Упражнение

Выберите наиболее правильное продолжение.

1. Firms go international because: a) their officers want to go abroad more often b) they want to save money from local taxes c) they need technical and financial assistance from abroad.

2. Large foreign companies take part in joint ventures in Russia because: а) they want to get a foothold in the Russian market, b) they want to save money from taxation in home countries, c) can't work well enough at home.

SUBSIDIARIES AND BRANCHES

A company can set up a branch in the foreign country to handle the sales of the product abroad. A parent company specifies the tasks and goals of a branch. Those usually consist of marketing and selling the product.

If the managers of the parent company decide to arrange the company's own production facilities (plants, factories, etc) overseas, they set up a subsidiary. A subsidiary works under the laws of the foreign country and to the profit of its parent company. Some subsidiaries are to a great extend independent of their parent companies because the home management believes that the on-site managers are in the best position to make decisions.

VOCABULARY

subsidiary – филиал, дочерняя компания

parent – родитель, родительский

specify – определять, специфицировать

task – задача, задание

goal - цель

marketing - маркетинг

manager – менеджер, управляющий

facility – средство, устройство

facilities – средства производства

etc. (etcetera) – и так далее

overseas – букв. за морем, на заморских территориях, за границей

law – закон, законы

under the law – в соответствии с законом

to a great extend – в значительной мере

independent of – независимый от

management - управление, менеджмент

on-site – букв. на месте

position – положение, позиция

decision – решение

QUESTIONS

1. Why do companies set up branches in a foreign country? 2. What does a parent company do when it sets up a branch overseas? 3. What are the tasks and goals of a branch? 4. In what cases do the managers decide to set up a subsidiary? 5. What laws does a subsidiary work under? 6. Who profits by the work of a subsidiary? 7. When and why do some subsidiaries become independent of their parent companies?

QUOTAS AND TARIFFS

Sometimes the government can encourage or discourage imports and exports of goods. It imposes quotas on certain products. An export quota specifies how much of a product can a manufacturer ship out. An import quota allows you to import to certain limit. The quota may be absolute (we reach a certain amount and can ship no more) or the government can combine it with a special tariff on all units over that amount. For example, we had an import quota of 6.000 automobiles. We had bought 6.000 automobiles with a 6.5 % tariff by the end of the last year, and all others we bought with a 45 % tariff.

The government also imposes special taxes or duties on imported goods. These are tariffs. Tariffs discourage imports because they make foreign goods more expensive. There are revenue tariffs that generate tax revenues and protective tariffs that protect home manufacturers. The purpose of the revenue tariffs is to raise money, and therefore these tariffs are rather low. The protective tariffs are much higher.

VOCABULARY

quota - квота

tariff – тариф

government - правительство

encourage – поощрять, поддерживать

discourage – препятствовать, ставить преграды, лишать стимулов

impose – навязывать, облагать (налогом)

absolute - абсолютный

reach – достигать, доставать (до чего-либо)

amount – сумма, количество, объём

combine – комбинировать, соединять

unit – единица (продукции)

revenue – (государственные) доходы, выручка

revenue tariff – фискальный тариф

generate – создавать, генерировать

protective – протекционистский (тариф)

raise – поднимать, аккумулировать (средства)

therefore - поэтому

rather – довольно, достаточно

QUESTIONS

1. How can a government encourage or discourage imports and exports of goods? 2. What does an export quota specify? 3. What does an import quota allow you to do? 4. What is an absolute quota? 5. What can a government combine a quota with? 6. What are tariffs? 7. How do tariffs discourage imports? 8. What two sorts of tariffs are there? 9. What is a revenue tariff? 10. What is a protective tariff? 11. What is the purpose of the revenue tariff? 12. Which of the two sorts of tariffs is higher and why?

EMBARGOES AND SANCTIONS

Governments can prohibit the import or export of certain products for military, sanitary, moral or political reasons. A military embargo prevents weapons going to a certain country. The United States prohibit the import of certain birds and animals for sanitary reasons. Moral reasons are the grounds for embargoing cocaine, heroin and other drugs. Sometimes governments prevent the export for political reasons. For example, the United Nations set embargo on sales to, and purchases from, Rhodesia before it became Zimbabwe.

Sanctions are a form of reaction to illegal actions of another party. There are sanctions against dumping, for example. Dumping means shipping large amounts of a product to another country at prices below the selling price.

VOCABULARY

embargo – эмбарго

embargoing – наложение эмбарго

sanctions – санкции

prohibit – запрещать

military – военный

sanitary – санитарный

moral – моральный

political – политический

reason – причина

prevent – препятствовать, ставить преграды

weapon – оружие, орудие

bird – птица

animal – животное

grounds – основание

drug – лекарство, наркотик

reaction – реакция

illegal – незаконный

actions – действия

party – партия; сторона

dumping – демпинг

price – цена

below – ниже

QUESTIONS

1. Why do governments prohibit the import or export of certain products? 2. What is the reason for a military embargo? 3. What reasons are there for a sanitary embargo? 4. Why do most of the governments prohibit the import of drugs? 5. What reasons are there for a political embargo? 6. What are sanctions? 7. What is dumping? 8. Why do the governments set sanctions against dumping?

REGULATIONS OF INTERNATIONAL BUSINESS

Some governments impose various regulations on businesses in their countries. Sometimes these regulations discourage foreign companies from entering home markets. In some countries all international businesses must have local partners. In other countries a foreign firm must have at least one native in the top management of a branch or a subsidiary. Some governments, for example in Mexico, insist that the local partners have the controlling interest. However, big firms like IBM refuse to do business on these grounds and usually manage to find the way out.

Government regulations limit what a company may do. For example, some countries demand that the company files a plan indicating what it is going to produce, how many local workers it is going to hire and how much it will pay the workers. This plan must also fit into the government economic master plan. If the country changes its master plan, the foreign firm must change its plans, too.

VOCABULARY

from entering – от вхождения

at least – по меньшей (крайней) мере

insist - настаивать

interest – здесь: пакет акций

controlling interest – контрольный пакет акций

However – тем не менее, вместе с тем

refuse - отказываться

way out - выход

demand - требовать

files a plan – представить план

indicate - указывать

indicating - указывающий

hire - нанимать

fit - соответствовать

master – хозяин, мастер, глава

master plan – главный план

native – местный житель; здесь: местный бизнесмен

QUESTIONS

1.How do the government regulations affect the foreign companies? 2. What must foreign companies have in some countries? 3. Whom must foreign companies have in their subsidiaries' top management sometimes? 4. What does the government in Mexico insist on? 5. How do big firms react to government regulations? 6. What do some governments demand a foreign company should file? 7. What must this plan indicate? 8. What must the company's plan fit into? 9. What happens if the government changes its master plan?

Texts for supplementary reading

Section 1

Text №1. WHAT IS BUSINESS?

Business is a word which is commonly used in many different languages. But exactly what does it mean? The concepts and activities of business have increased in modern times. Traditionally, business simply meant exchange or trade for things people wanted or needed. Today it has a more technical definition. One definition of business is production, distribution and sale of goods and services for a profit. To examine this definition we will look at its various parts.

First, production is the creation of services or the changing of materials into products. One example is the conversion of iron ore into metal car parts. Next these products need to be moved from the factory to the marketplace. This is known as distribution. A car might be moved from a factory in Detroit to a car dealership in Miami.

Third is the sale of goods and services. Sale is the exchange of a product or service for money. A car is sold to someone in exchange for money. Goods are products which people cither need or want; for example, cars can be classified as goods. Services, on the other hand, are activities which a person or group performs for another person or organization. For instance, an auto mechanic performs a service when he repairs a car.

However, there is one other important factor. This factor is the creation of profit or economic surplus. A major goal in the functioning of an American business company is making a profit. Profit is the money that remains after all the expenses are paid. Creating an economic surplus or profit is, therefore, a primary goal of business activity.

Questions:

1. What did business mean traditionally?

2. What aspects does the meaning of the word "business' include today?

3. What is the first stage of business called?

4. What is done on the first stage of business?

5. What are the other stages of business?

6. What is business set up for?

Text №2. MARKS & SPENCER

Marks & Spencer, the British food and clothes company, is the most famous British shop in the world. At the moment, there are 283 M&S shops in Britain, and other shops in France, Belgium, Holland, Spain and Portugal. Currently, they are building a large new store in Paris on the rue de Rivoli. In North America the company owns Brooks Brothers, and there are about fifty stores in Canada. More and more people, from Hong Kong to Lisbon, are buying their clothes and food from M&S.

The company employs about 50,000 people worldwide. Sales have increased by 80% over the last ten years, mainly due to expansion overseas. Many of the shops abroad are franchises. Owners of franchises buy all their stocks from Marks & Spencer and pay the company a percentage of their turnover.

The clothes vary from country to country. In Thailand, for example, M&S sell more short sleeved shirts because of the climate. In Japan, they set smaller sizes because of the average size of the population. In Austria, they stock very large clothes. Food departments sell typically British food: tea, cake, biscuits, etc., and the shops in Pans are very popular at lunchtime for the sale of sandwiches.

Why is Marks & Spencer so successful? The standards of quality are very high. All suppliers have regular inspections. All customers can return any item which they think, is unsatisfactory. Stocks are limited. Shelf lives are short. This means that items only stay in the shop for six to seven weeks. Eighty percent of the suppliers are British, in fact. M&S buy twenty per cent of the total clothes produced in Britain.

What about the future? At the moment, the company is studying plans for development in Eastern Europe, Japan, and even China. Next century, it is possible that one Chinese in five will wear Marks & Spencer's suits. That's a lot of suits!

Questions:

1. How many people worldwide does the company employ?

2. What do owners of franchise buy from Marks & Spencer?

3. Is M&S successful? Prove it.

4. What are the company's plans for the future?

Text №3. UNEMPLOYMENT

We say that unemployment exists where people capable and willing to work are unable to find suitable paid employment. But where an economy is adapting to changing conditions, there will always be some persons unemployed as they change jobs or as seasonal work comes to an end.

Unemployment may occur for many different reasons. There will always be some people changing jobs. In certain occupations, e.g. unskilled labour in the construction industry, workers are not employed regularly by one employer. When a contract is completed, labour is not required. Occasionally workers are discharged when a factory is being reorganized.

Unemployed workers usually register at the local employment exchange from which employers can hire them. The unemployed are paid certain benefits.

Employment in some industries, e.g. building, fruit picking is seasonal in character. Seasonal employment can be reduced out of "season" and admit such persons as students and housewives during the busy period. Sometimes there are unemployed workers of a particular occupation in one part of the country but a shortage of the same type of work in other parts. Thus today there is a surplus of unskilled and manual labourers in the north of England, whereas firms in the London area have vacancies unfilled. Two main reasons can be suggested for this type of unemployment — ignorance of opportunities and immobility of labour.

Workers may be in "between jobs". Some of them are looking for better jobs, others are seeking better salaries. Young people search for their first jobs. This is called "frictional unemployment". This type is usually short-term and regarded as inevitable. In some situations workers find that their skills and experience are unwanted by these changes. This type of employment is more long-term and regarded as more serious. It is known as structural unemployment.

The full-employment or natural rate of unemployment ranges between 5 and 6 percent.

Questions:

1. Why does unemployment exist in transitional economy?

2. What are the reasons for unemployment?

3. How can the unemployed get paid benefits?

4. What is seasonable unemployment?

5. What is unemployment caused by?

6. What is considered to be a natural rate of unemployment?

Text №4. WHOLESALING

Wholesalers are the institutions which stand between the manufacturer and the retailer. A wholesaler buys goods in bulk from producers and sells them in small quantities to retailers. In doing so he helps the production process. If you had an intention to be a successful manufacturer, you would make high quality products at a reasonable price for selected markets. If you intended to be a wholesaler, you would learn how to serve the market.

Wholesaler economizes the distribution. The most important function of a wholesaler is to contact manufacturers and potential customers. Thus nine contacts and deliveries arc necessary if three firms supply directly three retailers, where each producer deals only with a wholesaler, reducing the total number of transactions to six.

Wholesalers are used for information and advice. Suggestions which customers make to the retailer are passed to the wholesaler who conveys them to the manufacturer. Thus the latter can improve his product.

A wholesaler keeps stocks. Shoppers like to obtain goods immediately. This requires stocks. Often, however, neither the producer nor the retailer has extensive storage facilities, and responsibility falls on the wholesaler.

Moreover, he arranges imports from abroad. Foreign manufacturers can rarely bother to ship small parcels to individual retailers abroad. They prefer to deal with a wholesaler, an import merchant with established trade connections.

Manufacturers can establish their own wholesaling office or branch, the latter providing more services to its customers. Depending on the industry or geographical location merchant wholesalers are called distributors, jobbers, or dealers. Among merchandise agents there are selling agents, brokers, commission agents and action companies. They are all compensated by either a commission or a brokerage fee.

Questions:

1. What kind of institutions are wholesalers?

2. What is the most important function of a wholesaler?

3. How can a manufacturer improve his product?

4. Does a wholesaler import from abroad?

5. How can wholesalers be classified?

Text №5. RETAILING

The retailer performs the last stage of the production process, for it is he who puts the goods in the hands of the actual customers. His work is "to have the right goods in the right place at the right time."

There are four types of retail institutions: 1) speciality stores; 2) supermarkets, 3) general merchandise stores, 4) nonstore retailing.

Often speciality stores sell one type of product, such as clothing, jewelry, furniture, books. These stores having a better feeling of their market, they compete against giant department stores. They can adjust more quickly to market conditions.

Big supermarkets are usually well located. All the goods are arranged on trays and shelves. All the prices are clearly marked. The goods are ready-weighed and beautifully packed. There you can find everything you need. The prices are reasonable.

General merchandise stores (GMS) carry a wide variety of products. There are three types of GMS: a) department stores, b) discount stores, c) hypermarkets. Big department stores started in America more than 50 years ago, and then the idea was brought to European countries. These stores are wonderful places. People can do all their shopping under one roof. All the things for sale are displayed so that they can be easily seen, and the customers walk around and choose what they want.

The store is divided into departments: women's clothes, men's clothes, shoes, toys, sports goods, china and glass, etc. There may be a restaurant with an orchestra and sometimes a tea-room as well.

Low price is the major attraction of the discount stores. These stores self the most popular items, colors and sizes. The stores keep long hours and are usually open on Sundays. Hypermarket is a type of discount store that was developed in Germany. They are very large stores with low-price and high-turnover products. Hypermarkets achieve cost savings by simplifying their unpacking and display.

There are three major types of nonstore retailing: a) vending machines; b) door-to-door sales, and c) catalogue sales.

Questions:

1. What is the function of a retailer's work?

2. How can retail institutions be classified?

3. What can you say about the speciality stores and big supermarkets?

4. What did you come to know about discount stores?

5. What types of nonstore retailing do you know?

Text №6. HISTORY OF MONEY

(part 1)

These days money is hi-tech. We have notes and coins which are specially made. We use credit cards. Banks and stock exchanges can move millions at the touch of a button. But how did money develop? Where, for example, were notes and coins first produced? Why? What did people use as money before that?

Each country has its own individual culture. That's as true today as it was thousands of years ago. But although nations vary enormously, in some ways they're all the same. Each has developed its own language, for example - its own religion, arts, form of government; and of course, its own money.

So money is universal - but why? The answer's very simple. Without it trade would be impossible/and people in any society need to exchange goods in order to survive.

OK, so money is necessary, but what kind of money? Well, in the past most societies used objects. Some of these were valuable because they were rare and beautiful — others because they could be eaten or used. There are some examples...

(and where they were used)

Animal skins..................Alaska/Canada/Russia/Scandinavia

Beads.............................Africa/Canada

Feathers.........................North America

Fish hooks.....................Gilbert Islands*

Grain.............................India

Knives...........................China

Rats...............................Easter Island*

Salt................................Nigeria

Shells.............................Thailand/Paraguay

Stones............................Yap*

Tobacco.........................America

Whale teeth...................Fiji*

* Islands in the Pacific Ocean.

Question:

1. What commodities served as means of exchange?

(part 2)

BEFORE COINS

Early forms of money were used to buy goods. They were also used to pay for marriages, fines, and debts. But although everyday objects were extremely practical kinds of cash in many ways, they had disadvantages, too. For example, it was difficult to...

• measure their value accurately.

• divide some of them into' a wide range of amounts.

• keep some of them for a long time.

• use them to make financial plans for the future.

For reasons such as these, some societies began to use another kind of money. This consisted of precious metals which were cut into small pieces and weighed. People in Mesopotamia (now part of Iraq) began doing this about 4,500 years ago. Later, gold and silver money appeared in Ancient Egypt, China and elsewhere, too.

The new metal money was an important advance for four reasons.

1. It was easy to carry.

2. It lasted a long time.

3. It could be divided into lots of different values.

4. It made planning for the future much easier.

But although pieces of silver or gold were an advance, they still weren't exactly coins. They had no fixed shape and weren't clearly marked so that everyone could recognize them.

Questions:

1. What were the reasons for usage of metal money?

2. What disadvantages did the things used as money have?

(part 3)

EARLY COINS

The first coins were made in Turkey around 100 ВС, but paper notes didn't appear at the same time. They weren't produced until 1400 years later — In China. This report looks at the history of modern money's early ancestors.

The ancient kingdom of Lydia was in the country now known as Turkey. That's where the first coins — called "staters" - were produced around 2,700 years ago. They were made of electrum (a mixture of silver and gold) and had a lion's head stamped on them. This snowed that they were official Lydian coins and made them easy to recognize. It also meant that each coin's value was "guaranteed", so it didn't need to be weighed.

Not only that - there were lots of different values, too. Lydian people used coins worth one-sixth, one-twenty-fourth and even one-ninety-sixth of a stator.

The idea of a metal money system with fixed values, a clear identity, was successful. So successful that it soon spread to other countries. By 600 ВС, in fact coins were used all around the Mediterranean region. Greek coins of this period are particularly beautiful. Some are marked with the .heads of gods and scenes from ancient myths. Others have pictures of objects or animals on them, such as owls, vases or beetles. These show which part of Greece the coins came from. Athenian 'silver owl', coins, for example, soon became famous all over Europe.

The first king to have his portrait on a coin came from Greece, too. Alexander the Great died in 33 ВС. Coins with his face on them appeared the following year.

Questions:

1. What was the name of the country?

2. What occupied the territory of Turkey?

3. What objects were stamped on ancient coins?

(part 4)

EARLY NOTES

Today's paper money is produced and controlled by governments through a system of banks. That's why we talk about bank-notes. Originally, though, paper money had nothing to do with banks because

1. Metal coins were heavy. It was difficult to carry and use large numbers of them.

2. They were easy to steal.

3. China only had limited amounts of precious metals. It couldn't use them to make coins.

To solve these problems, goldsmiths and silversmiths of the Tang dynasty (618—907) began to produce special receipts. These were printed notes, which showed that their customers owned a certain amount of money. The result? Suddenly it was possible to do business with paper instead of using metal coins.

The oldest Chinese notes which still survive come from the Ming dynasty (1368—1644). They're made of tree bark and some of them are very large.

The introduction of notes like these changed economic history. And not just in China, paper money soon became popular in Europe, too. For a long time, though, it wasn't made and controlled by governments. In fact, the first official European bank notes (issued by the Swedish Stockholm Bank) didn't appear until 1661.

Questions:

1. Why did early notes appear?

2. What was the first country to use them?

(part 5)

COINS

Modern-day coins are produced in special factories called mints. Before any coin can be produced, though, it has to be designed. This is done by an artist and the design is usually very complex. Why? To make it harder for criminals to copy. Once the design has been completed and approved, a large plaster model of the coin is made. This has the design cut into it with metal cools. The model is then attached to a reducing machine. What does that do? Well, it copies the artist's work onto a small piece of very hard steel.

Each coin needs two dies — one for the front, one for the back. These are then fitted another machine — the coining press. This is where the coins themselves are actually produced. In the past it was common for coins to be made of gold or silver. These days, metal money consists of cheaper metals — for example copper, nickel, zinc or tin. To make money, these are first heated and then mixed together in the right amounts. After that, the mixture is rolled into long, thick blocks which are

(a) softened

(b)cut into coin-shaped pieces called "blanks". It's these blanks which are squashed (under enormous pressure and very quickly) between the two dies on the coining press to make coins.

Questions:

1. Why is it necessary to make a plaster design?

2. How are coins usually produced?

(part 6)

NOTES

There are four main elements in the production of bank-notes: • design • paper • ink • printing. Let's look at them in that order.

Design. Like coins, notes are also designed by artists. In the case of notes, though, the designs are much more complex. Each one contains thousands of tiny lines. This is done deliberately to make the notes as hard as possible to copy. First, the artist produces a sketch. Then, when that has been accepted, he or she engraves the design onto a steel plate. The design is engraved back-to-front with special, extremely sharp tools. Why back-to-front? So that when it's printed, it will be the right way round on the • notes themselves. Paper bank-notes have to last a long time. Because of this fact they're made with extra strong paper which contains cotton. But that's not the only unusual thing of back-note paper. In most cases it also contains a very thin piece of metal which runs from top to bottom, faint drawings. (These can only be seen clearly if you hold them up to day light.)

Ink. The inks printed on bank-notes aren't used anywhere else. They're specially made and lots of different colours are combined in each note. Again this is done for reasons of security.

Printing. Three different kinds of printing are needed to produce any bank-note. The first is called intaglio and prints the main elements in the design (faces, objects, etc.), Next, all the complex patterns in the background are printed by a process called lithography. Finally, a third system, letterpress, adds the serial number(which you can usually find in the bottom right-hand corner). This has to be done separately because each note needs an individual number.

Questions:

1. What are the four principal elements in making banknotes?

2. What does a designer do to produce coins & notes?

3. What is done for security?

Text №7.

THE WORLD BANK

There are two parts оf the World Bank: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The latter has a further affiliate, the International Finance Corporation (IFC). Set up in 1945, the World Bank seeks to help raise standards of living in developing countries by channeling resources from developed countries to the developing world. Its original capital was contributed by the 146 countries that own the Bank, but its loans are largely financed by borrowing on the world's money markets. In the past it has played a large part in financing major projects around the world. Today the emphasis has shifted to more grassroots projects, particularly labour-intensive projects aimed at helping the poorest sections of the world's population, by raising their productivity and integrating them into the developing process as active partners in progress.

The World Bank has an office in London, but its head office is in Washington DC.

Questions:

1. What parts does the World Bank consist of?

2. When was the World Bank set up?

3. How many countries are members of the World Bank?

4. What projects does the World Bank give financial support to?

5. Where is its main office located?

Text №8. BANKS, LOANS

(part 1)

Banks make their profits by lending the money which customers deposit with them to others who need it for personal or business reasons. Most people need more money than they have currently.

To be a borrower you must be a customer of the bank because the money will be lent to you through a bank account. There are two ways in which you may borrow. The first, and easy, is to spend more money than you have in your current account — to overdraw. The second, and the normal way of borrowing larger amounts or for a long period of time is the loan, If a loan is granted it will be a fixed sum immediately available for a fixed period of time. The principal and the interest on it may all become due for payment at the end of that period but for personal loans it is common to arrange that the loan and interest are repaid in equal regular installments over the period of the loan. A separate account is opened to record the repayments as they are made.

Whether you are seeking money for business or personal reasons there are a number of things that the manager will want to know before he is prepared to grant your request. The obvious facts will be the amount that you seek and the arrangements for repayment that you are able to suggest. You need to tell him something about the purpose of the loan.

Questions:

1. How do banks make their profit?

2. Who are loans granted to?

(part 2)

THE PURPOSE OF THE LOAN

For many personal customers applications for a loan are straightforward because the purpose is clear — to buy a car, to double glaze the house, to build an extension, etc. For many small businesses requests will be equally obvious — to purchase a plain paper copier, a computer or other machine. Other business schemes may not be nearly so clear-cut. They may involve long-term commitments, and the present loan may only be forerunner of other similar requests. A bank manager needs to be able to assess such schemes on their merits, and to probe the customer's ideas with searching questions. The applicant may in fact be unsure of certain aspects of the proposal and reveal flaws, in planning which would, if not solved, eventually mean failure. Only if the manager understands the project and the risks he assessed fair terms for the loan be agreed.

Questions:

1. What is the purpose of individuals applying for a loan?

2. Who makes a decision about giving a loan?

3. What do many small businesses receive loans for?

(part 3)

PERSONAL LOANS

The personal loan is the commonest type of loan to ordinary customers and is frequently available over the telephone to credit-worthy customers. Interest is added either at a fixed rate for the duration of the loan — which gives an annual percentage rate (APR) of well over 20 per cent for such loans at the time of writing — or monthly on the outstanding balance. With flat-rate loans there is a doubling-up of interest to give this APR, the repayments are spread evenly over the period of the loan and, consequently, the whole sum is not borrowed for the full loan period. On average the money is borrowed for half the time only, so the true interest rate is roughly double the nominal rate used in the calculations. Under the Consumer Credit Act 1974 the APR must be clearly stated as well as the fixed rate of interest, so that borrowers can assess the savings to make by postponing the purchases the loans seek to finance, and can compare the loan proposed with other sources of credit. With monthly rate loans interest is charged in arrears on the amount outstanding at the end of the month.

INTEREST RATES

The Bank's influence on short term interest rates arises from its role in the domestic money markets. As banker to the government and to the banks, the Bank is able to forecast fairly accurately the pattern of flows between the government's accounts on the one hand and the commercial banks on the other, and acts on a daily basis to smooth out the imbalances which arise. When more money flows from the banks to the government than vice versa, the banks' holdings of liquid assets are run down and the money market finds itself short of funds. When more money flows the other way, the market can be in cash surplus, but the pattern of government and bank operations usually results in a shortage of cash in the market each day — a shortage which the Bank then relieves. Because the Bank is thus, on a day-to-day basis, the final provider of liquidity to the system, it can choose the interest rate at which it will provide funds each day.

Questions:

1. How is the personal loan usually available?

2. What is an annual percentage rate?

3. What act regulates the rate of interest?

Text № 9. MEANS OF PAYMENT

CREDIT CARDS

The idea behind credit cards is simple. When you buy something you give your card to the shop assistant. He or she fills in a form. You sign it. Then, at the end of the month you receive a bill from the credit company. This lists everything you've bought on credit in the past four weeks. You can pay the bill in two different ways, either all at once, or a little at a time. If you pay a little at a time, the bill obviously grows month by month. But that's not all. You also pay a high rate of interest on top of the unpaid amount. Why? Because in reality you're borrowing money from the credit company. For some people this can become a real problem. They spend too much, can't afford to pay it back, and get into debt. For some people, though, credit cards are 'flexible friends' — a useful and convenient alternative to cash.

FANTASTIC PLASTIC

Already some credit cards include tiny computers. These smart cards make and word each payment electronically. But scientists are also developing even smarter cards with mini calculators and keyboards. This means it will not possible to give 'the card instructions' and ask its questions, e.g. 'Make this payment in yen' or 'How much money have I spent'. Soon, hitech cards like these will be a part of all our lives.

TELE-SHOPPING

Computers are going to play a major role in twenty-first century shopping. As a matter of fact, with computerized 'tele-shopping'' you'll soon be able to buy goods without even leaving home. Here's how it works:

(a) You call a shop via your personal computer.

(b) You order the goods you need,

(c) You give the shop your credit number.

(d) Money is taken electronically from your bank account to pay the bill.

(e) The goods are delivered to your home.

CHEQUE GUARANTEE CARDS

These are called cheque cards for short and they're a form of identification. When you give someone a cheque, you show them the card, too. This proves you're the person whose name is on the cheque. It also means that your bank guarantees to pay the cheque (up to a certain amount). Banks advise their customers to keep cheque books and cheque cards separately. Why? Because if a card is stolen, it can't be used without the cheque book and vice versa.

Questions:

1. Is paying with a credit card easy or difficult?

2. How can you make purchases using your check book?

3. What are the advantages of using teleshopping?

Text № 10. COMMODITY EXCHANGE

Commodity Exchanges deal in raw materials and some items of produce, such as cotton, wheat, vegetable oils, etc. as these goods can be accurately graded and the grades practically remain unchanged every year. The goods are brought and sold at commodity exchanges according

to grades or standards (under standard descriptions), and on the basis of standard contract terms. And commodity exchanges are called accordingly: the Wheat Exchange, the Metal Exchange and so on.

Thus for example, in Great Britain you can take part in sessions at the London Metal Exchange, the London Commodity Exchange dealing in cocoa, rubber and sugar, the Liverpool Cotton and Cora Exchanges or the Bradford Wool Exchange, Yorkshire.

Nowadays Commodity Exchanges are losing their role as markets of physical goods and are becoming mainly futures exchanges where deals are chiefly made for speculation purposes or for hedging.

The goods like fur, tea, spices whose quality varies from year to year, from lot to lot cannot be accurately graded and are sold at auctions according to sample. Before the auction begins, the lots are inspected by future buyers and then sold to the highest bidder.

Horses or other animals are also sold and bought at auctions. Trade by tenders is frequently used in developing countries for construction work or for delivery of goods. General terms and conditions of the future deal are announced beforehand and the contract is given to the Suppliers who offer the lowest price and the most favorable terms.

Questions:

1. What kind of exchanges operates in Great Britain?

2. What do you know about auctions?

3. Is trade by tenders also used?

Text №11. STOCK MARKETS

Stock Markets are the means through which securities are bought and sold. The origin of stock markets goes back to medieval Italy. During the 17^th and 18^th centuries Amsterdam was the principal centre for securities trading in the world. The appearance of formal stock markets and professional intermediation resulted from the supply of, demand for and turnover in transferable securities.

The popularity of transferable instruments as a means of finance continued to grow and at the beginning of the 20^th century there was an increasing demand for the facilities provided by stock exchanges.

The largest, most active and best organized markets were established in Western Europe and the United States. Despite their common European origins there was no single model which every country copied.

Members of stock exchanges drew up rules to protect their own interests and to facilitate the business to be done by creating ah orderly and regulated marketplace. Investors were interested in a far wider range of securities than those issued by local enterprises. Increasingly, these local exchanges were integrated into national markets.

The rapid development of communications allowed stock exchanges to attract orders more easily from all over the country and later the barriers that had preserved the independence and isolation of national exchanges, were progressively removed.

Questions:

1. When did stock markets appear?

2. Where are the largest & best organized markets?

3. What did members of stock exchanges draw up rules for?

4. What were investors interested in?

Section 2

Text №1. Long Term FINANCING

When a business needs funds to construct a new assembly line or to do extensive research and development which may not begin to bring in revenues for several years, short term financing wouldn't work. In this case, business will need long term sources of funds.

Firms may meet long term needs by increasing the company's debt either by getting loans or by selling bonds.

A long term loan is a loan that has a maturity of from one to ten years. Within this period of time the firm pays interest on the debt. Sometimes the lender protects its financial position by requiring that the company obtains the lender's permission before taking on any additional long term debt. If the loan is particularly risky, the lender may even require the firm to limit or eliminate dividends to stockholders.

If the firm wants to be free of lender's restrictions, it may issue bonds. These are long term debts with a maturity date of 20 to 30 years in the future. Governments issue government bonds. Corporations issue corporate bonds which may be secured or unsecured.

If a company wants to sell bonds, it can offer some collateral. It is difficult, if not impossible, to find investors who are willing to buy

bonds which are not backed up by collateral. Only huge corporations such as AT&T can successfully issue unsecured bonds, which are called debentures.

Most bonds carry a face value of $1000 and pay a predetermined interest rate (the coupon rate). The company pays this interest regularly according to the Indenture agreement which specifies the terms of a bond issue.

The company may retire bonds before they mature if the indenture agreement contains a call provision. In this case the firm pays the bondholders a redemption premium.

Another flexible feature in some agreements is the conversion privilege. It allows bondholders to convert their investment into a stated number of shares of common stock. If the price of the company's common stock is going up, the investors can profit from conversion. Convertibility makes the bond issue more attractive to potential investors.

Text №2. SECURITIES MARKETS

Securities are bought and sold at two types of securities markets: primary markets, which issue new securities, and secondary markets, where previously issued securities are bought and sold. If a company wants to sell a new issue of stock or bonds, it usually negotiates with an investment bank, or underwriter who sells the securities for it. The underwriter buys the securities from the corporation and resells then to individual investors through the secondary market.

Organized security exchanges have developed to make the buying and selling of securities easier. The securities exchanges consist of the individual investors, brokers, and intermediaries who deal in the purchase and sale of securities. Security exchanges do not buy or sell securities, they simply provide the location and services for the brokers who buy and sell.

Stock transactions are handled by a stockbroker. A stockbroker buys and sells securities for clients. Stockbrokers act on the clients' orders. Stockbrokers receive a fee and are associated with a brokerage house. To trade on the exchange a "seat" must be purchased. A seat is a membership. The members represent stockbrokers. When a stockbroker calls in an order to sell, one member representing that broker looks for a buyer at the price requested. When a broker calls in an order to buy, the exchange member looks for a buyer at the price offered.

The largest and best known exchange in the USA is the New York Stock Exchange (NYSE), also called the "Big Board- 'there are 1,300 seats on the NYSE and approximately 2,000 stocks and 3,400 bonds are traded daily. In order to be Dated on the NYSE, a firm has to meet the following requirements: 1. Pretax earnings of at least $2.5 million in the previous year. 2. Tangible assets of at least $16 million. 3. At least 1 million shares of stock publicly held, and others.

The second largest stock exchange in the USA is the American Stock Exchange came. It is located in Manhattan and has about 500 full members and 400 associate members. AMEX operates in much the same way as NYSE, but smaller companies may qualify for listing.

There are also regional stock exchanges that serve regional markets.

About 5,000 brokers sell & buy unlisted securities outside of the organized securities exchanges which are scattered all over the country. They trade unlisted stocks and bonds by phone and keep in contact with each other.

The prices of the securities are established by supply and demand. Electronic screens in the offices of the brokerage firms display OTC transactions, so brokers continually keep customers up to date on the latest prices.

Options are traded on the major stock exchanges, but also on a special market bond options, the Chicago Bond Options Exchange (СВОЕ).

Text №3. COMPETITIVE MARKET

Competition refers to the nature of the conditions under which individuals may trade property rights. It assumes a definition of property rights that individuals may trade among themselves as well as a description of the trading process. These aspects of competition are especially important in connection with the development of new technology and new products and with the use of low-cost, large-scale methods of production and distribution.

The simplest situation in an analysis of competition is a market, where individuals have initial endowments of commodities that they own and that they may trade among themselves. All trades occur at the same time and place. The essential characteristics remain valid when trades do not all occur at the same time and place. However, individuals would have incomplete knowledge relevant for their decisions. This complication changes the nature of the outcome of competition. Incomplete knowledge is inevitable partly, because the future is unknown. Even so, it is often less costly to take current actions that will have future consequences without knowing that these will be then to respond only to momentary events of the present. The advantages of planning are the resulting exposure to hazards that may occur alter the effects of competition.

These basic considerations help explain the nature of production and why the quantities of goods offered will change over time in response: to the expectations and information firms have. They also explain why some common notions about competition are inadequate. Among the inadequate notions about competition is the belief that a necessary condition for competition is a lack of power by any firm to affect the prices of its products.

Text №4. FINANCIAL MANAGEMENT

In the past, financial management was not a major concern for a business. A company used to establish relations with a local bank. The hank handled the financing and the company took care of producing and selling.

Today only a few firms operate in this way. Usually businesses have their own financial managers who work with the banks. They negotiate terms of financial transactions; compare rates among competing financial institutions. Financial management begins with the creation of a financial plan. The plan includes timing and amount of funds and the inflow and outflow of money.

The financial manager develops and controls the financial plan. He also forecasts the economic conditions, the company's revenues, expenses and profits. The financial manager's job starts and ends with the company's objectives. He reviews them and determines the funding they require. The financial manager compares the expenses involved to the expected revenues. It helps him to predict cash flow. The available cash consists of beginning cash plus customer payments and funds from financing.

The financial manager plans a strategy to make the ending cash positive. If cash outflow exceeds cash inflow, the company will run out of cash. The solution is to reduce outflows. The financial manager can trim expenses or ask the customers to pay Easter.

The financial manager also chooses financing techniques. One of them is short-term financing. Another is long term financing.

At the end of the fiscal year the financial manager reviews the company's financial status and plans the next year's financial strategy.

Text №5. MANAGEMENT AND HUMAN RESOURCES

DEVELOPMENT

Managers perform various functions, but one of the most important and least understood aspects of their job is proper utilization of people. Research reveals that worker performance is closely related to motivation; thus keeping employees motivated is an essential component of good management. In a business context, motivation refers to the stimulus that directs the behavior of workers toward the company goals. In order to motivate workers to achieve company goals, managers must be aware of their needs.

Many managers believe workers will be motivated to achieve organizational goals by satisfying their fundamental needs for material survival. These needs include a good salary, safe working conditions, and job security. While absence of these factors-results in poor morale and dissatisfaction-, studies have shown that their presence results only in maintenance of existing attitudes' and work performance. Although important, salary, working conditions, and job security do not provide the primary motivation for many workers in highly industrialized societies, especially at the professional or technical levels.

Increased motivation is more likely to occur when work meets the needs of individuals for learning, self-realization, and personal growth. By responding to personal needs — the desire for responsibility, recognition, growth, promotion, and more interesting work managers have altered conditions in the workplace and, consequently, many employees are motivated to perform more effectively.

In an attempt appeal to both the fundamental and personal needs of workers, innovative management approaches, such as job enrichment and job enlargement, have been adopted in many organizations. Job enrichment gives workers more authority in making decisions related to planning and doing their work. A worker might assume responsibility for scheduling workflow, checking quality of work produced, or making sure deadlines are met. Job enlargement increases the number of tasks workers perform by allowing them to rotate positions or by giving them responsibility for doing several jobs. Rather than assembling just one component of an automobile, factory workers might be grouped together and given responsibility for assembling the entire fuel system.

By improving the quality of work life through satisfaction of fundamental and personal employee needs, managers attempt to direct the behavior of workers toward the company goals.

Text №6. MANAGEMENT FUNCTIONS

Management plays a vital role in any business or organized activity. Management is composed of a team of managers who are in charge of the organization at all levels. Their duties include making sure company objectives are met and seeing that the business operates efficiently. Regardless of the specific job, most managers perform four basic functions. These management functions are planning, organizing, directing, and controlling.

Planning involves determining overall company objectives and deciding how these goals can best be achieved. Managers evaluate alternative plans before choosing a specific course of action and then check to see that the chosen plan fits into the objectives, established at higher organizational levels. Planning is listed as the first management function because the others depend on it. However, even as managers move on to perform other managerial functions, planning continues as goals and alternatives are further evaluated and revised.

Organizing the second management function is the process of putting the plan into action. This involves allocating resources, especially human resources, so that the overall objectives can be attained. In this phase managers decide on the positions to be created and determine the associated duties and responsibilities. Staffing, choosing the right person for the right job, may also be included as part of the organizing function.

Third is the day-to-day direction and supervision of employees. In directing, managers guide, teach, and motivate workers so that they reach their potential abilities and at the same time achieve the company goals that were established in the planning process. Effective direction, or supervision by managers requires ongoing communication with employees.

In the last management function, controlling, managers evaluate how well company objectives are being met. In order to complete this evaluation, managers must look at the objectives established in the planning phase and at how well the task assigned in the directing phase are being completed. If major problems exist and goals are not being achieved, then changes need to be made in the company's organizational or managerial structure. In making changes, managers might have to go back and replan, reorganize, and redirect.

In order to adequately and efficiently perform these management functions managers need interpersonal, organizational, and technical skills. Although all four functions are managerial duties, the importance of each may vary depending on the situation. Effective managers meet the objectives of the company through a successful combination of planning, organizing, directing, and controlling.

Text №7. PERFORMING AN AUDIT

Auditing is a process in which an independent accountant-auditor examines a firm's accounting records and financial statements and offers their accuracy and reliability.

There are different types of audits, for example, financial statements audits, income tax audits, "value for money" audits, environmental audits, administrative audits, financial management audit: etc.

The accountancy profession has built up a significant amount of expertise in performing financial statements audits.

Accounts audits were established as an instrument to protect third parties, the users of accounts. Special bodies of users, such as supervisory boards, employee representatives, government agencies may sometimes need an in-depth audit report which is usually confidential.

It should be stressed that auditors do not offer an opinion. The auditor's opinion is gradually being built up from a mass of detailed work to the final judgment through the planning and testing stages. The auditor normally starts with a study of the business environment the audited company is working in, and performs a preliminary analytical review.

Then he should direct his attention to the financial statements.

If auditor's attention is directed towards correctness of various assumptions made by the management for their preparation, auditor should focus on any misstatement whether it is intentional or unintentional.

Defining the audit strategy the auditor has to decide whether to rely on internal controls or to resort to substantive testing applying analytical review procedures, such as test in totals, comparison with budgets or even statistical analysis of figures.

In the planning stage as well as during the performance of audit

procedures and. finally, in forming conclusions, "materiality" and "audit

risk" are critical elements in the auditor's judgment. "Materiality"

refers to the magnitude or nature of a misstatement (including an

mission) of financial information.

"Audit risk" (including three different components - inherent risk, control risk, detection risk) is the risk that an auditor may give an inappropriate opinion on financial information that is materially misstated.

The natural finalization of the audit process is the auditor's report, reflecting the auditor's opinion on the financial statements. Unfortunately, audits do not always end up in an approval of the financial statements.

In order to protect the public interests and the profession's integrity an individual must be sufficiently educated and adequately trained before being certified to act as an auditor.

Text №8. THE ACCOUNTING EQUATION AND

THE BALANCE SHEET

Accounting is often said to be the language of business, it is used in the business world to describe the transactions in all kinds of organizations. Accounting terms and ideas used by people associated with business, whether they are managers, owners, investors, bankers, lawyers, or accountants. As it is the language of business there are words and terms that mean one thing in accounting, but whose meaning is completely different in ordinary usage survey the transactions of businesses, will gain a greater insight into the way that business is transacted and the methods by which business decisions are taken.

The actual record-making phase of accounting is usually called book-keeping. However, accounting extends far beyond the actual making of records. Accounting is concerned with the use to which these records are put, their analysis and interpretation.

An accountant should be concerned with more than the record-making phase, in particular, he should be interested in the relationship between the financial results and the events which have created them. He should be studying the various alternatives open to the business, and be using his accounting experience in order to aid the management to select the best plan of action for the business. The owners and managers of a business will need some accounting knowledge in order that they may understand what the accountant is telling them. Investors and others will need accounting knowledge in order they may read and understand the financial statements issued by the business, and adjust their relationships with the business accordingly.

Probably there are two main questions that the managers or owners of a business want to know: first, whether or not the business is operating at a profit; second, they will want to know whether or not the business will be able to meet its commitments as they fall due, and so not have to close down owing to lack of funds. Both of these questions should be answered by the use of the accounting data of the firm.

The accounting equation

The whole of financial accounting is based on the accounting equation. This can be stated to be that for a firm to operate it needs resources, and that these resources have had to be supplied to the firm by someone. The resources possessed by the firm are known as Assets, and obviously some of these resources will have been supplied by the owner of the business. The total amount supplied by him is known as Capital. If in fact he was the only one who had supplied the assets, then the following equation would hold true:

Assets = Capital

Accounting Services

There are many levels of accounting services provided by a wide range of accounting firms. A good accountant can set up your books and offer solid advice when it comes to such issues as tax planning and cash flow problems. He or she can help you select a good retirement plan and help you when setting up employee benefit packages. Accounting procedures can seem like a foreign language at times, but a good accountant can help translate everything into terms you can understand.

Features Provided by Accounting Services Firms

Payroll, including all payroll tax filings (Forms 941, 1099, W-2, etc.) Accounts payable and vendor files Accounts receivable and billing services

General ledger and financial statements Cash flow management Tax preparation

Bookkeeping Services

If your small business is not going to hire a bookkeeper as a staff Position, then searching for a good bookkeeping service will certainly be a wise decision for you. Don't try to handle the day-to-day bookkeeping activities that occur, because before you know it you will be spending too much of your valuable time on going through bank statements instead of concentrating your business.

Text №9. LOCAL GOVERNMENT

The Permanent Principles

Although the United Kingdom is a unitary state, not a federal one, a very large part of the public services are administered by elected local councils (local authorities) which together employ more than two million people.

London employs only one-third of this number. Scotland and Northern Ireland have their own systems which are not quite the same as that of England and Wales.

All local authorities derive their existence and their powers and functions from Parliament and the central government. Parliament can take powers away or add to them, and it can even abolish any particular authority, or group or class of authorities if it wants to.

Although Parliament has these powers over local authorities, and has used them recently, it does not exercise any detailed supervision through any office of the nature of prefect or local governor. Many of the activities of local authorities are in fact supervised, advised or controlled by the central government. But in each area the elected council and its officers have direct relations with the various central government departments - though these may have regional offices through which some of the central-local relations are conducted.

Traditionally, the most important local area is the county. England has been divided into counties for more than 1,000 years ago. Most of these counties those near the outer edges of England, have the old word 'shir" in their names e.g. Yorkshire. In each county the Queen appoints a Lord Lieutenant as her representative, now only for ceremonial purposes.

Within the counties the oldest units are the parishes. These arc the local communities or villages which became established in the Middle Ages, each with a church as its focal point.

Until 1888 they were important units of administration. Although they still survive and have elected parish councils they have almost no power of their own.

From the early Middle Ages, as some villages grew into towns, the Crown gave them 'charters of incorporation' as 'boroughs' or 'cities', with their own mayors and councils.

Text №10. LONDON

Greater London, with nearly seven million people, consists of thirty-two 'London boroughs' and the City of London. Most of these boroughs have between 150,000 and 300,000 people. The best known

of these is the City of Westminster. At the centre the City of London

survives as an independent unit, with less than 10,000 resident

inhabitants, half a million office workers by day and a few thousand

visitors to the Tower, Guildhall and St. Paul's Cathedral at weekends.

The Lord Mayor of London is concerned only with this small area, in

all other parts the boroughs' elected councils to run all the services except

a few which necessarily concern them all. The buses and underground

railways are now run by the London Transport Executive, responsible

to the central government, and the Home Secretary is in charge of the

Metropolitan Police (the police force in London).

A London Residuary Body was set up to manage the business of handing over the County's functions and property to the boroughs or other agencies.

Shire-'counties' of England outside London consist of thirty-nine shire' counties. Many of these are the old historic or geographic counties though the smallest have been joined together.

The thirty-nine 'shire counties are responsible for the main local functions, such as education, social services and police. Each is divided into 'district' which provide housing, refuse collection and other services best managed on a smaller scale. In general, most towns with more than about 80,000 people within these counties have become districts, but outside these towns the district divisions arc new creations, normally including a few towns and several dozen rural parishes, all of which have elected councils but very few functions. Some districts are called by the names of their biggest towns, others have newly invented names chosen by their councils, often after prolonged argument.

Text №11. THE WORKING OF LOCAL GOVERNMENT

(Part I)

Local councillors are elected for four-year terms, and in May of every year some local elections take place. For the counties and some districts the complete councils are elected at four-year intervals, but for other districts including most of those which are big towns and for metropolitan boroughs the elections are phased so that only one-third of the councillors are elected together in each year.

Each councillor represents a 'ward'. Within each council's area the wards are supposed to be as far as practicably equal in population, so their boundaries have to be revised from time to time There is no proportionality in the voting; as with the House of Commons the candidate with most votes wins the seat. In rural districts several small Parishes may together form a ward; a big town is divided into many wards.

In most local elections only about half of the people use their right to vote, and voting is dominated by the national parties. For some councils, including those of most inner London boroughs and big northern towns, every election leaves Labour with an absolute majority of the seats, others are permanently Conservative.

year only. In metropolitan and London boroughs the presiding officer has the title Mayor or Lord Mayor; so too in those districts which are called 'boroughs' or 'cities'. In other districts, and in counties, the presiding officer is called 'chairman'. A mayor or Every local council has its presiding officer, chosen by the whole council for one lord mayor is surrounded by some colourful ceremonial as the town's first citizen.

.

Text №12. THE WORKING OF LOCAL GOVERNMENT

(part II)

All local councils work through committees. Each council has a committee for each of the main sections of its work; for example the general management of the schools in a county or a metropolitan district is under the control of the education committee of the county or district council. Some of the committees consist only of members of the council (with the public represented in the same proportion as in the whole council), and some of them have in addition a few co-opted members, i.e. people who do not belong to the council but have been chosen to assist the committee with their special knowledge or other qualifications. For very important matters the committee can only recommend to the council what is to be done, and the decision is made by the council in general session. Meetings are normally open to the public.

The local authorities appoint their own staffs. At the middle and higher levels of the local government service the local government officers are usually ready to move from one place to another, and it is often necessary to move in order to get promotion. The appointment of the local councils staffs is supposed to have nothing to do with politics, though inevitably politics may have something to do with some of the top appointments. If the political majority of a council changes as a result of an election, it is not to be expected that there will be changes among the professional staff as a result.

The chairman of a committee (for example, on social services or education) has to work closely with the departmental chiefs and senior officers. Individual problems and matters of detail tend to be settled by the officers, though members of the public can try to get their ward councillors to intervene. Officers' decisions, like those of civil servants, have to agree with the main policies laid down by their committees.

If a single party dominates the council, it may give the chairs — of all the committees to its own party members. A committee chairman also works closely with elected councillors who belong to the same party. Both for committee business and for general council business there may be private party meetings at which the party's position is decided, and strict discipline is imposed on party members. Party discipline is often very strong in councils with Labour majorities, and in some cases the Labour councillors meetings are the main power centers.

Most local expenditure goes on services which councils arc required by law to provide, though they provide other services too. Part of the money needed is given to them in the form of grants from the central government, fixed by complex formulae and paid for out of national tax revenues. After 1983 the Government took a new and unprecedented power to set limits also to the amounts that local councils could collect by their own local taxes, and soon began preparations to impose on them a completely new system of local taxation.

For the cost of running their services the local councils rely partly on grants from the central government, and partly on taxes which they collect from local residents and businesses which operate in their areas.

In 1990 a new law came into effect, replacing the property tax by a new tax called a 'community charge. This is a fixed amount to be paid by each person to the local authorities.

A person with a small income may pay only a proportion (a fifth or more) of the normal rate.

Each council estimates its costs for the next year, then decides how much it needs to collect from its residents after taking account of grants from the central government and other revenues. So, the amount to be paid by each person depends on the expenditures of the borough or county and district where he or she lives. But the amount no longer depends on the value of the house.

Before changing the basis of local taxes, the central government had already increased its interference with the autonomy of local councils. In particular it restricted the amounts that local councils could collect from their people. Many local councils, including some with Conservative majorities, complained that it was impossible for them to provide local services of an acceptable quality without more funds. In 1990 Mr. Major's government began a new review of the whole system. It decided that the new 'poll tax' would be replaced by a local tax based on the value of property. It also increased the proportion of local expenditure paid for out of government taxation.

Теsт №1

Из четырех предложенных вариантов выберите единственно правильный.

1. Rick would like to find ... really good job.

A. a

B. the

C. an

D. -

2. They didn't... a word about their plans.

A. tell

B. talk

C. speak

D. say

3. I wonder when she... tomorrow.

A. would come

B. will come

C. comes

D. coming

4. The bill isn't... as I thought it would be.

A. such expensive

B. expensive

C. so expensive

D. more expensive

5. Nobody ... Julia to arrive so late.

A. expected

B. waited for

С looked for

D. looked forward

6. If it ... so late I would have called you,

A. has not

B. had not been

С had not

D. was not

7. The board ... all my suggestions.

A. given up

B. turned down

C. refused

D. put down

8. We have traveled a lot... by train and by car.

A. either

B. or

C. both

D. -

9. Modern English began ... the fifteenth century.

A. at

B. by

C. from

D. in

10. Peter has looked very excited ....

A. lately

B. the other day

С one of these days

D. the following week

1 l. I'm thirsty, I'd like some mineral water, but we haven't got … .

A. some

B. any

С nothing

D. anything

12. The manager told his secretary ... at work.

A. don't smoke

B. not to smoke

С not smoke

D. no smoking

13. The meeting was cancelled ... heavy snowfall.

A. as a result

B. although

С due to

D. because

14. Vicky asked Mom ... while she was on the phone.

A. don't talk

B. not to talk

С didn't talk

D. not talk

15. Ann went to England ... she could improve her English.

A. in order

B. owing

C. so that

D. although

16. I'm really interested in Economics. ... I.

A. So do

B. Neither

C. Neither am

D. So am

17. I ... stamps since Christmas.

A. have been collecting

B. was collecting

С am collecting

D. collected

18. The committee insisted ... making decision at once.

A. at

B. about

С on

D. in

19. We have our English class ... Monday morning.

A. in

B. at

С for

D. on

20. If you ... them well in advance, they will come.

A. informed

B. inform

С will inform

D. would inform.

Теsт №2

Из четырех предложенных вариантов выберите единственно правильный.

1. Without ... sleep, you won't be able to do well at the exam.

A. enough the

B. enough of

С enough a

D. enough

2. It is not... that he has to leave.

A. the surprise

B. surprised

C. surprising

D. surprise

3. She had no ... of spending the rest of her life working as a waitress.

A. intent

B. intentness

С intention

D. intentional

4. We are going to take our vacation ... the coast.

A. in

B. on

С at

D. over

5. It is ... the money but the principle that makes him angry.

A. no

B. not

С not only

D. neither

6. Customs ... one country to another.

A. differ

B. differ than

C. differ from

D. different

7. The plane is expected to arrive ... because of bad weather.

A. lately

B. lateness

С latest

D. late

8. We thought she ... today.

A. comes

B. is coming

С was coming

D. will come

9. There is still a wide-spread ... that the elderly have much to contribute.

A. accept

B. acceptable

C. accepted

D. acceptance

10. We can leave ... Mike is ready.

A. when

B. whenever

С ever

D. there ever

11. Iron ... for weapon and tools in the Bronze Age.

A. is generally used

B. generally used

C. was generally used

D. used generally

12. The duties of the secretary are to answer the phone, to type letters, and ...

A. bookkeeping

B. to bookkeep

С to do the bookkeeping

D. to do bookkeeping

13. I entered one ... and won a prize.

A. compete

B. competitor

С competition

D. competitiveness

14. Jean ... that she would call us.

A. said

B. had said

C. told

D. had

15. Kevin and I have to compete ... each other for good job opportunities.

A. with

B. to

С among

D. between

16. It has no ... the agenda.

A. relation with

B. relation to

C. relationship with

D. relationship to

17. Vendors must have a license.

A. everyone employed in food service

B. everyone who drives a car

C. everyone engaged in selling

D. everyone who works in a hospital

18. Americans have been criticized for placing too much emphasis on being on time.

A. importance

B. activity

C. bother

D. assistance

19. In his biography, Thomas Hardy is described as a very industrious writer.

A. sensible

B. pessimistic

C. optimistic

D. diligent

20. By law, when one makes a large purchase, he must have an adequate opportunity to change his mind.

A. an informal

B. a belated

С an ample

D. a gracious.

Test №3

Из четырех предложенных вариантов выберите един­ственно правильный.

1. There is a ... teachers at the school.

A. short

B. short of

C. shortage

D. shortage of

2. The prices here are … at a discount store.

A. high than

B. higher than

C. higher than those

D. higher of those

3. To judge people, you should … listen to what they say but observe what they do.

A. not only

B. not

С no

D. neither

4. This is a useful book … the topic

A. for to research

B. by research

С for researching

D. to researching

5. If at first you don't … try again.

A. accomplish

B. prosper

С succeed

D. triumph

6. … a student abroad, I was very homesick.

A. While

B. When

C. It was when

D. It while was

7. I will call you back as soon as my dinner....

A. will finished

B. will be finished

С finished

D. is finished

8. Whoever phoned did not leave ... name.

A his

B. her

С their

D. one's

9. ... a waitress, Gloria has been promoted to hostess.

1. It was once

B. Once it was

C. That once

D. Once

10. Kevin ... to go into business with his father.

A. he plans

B. planning

C. plans

D. that plans

11. Flying is not only faster but also ... than traveling by car.

A. safe

B. safest

С it is safer D. safer

12. Mary ... to her hometown after she graduated from university.

A. returned

B. returns

C. returned back

D. returned backward

13. The management made us ... doing it for next week.

A. put away

B. put off

С put out

D. put up

14. Professor Rogers wouldn't... us use dictionaries during the test.

A. let

B. lets

С leave

D. left

15. You should operate with ... the rules and regulations.

A. regard

B. regard of

C. regard to

D. regard for

16. In the past, energy sources were thought to be boundless.

A. without limits

B. expensive

С inexpensive

D. natural

17. Keep two pencils handy while taking the examination.

A extra

B. secret

C. near

D. sharp

18. Owners should be confident that their insurance will replace all of their merchandise.

A. Tutors

B. Proprietors

C. Lenders

D. Debtors

19. The report specified seven areas where the Government had a responsibility.

A. confused

B. designed

C. developed

D. separated

20. The Government rejected the Opposition's request to debate unemployment.

A. compromise

B. manuscript

С petition

D. budget.

Теsт №4

Из четырех предложенных вариантов выберите единственно правильный.

1. After her famous husband's death, Eleanor Roosevelt continued ... for peace.

A. work

B. working

С the working

D. to work

2. We had better ... the schedule.

A. to check

B. checking

С check

D. checked

3. When they have enough money, Alan and ... will return to school.

A she

B. her

С herself

D. hers

4. Harvard ... a school for men, but now it is coeducational.

A. was used

B. used to be

С was used to

D. was used to be

5. Jane always helps my brother and ... with our home assignments.

A. I

B. me

С myself

D. mine

6. Jim is unemployed now, so he is looking for ... .

A. works

B. a work

C. job

D. a job

7. I would be glad to take a message for ... .

A. she

B. her

С hers

D. herself

8. It is generally known that an M.B.A. degree is a good preparation for a career in . . .

A. a business

B. businesses

C. business

D. one business

9. George had ... when he first came to State University.

A. a good luck

B. good a luck

C. the good luck

D. good luck

10. This tea is ... hot to drink.

A. so

B. such

С much

D. too

11. The line is busy, someone ... the telephone now.

A. must use

B. must have used

С must be using

D. must using

12. Last month we had a ... high electric bill.

A. very

B. too

С so

D. such

13. George's values and mine are ... .

A. similar

B. like

С same

D. as well

14. One of the least effective ways of storing information is learning ...it.

A. how repeat

B. repeating

С to repeat

D. repeat

15. Many embarrassing situations occur... a misunderstanding.

A. for

B. of

С because

D. because of

16. Tom and Peter are very successful; the former is a dentist, the ... is a businessman.

A. second

B. last

С latter

D. latest

17. Television, radio, newspapers, and other kinds of mass ... influence our emotional attitudes.

A. medium

B. media

C. mean

D. means

18. Judy doesn't look .. . her elder sister.

A. like to

B. like as

С like

D. alike

19. In most American schools, sports are compulsory.

A. free of charge

B. required

С excellent

D. easy

20. Civil War in 1863 cut United States into Confederacy and Union.

A. severed

B. acknowledged

C. integrated

D. alienated.