V. Reading and comprehension. I. Read the text. Define its main points and summarize them

Exercise 10.

I. Read the text. Define its main points and summarize them.

Voluntary taxation

Voluntary taxation is a theory that states that taxation, naturally a coercive act, should be a voluntary act instead. The idea states that instead of people being forced to pay taxes by their government they should have the option to pay taxes. In this theory people control how much they pay and where they spend it. It is a part of Objectivist politics and many ideologies.

Here is an example of how this system could function.

A state would distribute tax forms that could be filled out by recipients. The forms would have options on them for what the recipient would like to spend his or her money on. For example, there could be a section for military spending, or separate sections for defense in general and specific conflicts in particular. There would also be sections to be for elected officials (who would still be necessary to carry out the wishes of the people) and also sections for charities.

The form would be divided into more and more sections so that people could specify their decisions. In other words the entire form would be under the category of general. Then there could be a section for education and then even further for elementary school education. People could choose which sections they wanted and contribute to those sections. For example they could contribute different amounts to each section of education or to the section of education in general, allowing their elected officials to decide the best way to allocate the money.

The arguments for this theory are as follows:

· It allows greater freedom.

· It performs both the function of collecting money for the government and allowing the population to decide where money should be spent. It is similar to allowing everyone to vote on government spending except that it is in a different format.

· It allows government officials to easily keep track of the wants of their voters and the nation as a whole.

· It allows people to vote directly in a sense. For example they can decide that everyone should have health care by contributing to that section.

The arguments against this theory are as follows:

· The government would suffer because it would not receive enough money.

· No one would pay taxes and thus the nation would fall into anarchy.

· People with money would have a greater say in government then those without money.

· The forms would be difficult to create to adequately have every option that everyone would like. An option for "other" could become out of control in large nations.

· This would give the public a greater share in the legislation process.

Notes:

coercive –примусовий

charities –доброчинність

to have a say – мати право голосу, вплив.

II. What is your attitude to this theory? Is it possible to use such ideas in modern economies?

Justify your opinion.

Use phrases:in my opinion, to my mind, I`d rather say that, in fact, there`s no doubt that, furthermore, frankly speaking, according to, it`s difficult to say without proper consideration, the arguments for and against.

VI. Listening.

Exercise 11. Listen to the text. Extract the information to answer questions:

1. What were three approaches to fiscal policy in the USA in 1984?

2. What is national debt? What are the reasons of its emerging?

3. What are the ways of solving the problem of the national debt?

Debates on taxation

A major issue in the 1984 political campaign concerned fiscal policy, especially taxes. Some candidates favoured increasing income taxes to pay for government programs. Others resisted increased taxes and called for less spending instead. Still others proposed a whole new tax system, a flat tax, that would greatly lower tax rates but increase government revenue by eliminating tax loopholes (strategies for avoiding taxes ).

Some people felt that taxes should be raised just for the rich. They felt that rich people were not paying their fair share. The point is that people are divided in the United States over economic issues such as taxation and fiscal policy in general.

The problem is that government spending has exceeded government income for so long that the national debt(the sum of government money borrowed and not paid back) is $2 trillion. That is about $8,500 for every man, woman and child in the United States! To borrow money to pay the debt, the government goes to the same sources (banks) as business people do. Government bonds may be more attractive to these sources, and this can drive business people out of the credit market. Such a situation can hurt business and be inflationary. Most people feel that something must be done about the national debt before it becomes unmanageable.

VII. Oral practice:

Exercise 12.Speak on fiscal policy and its positions using the chart:

Instruments

Unit 5

INVESTING

Vocabulary

Exercise 1. Study the vocabulary:

commitment – вкладення капітала;

аssets - активи

interest – відсоток;

bond –облігація;

returns – прибутки

income – дохід

financial derivatives – похідні фінансові інструменти

appreciation - підвищення цінності

yield – прибуток у вигляді відсотків на вкладений капітал;

stock – акції

destination – напрямок

accrue – нарастати, накопичуватися

compounding – складений відсоток

value – цінність, вартість

exponentially – в геометричній прогресії

payoff – прибуток, отриманий в результаті інвестування

to share in – отримувати частину

prosper – процвітати

gambling – азартна гра

losses - збитки

сonsequences – наслідки

mutual fund – пайовий інвестиційний фонд

investment options – вибір напрямку інвестицій

Exercise 2. Read and translate:

Text A

What is investing?

Investing is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in form of interest, income, or appreciation of the value of the instrument. It is related to saving. Investing is involved in many areas of the economy, such as business management and finance no matter for households, firms, or governments. It involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that has certain level of risk and provides the possibility of generating returns over a period of time. One of the most important factor in any investing activity is determining yield – the increase in the value of an investment over time, usually a year.

The idea behind investing is that money is put to use in such a way that it is likely to turn into more money. This could happen because someone is willing to pay interest to use the money. Destinations for invested money include savings accounts, stocks, bonds, mutual funds and numerous other investment options. It is important to note that because money can be invested, the value of a given amount of money changes over time. The longer a given amount of money is under your control, the longer you have to invest it and make more money from it. For this reason, it is almost always preferable to have money sooner rather than later. The name given to this concept is the "time value of money"; that is, the idea that a dollar now is worth more than a dollar in the future, because a dollar now can increase value through interest or other appreciation until the time at which the dollar in the future would be received.

At the same time, there is a risk associated with not investing the money that you already have. Because prices tend to rise over time, the value of money gradually decreases. This effect is called inflation. Money that is not invested or that is accruing value at a slower rate than the rate of inflation is becoming worth less and less as time passes. Therefore, investing is not only an opportunity to make more money, but it is the only way to protect the money that you already have. Another spectacular benefit associated with many investments is compounding. Money that is earning interest grows at a constant rate, paying the same amount of interest at the end of each time period. However, if that interest is added to the principal that began earning money originally, there is more money earning interest. In this way, interest causes money to increase in value exponentially over time.

As more and more money earns interest, more and more interest is earned. This scenario is constantly playing out in bank accounts, deposits, and any other investment that offers compound interest. The more frequently the interest compounds, the bigger the payoff because, on average, more money is earning interest at any given time.

Investing in corporate stocks. Investors share in a corporation`s profits by receiving periodic payments – dividends. In addition, if the corporation prospers over the years, its stock will increase in value. Investors will be able to sell the stock for more than they paid for it, thereby earning profit from the sale.

At this point, it is important to distinguish between investing and gambling. Earning interest and taking advantage of compounding may not produce the immediate jackpot that comes with winning the lottery, but the risk of ending up with nothing is often far worse than waiting for a safe investment to pay off. Investing a great deal of money into one stock is very similar to gambling. It could pay off, but if it doesn't the potential losses are great. Safe and diverse investments may slow the pace of returns, but they also prevent negative consequences.

III. Language

Exercise 3. Find in the text and put down English equivalents to the following word combinations:

Рівень ризику; купувати фінансові інструменти; прибуткові доходи в формі відсотків; домогосподарство; збільшення вартості; депозитний рахунок; можливість отримання прибутку; заробляти більше грошей; ціни мають тенденцію зростати; акції корпрацій; періодичні виплати; отримати прибуток від продажу; не отримати нічого за кінцевим рахунком; потенційні збитки; безпечне та диверсифіковане інвестування; запобігти негативним наслідкам.

Exercise 4. Fill the blanks with the suitable words:

1. Destinations for invested money include…, stocks, bonds, mutual funds and numerous other investment options.

(current accounts, cooperatives, savings accounts)

2. Because … tend to rise over time, the value of money gradually decreases

(interest rates, prices, costs)

3. …is not only an opportunity to make more money, but it is the only way to protect the money that you already have

(investing, insurance; bank loan)

4. Investors share in a corporation`s profits by receiving periodic payments – dividends.

(financial stability; income; history)

5. Safe and diverse investments may slow…, but they also prevent negative consequences.

(investment activity, inflation effect, the pace of returns)

Exercise 5. Make up the possible word combinations out of the following and translate them:

Investing compound financial saving pension mutual corporate

instruments derivatives interest activity account option stock funds

Exercise 6. Match the definitions to the economic terms in the left column:

dividends investing inflation time value of money compounding

a). the addition of interest to a principal sum causing money to increase in value exponentially over time; b). periodic payments received by investors owning stocks of a corporation; c). increase in the value of an investment.; d). the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns; e). the effect when the value of money gradually decreases;

IV. Text understanding

Exercise 7. Find in the text and translate a passage describing:

1. the meaning of investing.

2. the concept of “time value of money”.

3. the interaction between investing and inflation.

4. the notion of compounding.

5. The difference between investing and gambling.

Exercise 8. Agree or disagree with the statements:

1. Investing is not related to saving.

2. Determining yield is one of the most important factor in any investing activity.

3. Destinations for invested money include savings accounts, stocks, bonds, mutual funds and numerous other investment options.

4. Investing is not considered the way to protect the money that a person already has.

5. One of the main benefits associated with many investments is compounding.

6. If the corporation prospers over the years, its stock will have unchanged value.

7. Safe and diverse investments prevent negative consequences

Exercise 9. Answer the questions:

1. What does the term “investing” mean?

2. What areas of the economy is investing involved?

3. Whatis the most important factor in any investing activity?

4. What are the main destinations for invested money?

5. Why is there a risk associated with not investing the money that you already have?

6. What is inflation?

1. What is dividends?

Exercise 10.Make up a plan covering the main ideas. Discuss the text according to the plan.

Exercise 11. Read and translate:

Text B

Stocks

As a shareholder, you stand to profit when the company profits. As a rule, the better a company does and the higher its profits, the more money its stockholders make. Investors buy stock to make money in one or both of two ways:

· Trough dividend payments while they own the stock.

· By selling the stock for more than they paid.

Many companies parcel out portions of their annual profits to stockholders in the form of dividend payments. Dividend payments vary from stock to stock. Stocks with consistent histories of paying high dividends are known as income stocks because investors often buy them for the current dividends rather than for the company`s future prospects. Some companies, however, reinvest most of their profits back into the business in order to expand and strengthen it. As a result, companies that pay little or no dividends are called growth stocks because investors expect the company to grow – and the stock price to grow with it.

How do you judge a company`s prospects? By current or anticipated earnings, the desirability of its product or service, the competition, availability of new markets, management strength and many other considerations.

Unofficially there are four tires of stocks in the market:

Foremost are the blue chips,the older generation, the elite of industry, the companies of unquestioned strength, like IBM and AT&T. The term blue chips was introduced in 1904 to mean the stocks of the largest, most profitable corporations. The term comes from the blue chips used in poker – always the most valuable chips.

Secondary issuesare the solid, well-established businesses which receive a little less investor confidence than the blue chips. Both blue chips and secondary issues are income stocks.

Growth stocks generally are relatively young companies with growth potential but no assurance of success.

Penny stocksare small companies with virtually no value other than their speculative potential.

Notes:

Income stocks – компанії, акції яких купують заради отримання дивідендів;

Growth stocks – перспективні компанії, що розвиваються;

blue chips –«блакитні фішки» - найбільші та найстабільніші компанії на фондових ринках;

Secondary issues –стабільні компанії середнього рівня;

Penny stocks –маленькі нестабільні компанії, часто створені для спекулятивних цілей.