action to Congress, the governors are, by law, independent from Congress and the president. Reinforcing this independence, the Fed conducts its most important policy discussions in private and often discloses them only after a period of time has passed. It also raises all of its own operating expenses from investment income and fees for its own services.

The Federal Reserve System has three main tools for maintaining control over the supply of money and credit in the economy.

The most important is known as open market operations, or the buying and selling of government securities.

To increase the supply of money the Federal Reserve buys government securities from banks, other businesses, or individuals, paying for them in a check (a new source of money that it prints); when the Fed's checks are deposited in banks, they create knew reserves – portions of which banks can lend or invest, thereby increasing the amount of money in circulation.

On the other hand, if the Fed wishes to reduce the money supply it sells government securities to banks, collecting reserves from them. Because they have lower reserves, banks must reduce there lending, and the money supply drops accordingly.

The Fed also can control the money supply by specifying what reserves deposit – taking institutions must set aside either as currency in their vaults or as deposits at their regional Reserve banks. Raising reserve requirements forces banks to withhold a larger portion of their funds, thereby reducing the money supply, while lowering requirements works the opposite way to increase money supply. Banks often lend each other money overnight to meet their reserve requirements. The rate on such loans, known as the "federal funds rate," is a key gauge of how "tight" or "loose" monetary policy is at a given time.

The Fed's third tool is the discount rate, or the interest rate, that commercial banks pay to borrow funds from Reserve Banks. By raising or lowering the discount rate, the Fed can promote or discourage borrowing and thus alter the amount of revenue available to banks for making loans.

These tools allow the Federal Reserve to expand or contract the amount of money and credit in the U.S. economy.

1. Find the words with the opposite meanings:

borrow

expand

increase

raise

reduce

contract

lower

lend

2. Answer the following questions:

Explain in your own words this quotation:

"…a bank that is a member of the Federal Reserve System uses the Reserve Bank in its region in the same way that a person uses a bank in his or her community".

Name three main tools for maintaining control over the supply of money and credit in the economy.

What is the "federal funds rate"?

Who administers the Federal Reserve System?

3. Give the English equivalents:

Фискальная политика; денежно-кредитная политика; процентная ставка.