Phonetic exercise.
| credit | function | state | value | service |
| metal | money | payment | cash | work |
| depend | monetary | great | bank | purchasing |
| develop | substitute | safeguard | act | world |
| accept | become | undertake | than | terms |
| tender | under | inflation | activity | prefer |
Agree or disagree.
a) There are four functions of money.
b) The primary task of the central banks issafeguarding monetary stability.
c) The role of money doesn’t depend on the sate of development of economy.
d) People accept money in exchange for goods and services.
e) Money is a store of purchasing power.
2.5. Answer the following questions:
1. What does the role of money depend on?
2. What are the three functions of money?
3. What do people accept in exchange for goods and services?
4. What is the primary task of the central banks all over the world?
2.6. Complete the sentences and translate them:
a) The role of money depends on …
b) Money acts as a unit of …
c) The three functions of money can only be fulfilled if …
d) … is the primary task of the central banks all over the world.
2.7. Put general questions to the following sentences:
a) People accept money in exchange for goods and services.
b) The role of money depends on the state of development of economy.
c) There are three functions of money.
d) Money performs the function of a medium of exchange.
e) It also acts as a unit of account.
Read the text and translate.
3.2 Make a written annotation to the following text (10 sentences):
The IMF and the LDCs: Friend or Foe?
(1) Less than a century ago Latin American nations that failed to pay their debts were likely to be confronted by the British Navy or the United States Marines. Then, under the watchful eyes of the occupying troops, the country would be forced to pay its bills.
(2) This is a far cry from the procedures followed these days. The International Monetary Fund (IMF), established after World War II, extends credit to financially troubled countries. Nevertheless, the IMF is sometimes accused by people in the countries it is trying to help with being "a tool of imperialism," or a "bodyguard of the big New York banks."
(3) The reason for this hostility is that in return for its loans, the IMF often demands that the countries impose certain restrictions on their economies. The purpose of the restrictions or "austerity programs" as they are called, is to prevent a repeat of the events that led to the financial problems in the first place. To a Mexican peasant, however, "austerity" could mean that tortilla flour will cost more. To an Argentine factory worker it could mean a reduction in real wages, or to a Brazilian retiree it could mean a smaller government pension.
(4) The current problems faced by many less developed countries (LDCs) began with the oil crisis of the 1970s and the global recession of the 1980s. After OPEC quadrupled its prices in 1973, a number of the developing countries, such as Brazil and Argentina, borrowed from private banks (many of them American) to pay their oil bills. Those developing nations with large oil reserves found themselves suddenly enriched by the increase in prices and borrowed to finance expensive industrial development projects.
(5) By the 1980s, however, oil prices began to slide, and international trade slowed. As a result, many of the debtor nations found themselves unable to repay their loans. Private banks were no longer willing to extend additional credit. That left it to the International Monetary Fund to keep the debtor nations "afloat."
(6) While the IMF will lend money to any member nation willing to accept its terms, many governments have found those terms to be a threat to their existence. In April of 1984, for example, the President of the Dominican Republic announced that in keeping with the demands of the IMF, he was devaluing the Dominican peso by 200 percent. By reducing the value of the peso the President intended to make it easier for his country to pay back its loans in pesos. However, the effect of this move was to immediately double the price of imports for the Dominican people. (It now took twice as many pesos as before to buy dollars, marks, or other foreign currencies.) The average Dominican was extremely upset! Riots broke out and sixty people were killed and two hundred more were wounded.
(7) Many loans from private banks to LDCs are still in danger of default. The amount of money is so large that failure to repay the loans could put some of America's largest banks out of business. If this happens, the stability of the U.S. economy could be threatened.
(8) As a result, the IMF has tried several strategies to help the countries in difficulty repay their loans.
Lend the debtor nation the money it needs to meet its payments.
Ask debtor countries to adopt austerity measures that would give them enough money to repay their debts.
Require the lending banks to reduce the interest rates on their loans and extend the time borrowers have to repay.
