Министерство науки и высшего образования

Федеральное государственное образовательное учреждение

высшего образования
«Московский государственный лингвистический университет»

Е. С. Кудинова

INTRODUCTION TO ECONOMICS
Учебное пособие
по английскому языку для студентов V курса,
обучающихся по специальности «Перевод и переводоведение»
по направлению подготовки
«Лингвистическое обеспечение военной деятельности»

Москва • ФГБОУ ВО МГЛУ • 2019

УДК 81’42
ББК 81.2.Англ.я73
К-887

Печатается по решению Ученого совета

Московского государственного лингвистического университета

Учеб. план 2018 г., разд. I, поз. 58.

Рецензенты:
доктор филологических наук, профессор Ф. И. Карташкова
кандидат филологических наук, доцент Е. М. Скурко

Кудинова Е. С.
К-887 Introduction to Economics: учеб. пособие по английскому языку для
студентов V курса, обучающихся по специальности «Перевод и переводове-
дение» по направлению подготовки «Лингвистическое обеспечение военной
деятельности». М. : ФГБОУ ВО МГЛУ, 2019. 238 с.
ISBN 978-5-00120-025-3

Данное учебное пособие предназначено для студентов старших

курсов вузов, обучающихся по специальности 45.05.01 «Лингвистическое
обеспечение военной деятельности» для использования на занятиях по
дисциплине «Практикум по культуре речевого общения (экономический
аспект)». Целью пособия является формирование у студентов-неэкономистов
коммуникативной компетенции в области профессионального общения.
Пособие состоит из 10 частей, содержащих аутентичный текстовый материал
и аппарат упражнений, направленный на расширение персонального тезау-
руса студентов, на закрепление функциональной и тематически релевантной
лексики, на развитие навыков как подготовленной, так и спонтанной устной
монологической и диалогической речи, а также на отработку навыков устного
и письменного реферирования и перевода.
УДК 81’42
ББК 81.2.Англ.я73

ISBN 978-5-00120-025-3 © ФГБОУ ВО МГЛУ 2019

 CONTENTS

Предисловие ....................................................................................................................................... 4
UNIT 1. What is Economics? ...................................................................................................... 5
UNIT 2. Famous Economists and Economic Theories .................................................... 16
UNIT 3. Supply and Demand ................................................................................................... 36
UNIT 4. Types of Markets ......................................................................................................... 54
UNIT 5. Banks ............................................................................................................................... 81
UNIT 6. Taxation ......................................................................................................................... 94
UNIT 7. Financial Reports ...................................................................................................... 120
UNIT 8. Types of Business Entities ..................................................................................... 145
UNIT 9. Mortgages ................................................................................................................... 160
UNIT 10. Marketing .................................................................................................................... 201
References ........................................................................................................................................ 236

3
ПРЕДИСЛОВИЕ

Данное учебное пособие предназначено для использования в ка-

честве учебного материала на занятиях по практикуму по культуре
речевого общения английского языка со студентами-неэкономистами
старших курсов лингвистических вузов.
Целью пособия является формирование у обучающихся лингви-
стических компетенций в сфере профессионального общения.
Учебное пособие состоит из десяти разделов, охватывающих наи-
более актуальные экономические реалии:
− определение экономики и базовых экономических терминов;
− вклад видных экономистов в мировую экономику и основные
экономические теории;
− законы спроса и предложения;
− эластичность спроса и предложения;
− факторы производства;
− типы рынков;
− банковская система;
− налогообложение;
− финансовая отчетность;
− типы коммерческих предприятий;
− ипотечное кредитование и маркетинг.
Тематика перечисленных разделов соответствует Программе
дисциплины «Практикум по культуре речевой коммуникации второ-
го иностранного языка (английского)».
Данное пособие предполагает работу с оригинальными аудио-
и видеоматериалами – лекциями известных экономистов и бизнесме-
нов. Каждый раздел содержит аутентичные тексты и аппарат упраж-
нений, направленный на закрепление функциональной и тематиче-
ски релевантной лексики; задания на отработку навыков критическо-
го мышления и обобщения фактического материала, а также статьи
для актуализации навыков устного и письменного реферирования.
Кроме того, в конце каждого раздела размещены упражнения на
отработку способности аргументировано и логически верно строить
устную монологическую речь как подготовленную, так и спонтанную
на английском языке.

4
UNIT 1
WHAT IS ECONOMICS?

Part 1. Listening.

А. Listen to / Watch Professor Taylor and answer the questions.

1. What are the most common jokes about economists?

2. What are the three basic questions of economics?
3. How can you visualize the answers to the three basic questions
of economics in terms of government control and individual
freedom?
4. What does the speaker call the “night watchman state”;
the statistical people?
5. According to the lecturer, what does it take to think like an
economist?
6. What are the shopworn clichés about economics the speaker is
disproving?
7. What statements are deemed obvious by most economists?
8. Who introduced the notion of an invisible hand?
9. What is an opportunity cost?
10. What is the difference between microeconomics and
macroeconomics?

B. Insert the missing words.

1. Economists insist on … trade-offs ...

2. … believe in statistical people, not …
people.
3. Self-interest can be an effective way of …
4. Incentives … .
5. Prices are determined by the market,
not by …
6. … costs are opportunity costs.
Joan Robinson

5
C. Match the columns. Who said?

1. A dreary, desolate and indeed quite distressing, a. Joan Robinson

what we might call by way of eminence the
dismal science.
2. …this is really odd that economists are b. Herb Stein
expected to predict the future.
3. Some people talk in their sleep, but economists c. John Maynard
talk in other people’s sleep. Keynes
4. Economics is a method rather than a doctrine, d. Victor Fuchs
an apparatus of the mind, a technique of
thinking which hopes its possessor to draw
correct conclusions.
5. The purpose of studying economics is not e. Adam Smith
to acquire a set of ready-made answers to
economic questions, but to learn how to avoid
being deceived by economists.
6. Every individual endeavours to employ his f. Kenneth Arrow
capital so that its produce may be of greatest
value. He generally neither intends to promote
the public interest, nor knows how much
he is promoting it. He intends only his own
security, only his own gain, and he is in this
<…> led by an invisible hand to promote an
end which was no part of his intention. <…>
By pursuing his own interest, he frequently
promotes that of society more effectually than
when he really intends to promote it.
7. Most of the economics that is usable for g. Thomas Carlyle
advising on public policy is about at the level
of the introductory undergraduate course.

D. Suggest the context for the following words / word combinations.

1. Trepidation
2. Anti-marketing
3. To talk the talk
6
 4. 'Well, even the most basic economics shows that ...'
5. To be shut out of the argument
6. Expertise
7. An ace economist ready for that tenured chair in economics
8. To grapple with issues / questions etc.
9. To fall along a spectrum; at one end of the spectrum
10. Retirement programs like Social Security
11. Hard-hearted social Darwinist
12. One step away from Joseph Stalin
13. Hot air
14. To clear up misconceptions about
15. To take the burden
16. To be a fortune teller; to forecast the future; to predict
17. To take political sides
18. To raise taxes on corporations or individuals
19. Returns on ownership of stock; bonuses for top executives; money
in your retirement account
20. To pursue self-interest
21. Market exchanges
22. (An Inquiry into the Nature and Causes of) The Wealth of
Nations, 1776
23. To provide an incentive for smb to do smth; a useful set of
incentives
24. Unrewarding assembly line jobs
25. To encourage smb with a subsidy; to discourage smb with a tax
26. Alan Blinder, Hard Heads, Soft Hearts: Tough-Minded Economics
for a Just Society
27. To raise the rent; to raise interest rates; to raise gasoline prices
28. Shifting market conditions of supply and demand
29. Downtown real estate
30. To pay off one’s mortgage
31. To think about smth in … chunks
32. Goods markets, labour markets, financial capital markets
33. Individual actors
34. Budget deficit

7
SUMMARY
The three basic questions of
economics are
• What should be produced
by a society?
• How should it be produced?
• Who gets to consume what
is produced?
It’s useful to think of the possible answers to these questions as falling
along a spectrum. At one end of the spectrum is total government control.
At the other extreme, you can imagine a society in which individuals make
all the decisions about what, how, and who. In the real world, very few
societies occupy either extreme.
If the government provides only the basics for a market economy, this
is sometimes called the 'night watchman state'.
It’s essential to clear away some misconceptions about what economics
is not. For one thing, economics is not about predicting the future.
Economics is also not about taking political sides. Economics is not about
supporting business or labour.
ECONOMISTS BELIEVE THAT
• trade-offs should be taken seriously. For instance, if a government
needs to raise additional revenue and, consequently, it raises taxes
on corporations, corporations could raise the price of their products
sold to consumers, or they could cut the bonuses of top executives,
or they could cut the dividends they pay to stockholders – all of
which will mean less money in the pockets of some actual person.
• self-interest can be an effective way of organizing a society. This
is closely related to the idea of the 'invisible hand', which means
that in pursuing your own self-interest, you may benefit others.
• all costs are opportunity costs. This statement means that when
you make a choice, the thing you didn’t choose is what economists
call an 'opportunity cost'. The true cost is not the money you’ve
spent; it’s the thing or things you give up. It’s the value of the next
best alternative.
8
 • prices are determined by the market, not by a producer. For
example, bankers raise the interest rate or landlords put up the
rent, because market conditions of supply and demand shift in a
way that allows them to do so.

Part 2.
Read the text below and be ready to state the difference between the
terms 'economics', 'economy', 'finance', 'marketing'’ and 'business'.
Text 1
THE DIFFERENCE BETWEEN ECONOMICS,
FINANCE, MARKETING AND BUSINESS
Economics is a social science. Economics is the study of how individuals,
institutions, and society choose to deal with the condition of scarcity.
Or, in other words, economics studies the production, consumption and
distribution of goods and services. Scarcity is the universal condition that
exists because there is not enough time, money, or resources to satisfy
everyone’s needs or wants.
Some economists study the decision-making of individuals and
institutions; others study how nations handle scarcity and how different
economies interact. Economics is an interdisciplinary science, which
means that it is applied in various fields like finance, business, government,
education, law, politics, social institutions, science, psychology and many
more. Economics is divided into two broad areas: microeconomics and
macroeconomics.

The field of microeconomics focuses its attention on the decision-

making of individuals and businesses and the impacts it has on individual

9
 markets. Microeconomics is
primarily concerned with markets
for goods, services, and resources.
Whenever and wherever buyers
and sellers come together to
exchange resources, goods, or
services, a market is created and
the behaviour of these markets is
of particular interest to economists. Macroeconomics is the study of how
entire nations deal with scarcity. Macroeconomists analyze the systems
nations create or allow for the allocation of goods and services. In economics,
the micro decisions of individual businesses are influenced by whether the
macroeconomy is healthy; for example, firms will be more likely to hire
workers if the overall economy is growing. In turn, the performance of the
macroeconomy ultimately depends on, it is basically the sum of, all the
microeconomic decisions made by individual households and businesses.
By the way, the term 'economy' means the total system of economic
activity in a particular country or area, comprising all the production,
labor, trade, and consumption that take place.
Finance is a fund management science, or in other words, it focuses
on the management of money and assets1. The basic principle of finance
is saving money and lending money, that is, finance is concerned with the
study of how individuals and institutions earn, save, and spend money over
a certain length of time. These operations are accomplished with the help
of financial institutions (e. g. banks, trust companies, insurance companies,
brokerage firms and investment dealers). The science of finance deals with
the interrelation of the concepts of time, risk and money.
There are three general areas of finance: corporate finance, public
finance and personal finance. Corporate finance is a process of providing
the necessary funds essential for the activities of the corporation. Public
finance, aka. state finance, refers to the financial activities of a country,
state or city. Personal finance is the finance of an individual or a family.

1
An asset is anything of value that isn’t directly consumed but that gives off a
flow of services that you do consume. For example, a house is an asset because it
provides shelter services. You don’t consume the house; you consume the services
it provides. Similarly, a car is an asset because, although you don’t consume the car
itself, it provides transportation services.
10
The main questions of personal finance are about the amount, origin,
security and taxation of the money needed for the survival of the specific
individual or family.
The main difference between economics and finance is that finance
focuses entirely on the maximization of wealth and on how asset market
works, whereas economics seeks to optimize valued goals. If we understand
the facts this way, we can say that finance is a subset of economics. Finance
is also the study of the financial markets, which coordinate the interests
of the lenders and borrowers that do business in the market. The study
of economics is the study of the goods and services which circulate in the
same market.
Marketing attempts to explain the trends which dictate the demand of
consumers and supply of products. The main purpose of marketing is to
drive the growth agenda of a company by satisfying customer needs and
requirements.
The term 'business' refers either to trade and commerce in general
(uncountable noun) or to a legally recognized organization that makes
or buys and sells goods or provides services to consumers (countable
noun), aka. an enterprise, company or firm. The owners and operators of
a business have as one of their main objectives the generation and receipt
of a financial return called profit, in exchange for work and the acceptance
of risk.

ASSIGNMENTS

А. Translate into Russian

1. scarcity;
2. asset;
3. lender;
4. corporate finance;
5. public finance;
6. personal finance;
7. maximization of wealth;
8. supply and demand;
9. to drive the growth agenda.

11
B. Insert the missing words.
Customer, Consumer, or Client?
A … or a … is a person who buys goods or a service. A … (aka. end-
user) is a person who buys goods or services for their personal use. This
term is also used to talk about someone who uses the product or service.
For food, the … is the person who buys it and the … is the person who eats
it. … and … are both … The difference between clients and customers is
that … unlike … maintain long-term ongoing business relationships. The
term ‘…’ is mainly used for service industries. … of a company, restaurant,
shop etc. considered as a group are known as clientele [BklæÔnAtel]. To put it
another way, an end-user is a … A one-off buyer is a … A repeat customer
is a …
C. Countable, or uncountable? Insert the necessary articles.
1) Jordan is someone I can do … business with.
2) Our family runs … small business.
3) Susan works in … retail business.
4) The startup went out of … business last month.
5) If you want to launch … business, you need some seed capital.
6) Once the venture capitalist has acquired a controlling stake, he is
sure to force you out and sell your company at a profit. In other
words, you won’t be able to carry on … business any longer.
7) Is this trip to New York … business or pleasure?
8) After a slack period last year … business is finally picking up!

Part 3. Listening.

A. Family Businesses. Listen to the audio. Be ready to sum it up and

suggest the context for the numbers and words below.
New term: A waiver agreement is a kind of arrangement when a
person, or an organization agrees to give up a right to or claim for damage,
compensation etc.
• 50 %
• 60 %
• 70 %
• 80 %
• 95 %
12
 • 13 %
• IKEA
• BMW
• Sainsbury’s
• Fiat
• Hoshi Ryokan

B. Make up sentences using the following word combinations.

1) to form the backbone of smth;
2) family firms, family businesses, family ownership, family-controlled,
family-run, family-owned; non-family businesses;
3) to guarantee longevity;
4) strategic decision making;
5) to make a transition;
6) to overcome and predict problems;
7) to avoid pitfalls;
8) a corporation; a limited liability company;
9) multi-generational owners;
10) to cause legal battles;
11) to run into family conflicts down the line;
12) part-owner;
13) to have no say in smth;
14) to set values;
15) an enduring sense of corporate identity;
16) to increase long-term prospects for smth;
17) to remind smb of their mortality;
18) the succession of ownership and management.

C. What do you think these terms mean?

1. Succession planning.
2. The emotional glue.
D. Texts for Rendering into English.
Text 1
Конечной целью функционирования любой экономической
системы является удовлетворение потребностей общества и инди-
видов. Именно на это направлен процесс производства, неразрывно
13
связанный с потреблением товаров и услуг, расходованием имею-
щихся в распоряжении общества ресурсов для их производства.
С расходованием ресурсов для удовлетворения потребностей связаны
все проблемы экономического развития. И все решения этих проблем
базируются на двух фундаментальных экономических аксиомах.
Первая аксиома – потребности общества (индивидов и институтов)
безграничны, полностью неутолимы. Вторая аксиома – ресурсы
общества, необходимые для производства товаров и услуг, ограничены
или редки. Отмеченное противоречие разрешается путем выбора.
Не случайно одно из определений экономики как общественной науки
гласит: экономика описывает и анализирует выбор из ограниченных
ресурсов для максимального удовлетворения потребностей.

Text 2
Главной экономической задачей является выбор наиболее
эффективного варианта распределения факторов производства
в целях решения проблемы ограниченности возможностей,
которая обусловлена беспредельными потребностями общества
и ограниченностью ресурсов. Располагая информацией о своих
производственных возможностях, любое общество должно найти
ответы на следующие три вопроса.
• Что из товаров и услуг должно быть произведено и в каком
количестве?
Индивид может обеспечить себя нужными товарами различными
путями: произвести их самостоятельно, обменять на другие блага,
получить их в качестве подарка. Общество в целом не может получить
все и немедленно. В силу этого оно должно определиться, что хотело
бы иметь немедленно, с получением чего можно подождать, а от чего
вообще отказаться.
• Как эти товары и услуги надо производить?
Существуют различные варианты производства всего набора
благ, а также каждого блага в отдельности. Кем, из каких ресурсов,
с помощью какой технологии они должны быть произведены?
Посредство какой организации производства? По разным проектам
можно построить производственное и жилое здание, по разным
проектам можно выпускать автомобили, использовать участок
земли.

14
 • Кто купит и сможет потребить (использовать) эти товары
и услуги?
Поскольку количество созданных товаров и услуг ограничено,
то возникает проблема их распределения. Кто должен пользоваться
этими продуктами и услугами? Должны ли все члены общества
получать одинаковую долю? Чему должен быть отдан приоритет –
интеллекту или физической силе?

Part 4.
Discussion. Comment on the following quotes.
1. The real tragedy of the poor is the poverty of their aspirations.
(Adam Smith)
2. Innovation distinguishes between a leader and a follower. (Steve
Jobs)
3. A budget tells us what we can’t afford, but it doesn’t keep us from
buying it. (William Feather)
4. Don’t find fault, find a remedy. (Henry Ford)

15
UNIT 2
FAMOUS ECONOMISTS AND ECONOMIC THEORIES

Part 1. Read the text about Business Cycles and sum it up.
Economists refer to the series of expansions and contractions as
the business cycle (a colloquial way of calling it is 'boom and bust'). As
the workforce and productivity grow, so does the economy’s capacity to
produce. The periods of expansion and contraction are attributed to
differences between total spending on output relative to the economy’s long-
term capacity to produce. During periods of expansion, spending increases
to the point where the economy exceeds its long-run production capacity.
Contractions occur as total spending decreases and excess productive
capacity remains.
Business Cycle Measurements
Business cycles are measured by looking at both GDP and
unemployment. During periods of economic expansion, unemployment
is reduced and the GDP grows. The opposite happens in periods of
recession.
The Four Stages of the Business Cycle
Economists generally point to four stages in the business cycle (see the
diagram below):
1) Expansion, which occurs when the GDP grows month-over-
month, and unemployment declines.
2) Peak, which occurs when real GDP spending is at its highest – the
period just before unemployment begins to rise and other economic
indicators1 fall.
3) Contraction, which occurs when GDP growth slows or declines.
A recession is specifically defined as two consecutive quarters of
declining real GDP.

1
Economic indicators are key statistics used by analysts to interpret current
or future investment possibilities or to judge the overall health of an economy, e. g.
the consumer price index (CPI), gross domestic product (GDP), unemployment
& employment levels, the price of crude oil, consumer durables, net business
formations, share prices, retail sales, gross national product, interest rates, real
estate and housing price index.
16
 4) Trough [trÔf], which is the period between contraction and
expansion as GDP begins to recover.

Theories of Business Cycles

Economists disagree on exactly why the economy fluctuates as it does.
Is the culprit an external cause, such as wars? Or internal factors, such as
business innovation? They also disagree on what should be done during
downturns. How much should the government meddle? That depends on
which economist you talk to.
Milton Friedman’s monetarists explain the business cycle as being
caused by poor management of the money supply (money in circulation).
Periods of overexpansion are produced by too much money, and periods
of contraction are caused by too little money in circulation.
Keynes explained the business cycle as being caused by 'animal spirits'
that represent the emotion that clouds rational decision-making. These
animal spirits are expressed through businesses’ willingness to invest.
When businesses are manic, they invest heavily, only to fall into stages of
depression where they are unwilling to invest.
Most other theories explain the business cycle as ultimately being
caused by spending changes, but one referred to as the Real Business
Cycle Theory focuses on changes in productivity as being the ultimate
cause of the cycle.
ASSIGNMENTS
A. Suggest the Russian for
1) money supply;
2) downturn;
17
 3) ‘animal spirits’;
4) The Real Business Cycle Theory.

B. Suggest the English for

1) цикл деловой активности;
2) подъем, пик / бум, спад, дно;
3) объем производства, производительность;
4) продуктивность, производственная способность (4 варианта);
5) расходы, затраты;
6) первопричина.

Part 2. Investopedia Video. Business Cycles. New terms: the Great

Recession, NBER (National Bureau of Economic Research),
cyclical stocks, commodity stocks, consumer staples, technology
stocks, utilities stocks, to overheat, to outperform, underpriced,
cashflow, dividend yield.

A. Watch the video about business cycles and answer the questions below.

1) What happens to employment, production, sales and incomes

during expansions and contractions?
2) What is the difference between contractions and recessions?
3) What stage of the business cycle does the housing boom of the
2000s illustrate?
4) How long did the Great Recession last?
5) How long has the average expansion lasted since 1945 according
to the National Bureau of Economic Research? How long has
the average contraction lasted since 1945? Have there been any
changes since the 1990s?
6) How can investors profit from business cycles?
7) Which of the statements are false?
a) Cyclical stocks fluctuate (rise and fall) with business cycles.
b) Stocks of Nike Inc., Kraft Heinz, Ford Motor Company, Procter
& Gamble, and Netflix Inc. are examples of cyclical stocks.
c) Consumer staples (e. g. luxury items) are essential and cannot
be cut out of consumers’ budgets.
18
 d) Healthcare, food, beverage, household items, pharmaceutical
products are examples of consumer staples that are always
in demand.
e) Utility stocks (e. g. gas, electricity stocks etc.) and consumer
staples stocks are non-cyclical, which means that they tend to
perform well even in the midst of economic downturns.
8) Which of the following are technology and dot com stocks: Phillip
Morris, Facebook, Wal-Mart Stores, Amazon, Netflix, Colgate-
Palmolive, Google (Alphabet)?
9) If the economy is overheating, is it healthy for the economy? What
do you think is likely to happen next?
10) What is the term for 'the amount of money you get for each
dollar / euro / ruble etc. you invested in a stock / share'1?
11) What are the pros and cons of business cycles?

Part 3. Sum up the following texts

A. What is the difference between GDP and GNP?
Gross domestic product (GDP) measures the total value of all final
production that occurs within a country during the course of a year. GDP
is also a measure of annual spending on new domestic production and a
measure of income earned from domestic production.
To better understand GDP, consider the following example. Assume
a simple economy made up of Frank and Louise. Lately Frank has been
complaining about the cold weather, so he offers Louise $ 1 to knit a
blanket. Louise jumps at the opportunity to make a buck and commences
knitting a new blanket. Upon completion, Louise exchanges the blanket
for the dollar. In this simple example, what was the value of the economy’s
spending, income, and output? The answer is $ 1. The $ 1 spent by Frank
was earned by Louise in exchange for the knitted blanket.
GDP is not the only measure of economic performance that has been
employed. You might remember GNP2, or gross national product. The key
difference between GDP and GNP is a single preposition. GDP is a measure
1
For example, if a share of Company A is trading at $ 20 and pays annual
dividends of $ 1 per share to its shareholders, its dividend yield is 5 %, i.e. ($ 1 /
$ 20) × 100 = 5 %.
2
The new term for it is GNI, or Gross National Income.
19
of all new production that is done IN a country during the year, while GNP
is a measure of all new production that is done BY a country during the year.
In other words, GNP is the total value of all goods and services produced in
one year by domestic-owned businesses, whether those businesses operate
within the country or abroad, plus foreign investments (excluded from
GDP). Toyotas made in Texas are part of U. S. GDP, but not U. S. GNP1.
When an iPhone is manufactured and assembled in Taiwan, does it count
towards the U. S. GDP or China’s GDP?
GDP = C + I + G + (X – M), where C stands for household consumption,
I is business investments, G is government spending, X stands for exports, and
M stands for imports.

B. What is the difference between Recession and Depression?

Depression is a severe, long-term decline in economic activity in
which output slumps, unemployment rises, and credit is scarce. Recession
is a period during which an economy’ total output decreases.
The general rule of thumb for identifying a recession is when there
has been a decline in GDP for at least two consecutive quarters. The most
recent example of this occurring would be after the financial crisis of 2007–
2008. A severe recession with a 10 % decline in GDP is usually called a
depression.
The attributes of a recession
include declines in employment,
investment, and corporate profits.
Recessions are the result of falling
demand and may be associated
with deflation (falling prices), or
inflation or stagflation (see below).
Considered a rare (economists usually name the Great Depression in
the 1930s) but extreme form of recession, a depression is characterized by
'unusual' increases in unemployment, restriction of credit, shrinking output
and investment, price deflation or hyperinflation, numerous bank runs and

1
The formula to calculate the components of GNP is Y = GDP + Z. Z stands
for net income earned by domestic residents from overseas investments – net
income earned by foreign residents from domestic investments.
20
bankruptcies, reduced amounts of trade and commerce, as well as highly
volatile / erratic relative currency value fluctuations, mostly devaluations
(a drop in the value of a currency).

C. What is Inflation?
Inflation is defined as a general increase in prices or as a decrease in
purchasing power of money. Inflation is either created by excessive demand
or increases in producers’ per-unit costs, but it is sustained by too much
money in circulation (see the Figure below).

Figure. Money Causes Inflation

D. What is Unemployment?
Persons sixteen years of age or older are considered unemployed if
they have actively searched for work in the last four weeks, but are not
currently employed. The employed are those who have worked at least one
hour in the previous two weeks. People who meet neither criterion are not
considered in the labor force, which is the number of employed persons
plus the number of unemployed persons. The unemployment rate that
you hear quoted in the news is not a percentage of the population, but a
percentage of the labor force that is not currently employed.
There are many reasons for not participating in the labor force.
Full-time students, retirees, stay-at-home parents, the disabled, and the
institutionalized do not participate. Members of the military on active duty
are not considered part of the labor force either. At any point in time there
are people entering, exiting, and re-entering the labor force. Furthermore,

21
people are forever getting hired, fired, and furloughed. They are also quitting,
cutting back, and retiring. The labor force is in constant flux, which makes
measuring unemployment a daunting task.

E. What is Stagflation? What is Hyperinflation?

Stagflation is a period of high

inflation, high unemployment, and
low growth.
Hyperinflation is defined as
annual inflation of 100% or greater.
All cases of hyperinflation have been
accompanied by the government
or central bank issuing too much
money. For instance, Hungarian
Inflation inflation was so severe in 1945 and
1946 that prices were measured in not tens or hundreds, but billions, trillions,
and even octillions. By the end of the period of Hungarian hyperinflation,
the total supply of pengos in circulation had less value than a single pengo
did at the beginning.

F. What is known as a Welfare state?

A welfare state is a system in which the government provides free

social services such as health and education and organizes the national
labor market as to prevent or minimize unemployment.

G. What is the difference between ‘fiscal policy’ and ‘monetary policy’?

Fiscal policy (Rus. бюджетная политика) refers to a government’s

plans for taxes / tax rates and government spending. Through fiscal policy,
regulators attempt to improve unemployment rates, control inflation,
stabilize business cycles and influence interest rates in an effort to control
the economy1.

1
Fiscal policy is based on the concepts of the UK economist John Maynard
Keynes.
22
 Monetary policy1 (Rus. кредитно-денежная политика) refers to
government policies aimed at changing the money supply (money in
circulation), which in turn affects interest rates, in order to stimulate
or slow down the economy. Monetary policy is maintained through
modifying the interest rate, buying or selling government bonds, and
changing the amount of money banks are required to keep in the vault
(bank reserves).

Part 4. Read the texts and do the assignments.

A. Insert the missing words from the box below
technical and economic progress;
invisible hand;
the private sector;
robust competition;
collude rather than compete.
Adam Smith
Adam Smith was a professor of Moral
Philosophy who developed the idea that
as long as … constrains firms, their self-
interested profit-seeking inadvertently
causes them to act in ways that are socially
optimal – as though they’re guided by an …
to do the right thing. He also analysed the
way that new technology and organisation
combined to create new and more efficient
(1723–1790) ways of doing things, leading to…
But Smith wasn’t naive. He believed that people who run businesses
prefer to … whenever possible, and that governments have a very important
economic role to play in fostering the robust competition needed for the
invisible hand to work its magic. Though Smith argued in favor of 'laissez-
faire', he also believed that governments must provide many essential public
goods, such as national defence, that aren’t readily produced by…

1
Monetary policy is attributed to the University of Chicago economists,
chiefly the Nobel-laureate professor Milton Friedman.
23
B. Rearrange the paragraphs in the correct order.
John Maynard Keynes
a) Keynes’s policy prescriptions were adopted
during the Great Depression in many countries and
later formed the bedrock of the post-war welfare
state. And although many of his specific ideas about
the cause of the Great Depression and the best
policies for dealing with recessions are no longer
embraced, his underlying idea that governments are
responsible for taming the business cycle remains very much with us
today.
b) He then asserted that monetary policy had been ineffective
in combating the decline in expenditures. And he finally concluded,
given his dismay about monetary policy, that fiscal policy was the only
remaining source of salvation. In particular, Keynes believed that the
best way to increase expenditures in such dire circumstances was for
the government to spend heavily to pay for programmes that would
buy up lots of goods and services in order to get the economy moving
again.
c) His most famous ideas were developed in response to the long
agony of the Great Depression of the 1930s. He first asserted that the
Great Depression was the result of a collapse in the expenditures being
made on goods and services.
d) John Maynard Keynes (1883–1946) invented modern
macroeconomics and the idea of using government-provided economic
stimuli to overcome recessions. Much of the rest of 20th-century
macroeconomics was a series of responses to his seminal ideas.
C. Insert the missing articles
Kenneth Arrow
and Gerard Debreu
Kenneth Arrow (b. 1921) and Gerard Debreu
(1921–2004) mathematically proved that 1… Adam
Smith’s idea of 2 … invisible hand was, in fact, correct.
Not only do 3 … competitive firms provide 4 … society
with 5 … utility-maximising combination of 6 … goods
and 7 … services, but also they do so efficiently,
24
 at 8 … minimum cost. Since this proof came in
9 … 1950s, it served to disprove 10 … assertions
of 11 … totalitarians and 12 … communists that
13 … centrally planned economies were more
productive or more efficient than 14 … market
economies.

D. Correct the mistakes

Milton Friedman
Milton Friedman (1912–2006) convicted econo-
mists that the quantity theory of money is, in fact, true:
sustained inflations is the result of sustained increases
in the monetary supply (printing too much money).
This insight put limits on using money politics to
stimulate the economics. Friedman also argumented
that the Great Depression was chiefly a money disaster
and that its severance was the result of a gruesomely tight money supply
that kept real interested rates much too high. This diagnoses of the cause
of the Great Depression is now the standard explanation, meaning that the
intellectual ammunition for Keynes’s solution to recessions – large creases
in government spending – has loose much of the sway that it once had.
Friedman’s diagnosis has also led economists to conclude that monetary
policy is more important than fiscal politics for regulating the economy and
preventing recesses.
E. Find in the texts above English equivalents for.
1) стимулировать здоровую конкурентную среду;
2) политика невмешательства;
3) преодолевать рецессию;
4) деятельность, направленная на получение прибыли;
5) основополагающие идеи (2 варианта);
6) заложить фундамент государства благосостояния послевоен-
ного периода;
7) правило максимизации полезности (для получения наиболь-
шей полезности потребитель распределяет свой денежный

25
 доход, чтобы предельные полезности от потребления каждо-
го товара или услуги, деленные на их цены, были равны у всех
товаров и услуг);
8) опровергать утверждения;
9) плановая экономика;
10) брать на себя ответственность по регулированию цикла дело-
вой активности;
11) денежная масса (количество денег в обращении);
12) длительная инфляция;
13) потерять контроль / власть / влияние;
14) государственные расходы;
15) с наименьшими затратами.

F. What do the following definitions stand for?

1) a period of temporary economic decline during which trade and
industrial activity are reduced, generally identified by a fall in GDP
in two successive quarters;
2) a general increase in prices and fall in the purchasing value of
money;
3) a measure of national income over the course of a year, which is
calculated by adding up a country’s entire annual output, and it is
often used to measure a country’s economic activity and wealth.

G. Summary writing. Study the instruction below.

Summary writing
Summarizing the key points in a text enables you to gain a good
understanding of the content. Follow these steps for making effective
summaries:
1. Skim-read the text to get an idea of the topic.
2. Reread the text more carefully. Divide it into sections and take
notes of the main points and supporting evidence / facts.
3. Using your notes, write a thesis statement. This is one sentence
which summarizes the main argument in the text. Include the writer's
name and the article date, e. g., Smith (2013) says …
4. Write your summary. Start with the thesis statement, followed by
supporting ideas / evidence. Link these ideas appropriately. Be objective
and stick to what the writer said, but use your own words.

26
 Avoiding plagiarism
Plagiarism is copying someone’s work so that it appears to be your own.
If you are suspected of plagiarism, your work will usually be disqualified.
When you include other people’s ideas in your writing, make sure you
avoid plagiarism.
• Give credit to the author by including his / her name and the date
оf the work.
e. g. Dr. Atkins (2012) claims that …
• Put any phrases you take from a text between quotation marks.
e. g. Wittman (2012) suggests that 'peer pressure is influential in
risky behavior.'
• Paraphrase the author’s ideas. This means putting them completely
into your own words. Changing one or two words is not enough.
e. g. Original statement: Gluckman (2014): “Peer pressure affects
how teenagers act.”
WRONG. Gluckman suggests that peer pressure affects how
teenagers act.
CORRECT. Gluckman (2014) suggests that a young person’s
actions may be affected by friends who encourage him / her to act in a
certain way.
• If you want to reference an author’s work that you have read in
another author’s work, you must include both names and dates.
e. g. Stirling (as cited in Roberts, 2010) says that risk-taking among
teenagers is not as high as many people believe.
• Include a full bibliography at the end of your text. Order items
alphabetically by author’s surname. If you cite a website in the
bibliography, the most basic entry for a website consists of the
author name(s), page title, website title, sponsoring institution/
publisher, date published, medium, and date accessed.
e. g. Smith, John. “Obama inaugurated as President.” CNN.com.
Cable News Network, 21 Jan. 2009. Web. 1 Feb. 2009 (www.cnn.
com/POLITICS/01/21/obama_inaugurated/index.html).
or
“Automatically Record Everything They Do Online!” Netbus.org. n.d1.
Web. 17 Feb. 2006.
1
n.d. = no date
27
Assignment

Write a three-line summary of the article below

China reports third-quarter gross domestic product
Huileng Tan | @huileng_tan
CNBC
URL: www.cnbc.com/2017/10/18/chinese-q3-gdp-china-
reports-third-quarter-gross-domestic-product.html?utm_
referrer=https%3A%2F%2Fzen.yandex.com
China reported third-quarter growth data Thursday that met
expectations, but was a tad lower than the second quarter᾽s 6.9 percent
expansion.
The country᾽s National Bureau of Statistics said its third-quarter GDP
growth was 6.8 percent compared to the same period last year, a day after
President Xi Jinping made big promises for the country᾽s economic future
during a pivotal leadership meeting.
Economists polled by Reuters had forecast China to post a modest
drop from the second quarter, with GDP to have grown 6.8 percent in
the July-September period due to the government᾽s efforts to cool the
property market and cut debt risks.
A statement from the statistics bureau painted steady but positive
economic development in the first three quarters. It also highlighted
challenges in a complex international environment amid structural
changes domestically.
«We᾽ve seen the benefits of a synchronized global recovery in play.
Exports have been quite buoyant versus last year and that has really given
China quite a bit of buffer in terms of reducing the reliance on leverage
expansion, reducing the reliance on fixed asset investment,» said Helen
Zhu, head of China equities at BlackRock.
As China is still an export-sensitive market, the current global
recovery will give the rest of the economy «a very serious break» in terms
of the growth required to reach targets, Zhu added.
Describing Thursday᾽s data release as unsurprising, BlackRock᾽s Zhu
added that Chinese growth is now stable but with a better composition
than before as the country continues to reduce borrowing in the corporate
sector.
28
 China᾽s statistics bureau said Thursday that September retail sales
grew 10.3 percent from a year ago, while final consumption accounts for
64.5 percent of GDP growth in the first three quarters.
On Monday, the People᾽s Bank of China quoted its governor, Zhou
Xiaochuan, as saying the world’s second-largest economy is likely to post
growth of 7 percent in the second half of the year thanks to rapid household
spending. First half GDP growth was 6.9 percent.

Part 5. Texts for Rendering into English.

Text 1
Кейнсианство
Экономист Олег Замулин о Великой депрессии, позитивном
и нормативном кейнсианстве и государственном регулировании
экономики
Кейнсианство – направление в экономической теории, появив-
шееся в ответ на вызовы Великой депрессии (экономический кризис
1929–1939). Течение названо в честь английского экономиста Джона
Мейнарда Кейнса. Кейнс считается одним из основоположников
макроэкономики как самостоятельной дисциплины. Основная работа
ученого – «Общая теория занятости, процента и денег» (1936).
Великая депрессия дала толчок к разделению экономической
теории на микроэкономику и макроэкономику. Хотя и до этого
изучались такие макроэкономические темы, как экономические
циклы и теория денег, заслуга английского экономиста Джона
Мейнарда Кейнса в том, что он систематизировал эти знания
и заложил основу нового направления исследований, которое долгое
время отличалось от остальной экономической науки не только
тематически, но и методологически.
Однако начиная с 1980-х годов методологические различия между
микро- и макроэкономикой стерлись. Теперь вся макроэкономическая
наука, в том числе современное кейнсианство, базируется на
четких микроэкономических обоснованиях, то есть на поведении
отдельно взятых индивидов и фирм. Макроэкономика отличается
от микроэкономики только тематически – изучает процессы,
имеющие отношение ко всей экономике в целом: экономический
рост, колебания экономической активности, инфляцию, поведение
обменных курсов.
29
 Среди известных ученых-кейнсианцев – два последних руково-
дителя Федеральной резервной системы Бен Бернанке и Джанет Йел-
лен. Приверженцы кейнсианской теории Оливье Бланшар и Кеннет
Рогофф недавно работали главными экономистами в Международ-
ном валютном фонде, до этого там же работал Стенли Фишер, позже
возглавивший Центральный банк Израиля. Автор известных учеб-
ников по экономике Грегори Мэнкью также является приверженцем
кейнсианской теории.
Великая депрессия и появление кейнсианства
Кейнс предложил в качестве объяснения Великой депрессии па-
дение совокупного спроса, причины которого он туманно обозначил
«животными инстинктами инвесторов». То есть паника, которая на-
чалась в 1929 году после краха фондового рынка, вылилась в то, что
фирмы перестали тратить деньги на инвестиционные расходы.
Совокупный спрос (aggregate demand) – это желание всех эконо-
мических игроков приобретать товары и услуги, которые производит
экономика. Это может быть желание со стороны потребителей, то
есть людей, которые приобретают товары и услуги для своих нужд.
Это может быть желание со стороны фирм приобретать инвестици-
онные товары или строить новые мощности для своего производства.
Во время спадов чаще всего мы видим падение именно инвестици-
онного спроса: фирмы отказываются от проектов, они не нанимают
людей для того, чтобы построить новый завод или новое здание, из-
за этого возникает безработица. Также совокупный спрос включает
в себя закупки со стороны правительства, которое делает государ-
ственный заказ, и со стороны внешнего сектора (экспорт).
Когда началась Великая депрессия, то по логике классической
теории сокращение совокупного спроса должно было привести к па-
дению цен и зарплат. Но Кейнс сделал еще одно важное наблюдение,
что цены и зарплаты не успевают вовремя подстраиваться под новое
равновесие и фирмы не смогли их снизить. А по старым ценам они
уже не могли продать столько товаров, сколько они продавали рань-
ше. Поэтому фирмы были вынуждены сократить производство и уво-
лить часть работников. Уволенные работники потеряли доход, спрос
сократился еще сильнее, и это повело за собой циклическое падение
экономики в течение длительного времени.
(postnauka.ru/faq/78776)
30
 Text 2
Позитивное кейнсианство
Позитивное кейнсианство – это экономическая теория, которая
пытается объяснить наблюдаемые явления. В первую очередь пыта-
ется объяснить то, что называется экономическим циклом, то есть
найти причины того, что экономика периодически переживает пе-
риоды спада (рецессии).
И ранняя кейнсианская теория, и современная, новая кейнси-
анская версия исходят из того, что подобные спады являются не-
равновесными явлениями, то есть некоторыми отклонениями от
нормальности, связанные с несовершенствами рыночной экономики.
Несовершенство, на которое чаще всего обращают внимание, – это
жесткость цен, то есть неспособность цен подстроиться быстро под
меняющиеся условия. Вторая важная часть позитивного кейнсиан-
ства – это гипотеза, что подобные спады в большинстве случаев (хотя
и не во всех) происходят по причине падения совокупного спроса.
Нормативное кейнсианство
Нормативное кейнсианство отвечает на вопрос, что делать в слу-
чае экономического спада. И часто под кейнсианством в обществен-
ной дискуссии понимают любую идеологию государственного вмеша-
тельства в экономику.
Монетаризм
В общественной дискуссии кейнсианство часто противопо-
ставляют монетаризму как идеологии, соответственно, невмеша-
тельства государства.
Монетаризм – это парадигма, которую представил американский
экономист Милтон Фридман. Он считал, что экономика внутренне
устойчива и ее не нужно искусственно стабилизировать ни посред-
ством бюджетной политики, ни посредством активной денежной по-
литики. Все, что должно делать государство, – это следить за тем, что-
бы денежная масса росла плавно с постоянной скоростью.
Излишний рост денежной массы приводит к инфляции, что па-
губно для экономики. А если денежная масса неожиданно падает, как
в начале 1930-х годов, то это может привести к падениям экономики
вплоть до такого, как Великая депрессия. То есть Фридман считал,
31
что Великая депрессия возникла по вине властей, которые стимули-
ровали падение экономики, допустив падение денежной массы. Такая
точка зрения, что все, что государство должно делать, – это следить
за плавным ростом денежной массы, была изначально представлена
как монетаризм.
Но в том виде монетаризм уже не существует. С точки зрения
теории монетаризм давно сросся с кейнсианством, потому что
денежная политика – это один из способов стимулирования
экономики во время спада, то есть стабилизации вокруг долгосрочного
тренда. А неожиданные колебания денежной массы, вызванные либо
ошибками властей, либо какими-то пертурбациями на финансовом
рынке, – это шоки совокупного спроса, которые в том числе обсуждают
кейнсианцы.
Кейнсианство и финансовый кризис
Совокупный спрос может упасть по разным причинам. На-
пример, одной из главных причин мирового финансового кризиса
2008 года стало то, что во многих странах лопнул пузырь на рынке
жилья: недвижимость сильно подешевела, и люди, которые ощущали
себя богатыми, перестали себя ощущать богатыми, поэтому они ста-
ли меньше тратить на покупку товаров и услуг. Одновременно с этим
обанкротилось большое количество банков, поэтому они перестали
давать кредиты как фирмам, так и населению. В результате и фирмы,
и население, лишившись доступа к кредиту, перестали тратить деньги
либо на покупку товаров и услуг, либо на инвестиционные расходы.
Неокейнсианство
Традиционная версия кейнсианства, существовавшая до
1980-х годов, позже сменилась неокейнсианством. Главные идеи в но-
вой версии остались те же: доминирование стороны совокупного
спроса в объяснении спадов и объяснение этих спадов как отклоне-
ний от рыночного равновесия в первую очередь из-за медленной под-
стройки цен. Различия по большей части методологические и поэто-
му понятны скорее академическим экономистам.
Новая кейнсианская теория основана на микроэкономических
обоснованиях. Серьезное внимание уделяется тому, как ведут себя
в моделях конкретные индивиды и фирмы, как формируются их ожи-
дания, как принимаются решения. Кейнс этим пренебрегал не потому,

32
что считал это неважным, а потому, что сразу все объять было невоз-
можно. Однако пренебрежение этими аспектами привело к тому, что
некоторые формулы оказались неправильными, что стало причиной
ошибок в политике, которые были сделаны в 1970-е годы в разных
странах. Это повсеместно вылилось в очень высокую инфляцию.
Некоторые экономисты после тех событий сочли, что кейнсиан-
ская теория с идеей неравновесных колебаний и жестких цен неверна
сама по себе, и поэтому они основали другую теорию под названием
новая классическая теория. Другие же экономисты решили, что неко-
торые ошибки, которые были сделаны, не являются поводом сносить
всю теорию, а, скорее, нужно ее починить, переписать с большим вни-
манием к микроэкономическим обоснованиям. Это было сделано, и,
в общем-то, основные выводы нового кейнсианства остаются такими
же, какими они были 50–60 лет назад.
Новая классическая теория
Новая классическая теория отталкивается от идеи, что экономи-
ка всегда находится близко к равновесию и экономические колебания
являются равновесными явлениями. При этом новая классическая
теория является базой для современной кейнсианской теории. То есть
кейнсианцы берут новую классическую теорию и добавляют в нее
какие-то несовершенства рынка, например, медленную скорость под-
стройки цен. В рамках этих моделей получается, что если мы считаем,
что цены быстро приходят к равновесию, то мы живем в неокласси-
ческом мире. Если же мы считаем, что цены долго подстраиваются, то
мы живем в кейнсианской парадигме.
(postnauka.ru/faq/78776)

Part 6. Listening. Listen to the audio about Bernard Madoff and do

the assignments below.
А. Be ready to describe the events that happened in these years.
1. 1960
2. 1975
3. 1990
4. 2005; 2007
5. 2009
33
B. Suggest the context for the following words.

1) Charles Ponzi; a Ponzi scheme;

2) $ 50 billion;
3) a run-of-the-mill confidence
trickster;
4) exclusive social milieu
[AmælÛ×:];
5) to be par for the course;
6) to abolish the fixed
commission system;
7) to trade in New York Stock
Exchange-listed companies;
8) to give somebody a good foothold;
9) NASDAQ (National Association of Securities Dealers automated
quotations) Rus. система автоматической котировки Нацио-
нальной ассоциации фондовых дилеров США;
10) to guarantee solid regular returns;
11) to hedge returns to avoid market volatility;
12) to make payouts;
13) all the trappings of a successful lifestyle;
14) the SEC (Securities and Exchange Commission) Rus. Комиссия
по ценным бумагам и биржам;
15) to plead guilty to eleven different charges;
16) gullibility;
17) perjury1;
18) incompletely documented payments.

1
Whereas 'perjury' is the offence of wilfully telling an untruth or making
a misrepresentation under oath, 'slander' is an untrue spoken statement about
someone which is intended to damage their reputation. The term 'libel' is a
published false statement or a written defamation that is damaging to a person’s
reputation. Defamation is the offence of writing or saying something bad about
someone that is not true and makes people have a bad opinion of them.
34
Part 7. Discussion. Comment on the following quotes.

1. No complaint... is more common than that of a scarcity of money.

Adam Smith
2. Money can buy you a fine dog, but only love can make him wag his
tail. Kinky Friedman
3. Beware of little expenses. A small leak will sink a great ship.
Benjamin Franklin
4. Management is doing things right; leadership is doing the right
things. Peter Drucker

35
UNIT 3
SUPPLY AND DEMAND

Part 1. Listening.

A. Watch Professor Taylor’s lecture and be ready to answer the

following questions.

1. What is demand?
2 What is the difference between
demand and quantity demanded
(величина спроса)?
3. What drives the price up or down if
the quantity demanded gets smaller
or bigger?
4. What is the buying power of your
income?
5. What makes demand rise or fall?

B. Insert the missing words.

1. For most ___, most of the time, as the price of the good goes ___,
the quantity demanded of that ___ tends to ___.
2. If you look at the graph, the quantity of the good is on the ___, and
the price of the good is on the ___.
3. At the ___ level, this pattern makes intuitive ___ to you: if the price
goes up, you get less.
4. Even if the price rises only ___, the extra money you have to spend
comes from somewhere else, and so the buying power of your
income is ___ if the price of a good goes up.
5. If chicken is a ___ for beef and the price of chicken goes way up,
then people will go away from chicken and tend to ___ more beef.
6. To meet the consumer demand ___ a certain good.

С. Translate into Russian.

1) to be the actual reason underneath;
2) to spell out concrete reasons;

36
 3) to join carpools;
4) to have high gas mileage [AmaÃlÃÏ];
5) to buy fancy coffee.

Part 2. Read the text below about spending paradoxes and answer
the questions.
• What commodities are known as Giffen goods? Give other examples
of Giffen goods.
• What commodities are called Veblen goods?
• What is conspicuous consumption?
• What factors affect consumer choices?

Spending paradoxes

In 1895, British economist Alfred Marshall demonstrated how supply

and demand create the price of goods. After he explained the general rules,
such as the greater the demand, the smaller the price, he went on to show
how there can be an interesting exception.
Marshall suggested that a price rise could, in some circumstances,
create a surprising increase in demand. He attributed the discovery of this
exception to a well-known Scottish economist and statistician of the time,
Sir Robert Giffen. Today, commodities for which demand rises as their
prices rise are known as Giffen goods. The original Giffen good was bread,
the most important staple of the poorest section of the British population
in the 19th century. The poorest of the working classes spent a large part
of their income on bread, a food that was necessary for life but was seen as
inferior to the perceived luxury of meat. Marshall said that as the price of
bread rose, the poorest people had to spend more of their income on bread
to get enough calories to survive – they had to buy bread instead of meat.
As a result, if the price of bread increased, so did demand.
The US economist Thorstein Veblen was the first to note that economic
behaviour is driven by psychological factors, such as fear and status-seeking,
as much as by rational self-interest. Veblen claimed that the rich did not
buy things because they needed them but to display their wealth and status.
Veblen was the first to describe this as “conspicuous consumption”. Unlike
Giffen goods, however, which must be inferior, these goods must signal
high status.

37
WHAT IS SUPPLY?

Part 3. Listening.
A. Listen to the speaker and answer the questions below.
1. What is supply?
2. What is the difference between supply and quantity supplied?
3. What happens to the quantity supplied as the price of the good
goes up? Why?
4. What factors make supply rise or fall? Can the price shift the entire
supply curve?
5. What is an input price?
6. How do supply and demand interact? To answer the question,
insert the missing words in the table below.
A. At a low price → the quantity supplied is… → the quantity
demanded is…
B. As the price rises → the quantity supplied … → the quantity
demanded…
7. What is the equilibrium?
8. Are markets at equilibrium most of the time?
9. What happens to equilibrium if market conditions shift?
10. How important is thinking through the consequences of demand
and supply shifts?
B. Complete the sentences.
1. If a good’s price is higher than the equilibrium, then the quantity
supplied of that good will __ the quantity demanded. Stuff
starts __ up on the shelves. To get rid of it, the seller has to start
cutting __ until people are willing to buy. The price starts to drop
toward that __ point, where the quantity supplied and the quantity
demanded __.
2. If the price of a good falls below the equilibrium, then quantity __
will exceed quantity __. In that situation, people are practically
lining up to buy that good before supplies at the local store __.
Suppliers notice this, and they begin to __. As a result, quantity
demanded begins to fall and quantity supplied starts to rise, until
the two quantities are equal and the price __ equilibrium.
38
C. Suggest the context for

1) to slope upward; to slope downward;

2) to make intuitive sense;
3) to earn a profit;
4) production method;
5) crop yields;
6) to have no wasted motion;
7) to overshoot (past) equilibrium and to bounce back (of markets);
8) to veer above equilibrium;
9) a win-win situation;
10) the pendulum begins to swing the other way;
11) a solid grasp of the basics of some science;
12) to be in balance; to be at / near equilibrium; to reach equilibrium;
13) to adjust production in response to smth.

SUMMARY
DEMAND
The law of demand sees matters from the viewpoint of the consumer
rather than the producer. When the price of a good increases, demand
inevitably falls (except for essential goods such as medicines).
Reasons:
• substitution effect
• income effect
Quantity demanded refers to the specific amount of a good that is
desired at each given price.
Demand refers to the relationship between price and quantity
demanded. It refers to how much is desired at any possible price or at every
price.
Factors that make demand rise or fall:
• income
• changes in population
• consumer tastes and attitudes
• the price of substitute goods

39
SUPPLY
Supply refers to the relationship between the quantity of a good
supplied and the price of a good.
As the price of the good goes up, the quantity supplied tends to rise,
because firms become more willing to supply that good and make as much
profit as possible. If the assorted costs of production (labor, materials,
machines, and premises) amount to more than the market is willing to pay
for the product, production will be seen as unprofitable and be reduced or
stopped.

Reasons:
• profitability and profit maximization
• new firms entering the market and competition
Quantity supplied refers to the specific amount produced at a given
price. Supply refers to how much is produced at every price.

Factors that make supply rise or fall:

• a change in technology
• weather conditions or nature
• a change in input prices
• government policies

While consumers will always seek to pay the lowest price they can,
producers will look to sell at the highest price they can. When prices are too
high, consumers lose interest and move away from the product. Conversely,
if prices are too low, it no longer makes financial sense for the producer
to continue to make the product. A happy medium must be reached– an
equilibrium price acceptable to both consumer and producer. This price
is found at the point where the supply curve intersects the demand curve,
producing a price at which consumers are happy to pay and producers are
happy to sell.
Equilibrium is the point at which price and quantity are efficient in the
specific economic sense that nothing is being wasted. A market is said to
be in equilibrium when at the prevailing price there is neither a surplus nor
shortage of the good or service.
40
Part 4. Video. Watch the video and answer the questions below.
• How does Uber ensure supply equals demand?
• What is surge pricing?
• What technical glitch served as a case study?

Part 5. Use of English. Study the text below and do the assignments
that follow.
Inversion and fronting
Subject and verb can be inverted in certain situations:
1. With the modals had, should, were when they are used in
conditional sentences. In these cases if is omitted: Had I known, I
wouldn’t have invested in those shares. (= If I had known, … )
2. After certain prepositional phrases, particularly those indicating
place or negative structures: In the town where I was born lived a
man who made a billion.
3. After negative structures such as hardly, scarcely, never, on no
account, no sooner.
With these structures the auxiliary verb follows directly after: No
sooner had she finished, she was told it wasn’t actually necessary. = No
sooner did she finish, … = No sooner was the job finished, …
For emphasis and more dramatic effect, sentences can start with the
complement of verbs such as be, seem, appear, look: Even more alarming is
the lack of transparency.
These sentences can easily be ‘reversed’ for a more conventional order:
The lack of transparency is even more alarming.
The sentences often begin with wh-clauses for even more emphasis:
What is even more alarming is the lack of transparency.

A. Rephrase the sentences to make them more emphatic. Translate them

into Russian.
1. The dip in consumer confidence is also clearly significant.
2. If you ever need any further assistance, please do not hesitate to
contact us.
3. I will never again go to so much trouble for so little gain.

41
 4. He failed to turn up on time. He didn’t apologize either.
5. The inflationary risk appears to be far more serious.
6. If I had caught my flight I would not have missed the meeting.
7. You cannot claim expenses without a receipt at any time.
8. If a solution were found, we would implement it.

B. Match the first parts of the sentences 1–6 with the right endings a) –
f).
1. It is hard to overestimate
2. Above all what is needed
3. What resulted in fact
4. Nearly half of these workers
5. Around the middle of next year
6. In no way
a) have had no training whatsoever.
b) is a root-and-branch reorganization of our whole auditing
systems.
c) we should be seeing a measurable improvement.
d) can Moira be blamed – she was on leave all the time.
e) was a system that neither offered value for money nor worked.
f) how far people’s mindsets will have to change to meet the
challenge.

C. Complete each inverted conditional sentence using should, had, or

were.
1. … the conditions not be met by the end of May, the submission will
be rejected.
2. The United States would seek adoption of a resolution that could
be enforced by sanctions … they fail to comply with it.
3. … any country withdraw from an agreement consisting of at least
three countries, then all the remaining signatories will respond
with sanctions.
4. … the organization done that, at least they would have entered the
debate prepared for what was to follow.
5. … it not for historical reasons, we would use the term ‘protectionism’
rather than ‘strategic defence’.

42
 6. The sub-group will consider whether there was material within
the representation which, … it been made available to the team
beforehand, would have altered their bargaining position.

D. The following sentences all contain mistakes. Rephrase them to make

them correct.

1. What do I want to focus on today is the importance of evaluating

risk.
2. It is short-termism why many investors fail.
3. Scarcely she had made her investment when the global markets
crashed.
4. Such a charismatic person was he that he inspired absolute loyalty
in his team.
5. May have you the best of luck when you’re out there – you’ll need it!
6. Only by focusing closely on risk he was able to avoid huge losses.
7. Were the markets really take off, we’ll be set to make major gains.
8. Not only you failed to make any gains, but you also lost nearly all
our money.
9. Why do I disagree with you is that you ignore fundamentals.
10. On no account we must give in to their demands.

E. Reformulate the sentences for emphasis, beginning with each given

phrase.
Example: This bank was actually founded in Edinburgh.
(The place … / Edinburgh … / Where …)
The place where this bank was actually founded is Edinburgh.
Edinburgh is the place where this bank was actually founded.
Where this bank was actually founded is Edinburgh.
1. We need action rather than words.
(Words … / Action … / What …)
2. I’m here today because I want to discuss my promotion prospects.
(The reason why … / What I … / My promotion prospects … )
3. The most important market for raw commodities is undoubtedly
China.
(No market … / Without doubt … / China is … )

43
 4. Your attention to detail impresses me more than any other quality.
(What … / The quality … / I am more … )
5. First of all I want you only to listen.
(All … / The only … / Just listen – that’s …)

ELASTICITY

Part 6. Video. Watch the lecture and do the assignments that follow.
A. After you’ve watched Professor Taylor, be ready interpret the following
formulas using non-economist-friendly language. Don’t panic!
PED stands for ‘Price Elasticity of Demand’ and ‘PES stands for Price
Elasticity of Supply’.
(%ΔQd)
1. PED =
(%ΔP)
(%ΔQs)
2. PES =
(%ΔP)

B. Account for the following numbers: 15.3 million, 17 million, 16 million.

C. Complete the sentences.

1. The elasticity of demand is defined as the percentage change in __

divided by the percentage change in __. The elasticity of supply is
defined as the percentage change in __ divided by the percentage
change in __.
2. Goods with inelastic demand have an elasticity of __.
3. Goods with elastic demand have an elasticity of __.
4. Goods with unitary elasticity of demand have an elasticity __.
5. Goods with __ have an elasticity of less than 1.
6. Goods with __ have an elasticity of greater than 1.
7. Goods with unitary elasticity of supply have an elasticity __.
8. Raising price brings in more revenue if demand is __, but not if
demand is __.
9. Demand and supply are often inelastic in the __ run and elastic in
the __ run.

44
 10. When demand is __, increases in the cost of production can be
passed along to __, but when demand is __, increases in the cost of
production have to be carried by the __.
D. Suggest the context for the following word combinations or use
them in sentences of your own.
1. To choose the generic medicine over the name brand
2. To cut back / trim back on insulin
3. To be well and truly hooked on a drug
4. Vitamin C pills
5. To ramp up production
6. To run below capacity
7. To convert imperial units to metric
8. To have a wide range of practical applications
9. To react to shifts in demand and supply
10. Indoor arena
11. Appearance costs, appearance money
12. To maximize revenue
13. To increase the overall revenue
14. The ticket price times the quantity of tickets sold
15. A must-see / must-have / must-read etc.
16. To sell out the venue; to fill up the space
17. Promos and giveaways; paraphernalia (= trappings)
18. Ticket scalper; to scalp tickets
19. Limited options
20. To turn one’s thermostat down
21. To combine car errands into single trips / to bunch car errands
together
22. A fuel-efficient model ≠ a gas guzzler1
23. To organize a carpool; a carpool arrangement; to set up vanpools
24. To expand production
25. To carry costs
26. Low output
27. To get a caffeine fix
28. To cut out the cost of skilled barista labor
29. A double-shot extra-foam cappuccino
1
a large car with a high fuel consumption.
45
E. Answer the questions.
1. What is elasticity?
2. Give examples of
a. goods with inelastic demand;
b. goods whose quantity demanded is highly stretchy;
c. goods with inelastic supply.
3. Why is elasticity calculated by using percentage changes in price
and quantity?
4. Is it always profitable for businesses to charge customers as much
as possible?
5. What causes prices to jump up and down in the short run?
6. Can coffee shops pass an increase in the cost of production / input
costs to consumers?
F. Translate into English.
1) единичная эластичность;
2) неэластичный спрос;
3) эластичное предложение;
4) издержки производства;
5) увеличивать поставки сырья;
6) квалифицированная рабочая сила;
7) спекулянт, перекупщик;
8) крытый стадион;
9) увеличить выпуск продукции;
10) расширять производство.
G. Addition, Subtraction, Multiplication, & Division. Say the following.
a. 50 / 10 = 5
b. 2 / 10 = 0.2
c. 50–10 = 40
d. 50×10 = 500
e. 50+10 = 60
f. (x–y) / z
g. x–y / z
H. Choose the correct answer.
1. 1 gallon is equal to
a. 4.55 litres
46
 b. 3.8 litres
c. 5 litres
2. 1 barrel is equal to
a. 0.473 litres
b. 159 litres
c. 119 litres
3. 1 pound is equal to
a. 6.35 kilograms
b. 454 grams
c. 28.35 grams
SUMMARY
Elasticity of demand is consumer sensitivity to price. When you can
delay the purchase of a good, if it has many close substitutes, or if it takes
a large percentage of your income, demand is typically price sensitive or
elastic.
If, however, the purchase must be made immediately, no close
substitutes exist, or the purchase does not take a significant percentage of
income, demand is price insensitive or inelastic.
When the percentage change in the quantity of a good demanded
is exactly equal to the percentage rise in its price, we say it has unitary
elasticity.
Elasticity of supply is the producers’ sensitivity to changes in price on
the quantity they are willing to produce. The key factor in supply elasticity
is the amount of time it takes to produce the good or service.
If producers can respond to price changes rapidly, supply is relatively
elastic. However, if producers need considerable time to respond to changes
in the market price of their product, supply is relatively inelastic.
If a given percentage change in price would cause an equal percentage
change in the quantity supplied, we say it has unitary elasticity.
Knowing whether demand or supply is elastic, inelastic, or unitary has
a wide range of practical applications for how prices should be set and how
markets react to shifts in demand and supply.
• Raising price brings in more revenue if demand is inelastic, but not
if demand is elastic.
• Demand and supply are often inelastic in the short run and elastic
in the long run.

47
 • When demand is inelastic, increases in the cost of production can
be passed along to consumers, but when demand is elastic, increases
in the cost of production have to be carried by the producers.

Part 7. Texts for Rendering into English.

Text 1
Спрос можно представить в виде шкалы, показывающей коли-
чество продукта, которое потребители готовы и в состоянии купить
по каждой конкретной цене из ряда возможных в течение определен-
ного периода времени. Коренное свойство спроса заключается в сле-
дующем: при неизменности всех прочих параметров снижение цены
ведет к соответствующему возрастанию величины спроса. И напро-
тив, при прочих равных условиях повышение цены ведет к соответ-
ствующему уменьшению величины спроса. Короче говоря, существу-
ет отрицательная, или обратная, зависимость между ценой и величи-
ной спроса. Экономисты назвали эту обратную зависимость законом
спроса.
Допущение «при прочих равных условиях» имеет здесь принци-
пиальное значение. На количество купленного товара, помимо цены
рассматриваемого продукта, влияют многие другие факторы. Количе-
ство приобретенных кроссовок фирмы Nike будет зависеть не только
от их цены, но и от цены таких заменителей этого товара, как крос-
совки фирмы Reebok, Adidas, L. A. Gear. Закон спроса в этом случае
гласит, что кроссовок Nike будет приобретено меньше, если их цена
растет, в то время как цена кроссовок фирмы Reebok, Adidas, L. A. Gear
остается постоянной. Короче, если относительная цена кроссовок
Nike повышается, их будет куплено меньше.
Что же лежит в основе закона спроса?
1. Здравый смысл и элементарное наблюдение реальной жизни
согласуются с тем, что нам показывает нисходящая кривая спроса.
Обычно люди действительно покупают данного продукта больше по
низкой цене, чем по высокой. Для потребителей цена представляет
собой барьер, мешающий им совершить покупку. Чем выше этот ба-
рьер, тем меньше продукта они будут покупать, а чем ниже ценовой
барьер, тем большее количество товара они приобретут. Уже тот факт,
что фирмы устраивают «распродажи», служит наглядным свидетель-
ством их веры в закон спроса.
48
 2. В любой данный период времени каждый покупатель продук-
та получает меньше удовлетворения, или выгоды, или полезности,
от каждой последующей единицы продукта. Например, второй «биг-
мак» дает потребителю меньше удовлетворения, чем первый; третий
приносит еще меньше удовольствия, или полезности, чем второй,
и т. д. Отсюда следует, что, поскольку потребление подвержено дей-
ствию принципа убывающей предельной полезности, то есть прин-
ципа, согласно которому последующие единицы данного продукта
приносят все меньше и меньше удовлетворения, потребители поку-
пают дополнительные единицы продукта лишь при условии, что цена
его снижается.
3. Закон спроса можно также объяснить эффектами дохода и за-
мещения.
Эффект дохода указывает на то. что при более низкой цене че-
ловек может позволить себе купить больше данного продукта, не от-
казывая себе в приобретении каких-либо альтернативных товаров.
Иными словами, снижение цены продукта увеличивает покупатель-
ную способность денежного дохода потребителя, а поэтому он в со-
стоянии купить большее количество данного продукта, чем прежде.
Более высокая цена приводит к противоположному результату.
Эффект замещения выражается в том, что при более низкой
цене у человека появляется стимул приобрести дешевый товар вместо
аналогичных товаров, которые теперь стоят относительно дороже.
Потребители склонны заменять дорогие продукты более дешевыми.
Основные детерминанты рыночного спроса следующие:
1) вкусы, или предпочтения, потребителей
Благоприятное для данного продукта изменение потребитель-
ских вкусов или предпочтений, вызванное рекламой или изменени-
ями моды, будет означать, что спрос возрастет при любой цене. На
вкусы потребителей могут повлиять технологические изменения,
воплощенные в новом продукте.
2) число потребителей на рынке
Очевидно, что и увеличение на рынке числа потребителей спо-
собствует повышению спроса. А уменьшение числа потребителей
находит отражение в сокращении спроса. Так, всплеск рождаемости
после второй мировой войны привел к повышению спроса на пелен-
ки, детские лосьоны и акушерские услуги. Когда в 1970-х годах дети,
появившиеся на свет в период этого всплеска рождаемости, достигли

49
двадцатилетнего возраста, возрос спрос на жилье. А взросление
этого поколения, наоборот, вызвало спад спроса на жилье в 1980–
1990-х годах.
3) денежные доходы потребителей
Применительно к большинству товаров повышение дохода при-
водит к увеличению спроса. По мере роста доходов потребители, как
правило, покупают больше бифштексов, солнцезащитных штор, сте-
реоустановок.
4) цены на сопряженные товары
Приведет ли изменение цены на сопряженный товар к повышению
или снижению спроса на рассматриваемый продукт, зависит от того,
является ли этот родственный товар заменителем нашего продукта или
сопутствующим ему. Заменитель – это такой товар, который можно ис-
пользовать вместо другого товара. Сопутствующий товар используется
в сочетании с другим товаром. Примером взаимозаменяемых товаров
могут служить сливочное масло и маргарин. Когда цена на сливочное
масло растет, потребители покупают его в меньшем количестве, а это
вызывает повышение спроса на маргарин.
Другой тип взаимосвязанных товаров представляют собой
взаимодополняющие товары. Когда цена на бензин снижается и вы
в результате больше ездите, увеличенный пробег вашего автомоби-
ля повысит ваш спрос на моторное масло. И напротив, рост цены на
бензин сократит спрос на моторное масло. Таким образом, спрос на
бензин и масло сопряжен – это сопутствующие товары. То же отно-
сится к ветчине и яйцам, учебе и учебникам, клюшкам и мячам для
игры в гольф и т.д.
5) потребительские ожидания относительно будущих цен и до-
ходов
Ожидания потребителей относительно повышения цен в буду-
щем могут побудить их покупать теперь же, чтобы «упредить» угро-
жающее повышение цен; равным образом и ожидание увеличения до-
ходов может заставить потребителей меньше ограничивать текущие
расходы. Например, введение дополнительного федерального акциз-
ного сбора на пиво, вино и чистый алкоголь с 1 января 1991 г. резко
повысило спрос на эти товары в декабре 1990 г., так как потребители
закупали их впрок, чтобы избежать ожидаемого повышения цен.
«Изменение величины спроса» соответствует перемещению
от одной точки к другой на стабильной кривой спроса; «изменение
спроса» означает смещение всей кривой спроса.

50
 Text 2

Предложение можно определить как шкалу, показывающую ко-

личество продукта, которое производитель желает и способен произ-
вести и предложить к продаже на рынке по каждой конкретной цене
и ряда возможных цен в течение определенного периода времени.
С повышением цен соответственно возрастает и величина пред-
ложения; со снижением цен сокращается также и предложение. Эта
специфическая связь называется законом предложения. Суть его в том,
что производители изготавливают и предлагают к продаже большее
количество своего продукта по высокой цене, чем по низкой.
«Изменение предложения» означает смещение кривой предложе-
ния; «изменение величины предложения» означает перемещение от
одной точки к другой на данной кривой предложения.
К основным детерминантам (факторам) предложения относятся
следующие:
1) цены на ресурсы;
2) технология производства;
3) налоги и субсидии;
4) цены на другие товары;
5) ожидания изменения цен;
6) число продавцов на рынке.
Рассмотрим теперь воздействие на предложение каждой из пере-
численных детерминант.
1. Цены на ресурсы. Существует самая тесная связь между
издержками производства и предложением.
Кривая предложения фирмы основывается на издержках про-
изводства; за дополнительные единицы продукта фирма должна
получать более высокие цены, поскольку производство этих допол-
нительных единиц требует больших издержек. Отсюда следует, что
снижение цен на ресурсы снизит издержки производства и увеличит
предложение. Пример: если цены на семена и удобрения снижаются,
можно ожидать увеличения предложения кукурузы.
И наоборот, повышение цен на ресурсы увеличит издержки про-
изводства и сократит предложение, то есть сместит кривую пред-
ложения влево. Пример: повышение цен на железную руду и кокс
увеличивает издержки производства стали и ведет к сокращению ее
предложения.

51
 2. Технология. Совершенствование технологии означает, что
новые знания позволяют производить каждую единицу продукции
с меньшими затратами ресурсов. При данных ценах на ресурсы это
приведет к снижению издержек производства и увеличению пред-
ложения.
3. Налоги и субсидии. Фирмы рассматривают большинство
налогов как издержки производства. Поэтому повышение налогов,
скажем налога с оборота или налога на имущество, увеличивает из-
держки производства и сокращает предложение. Субсидии же счи-
таются «налогом наоборот». Когда государство субсидирует про-
изводство какого-либо товара, оно фактически снижает издержки
и увеличивает его предложение.
4. Цены на другие товары. Снижение цены на пшеницу мо-
жет побудить фермера выращивать и предлагать к продаже больше
кукурузы по каждой из возможных цен. И напротив, повышение
цены на пшеницу может заставить фермеров сократить производ-
ство и предложение кукурузы. Фирма, выпускающая спортивные
товары, может сократить предложение баскетбольных мячей, когда
повышается цена на футбольные.
5. Ожидания. Ожидания изменений цены продукта в будущем
также могут влиять на желание производителя поставлять продукт
на рынок в настоящее время. Однако трудно делать выводы о том,
как скажутся ожидания, допустим, более высоких цен на текущем
предложении продукта. Фермеры могут задержать вывоз кукурузы
нынешнего урожая на рынок, ожидая повышения цены на нее в бу-
дущем. Это вызовет сокращение текущего предложения.
6. Число продавцов. При данном объеме производства каж-
дой фирмы чем больше число поставщиков, тем больше рыночное
предложение. По мере вступления в отрасль новых фирм кривая
предложения станет смещаться вправо. Чем меньше в отрасли ко-
личество фирм, тем меньше рыночное предложение. Это означает,
что по мере выхода фирм из отрасли кривая предложения будет
смещаться влево.

Part 8. Discussion. Comment on the following quotes.

1. A satisfied customer is the best business strategy of all. (Michael

LeBoeuf)
52
2. Making money is art and working is art and good business is the
best art. (Andy Warhol)
3. In the business world, the rearview mirror is always clearer than
the windshield. (Warren Buffett)
4. Information technology and business are becoming inextricably
interwoven. I don't think anybody can talk meaningfully about one
without the talking about the other. (Bill Gates)

53
UNIT 4
TYPES OF MARKETS

Part 1. Read the text about Factors of Production and be ready to

sum it up. Do the assignment that follows.

Factors of Production
In economics resources are referred to as the factors of production. The
factors of production include land, labor, capital, and entrepreneurship.
Land is inclusive of all natural resources like trees, mineral deposits,
fish in the ocean, ground water etc. Land can be divided into renewable
and nonrenewable natural resources. The payment for land is referred to
as rent.
Labor refers to people with their skills and abilities, or in other words,
to human efforts done mentally or physically with the aim of earning
income. Labor can be categorized in many different ways. For example,
the first way is the skill level. Thus, labor is divided into unskilled, semi-
skilled, skilled, and professional. Unskilled labor refers to people without
formal training who are paid wages to do repetitive tasks, e.g. making
hamburgers or street cleaning. The next is semi-skilled labor that requires
some education or formal training. An example is performing assembly-
line production. Skilled labor refers to people that are paid wages for what
they know and what they can do and requires high levels of training.
Welders, electricians, plumbers, mechanics, and carpenters are examples
of skilled laborers. Professional labor requires high levels of education and
professional qualifications. Doctors, lawyers, engineers, scientists, and
teachers are included in this category.
Capital in economics refers to the tools, factories, and equipment used
in the production process. For example, a car that you drive for pleasure is
a consumption good, whereas an identical car that you use to haul around
bricks for your construction business is capital. Capital includes factories,
roads, sewers, electrical grids, the Internet and so on. Because capital is
always purchased with borrowed money, it incurs an interest payment.
Entrepreneurship is the state of being an entrepreneur, or the activities
associated with being an entrepreneur. An entrepreneur is a person who
has possession of a new enterprise, venture or idea and who accepts the
financial responsibility for the inherent risks and eventual outcome of that
enterprise, venture or idea.
54
ASSIGNMENT
Suggest the Russian equivalents for
• factors of production
• entrepreneurship
• mineral deposit
• ground water
• to perform assembly line production
• sewers
• welder
• plumber
• carpenter
• electrical grid
• to incur an interest payment
• venture
• inherent risks

Part 2. Study the Circular Flow Diagram below. What do you think it
represents? Listening / Watching. Listen to the audio / Watch
Professor Taylor and do the assignments.

The Circular Flow Diagram

55
ASSIGNMENTS
A. Answer the questions.
1. What does the Circular Flow Diagram illustrate?
2. Explain what the diamond water paradox is about. What is
the difference between the terms ‘value in use’ and ‘value in
exchange’?
3. What is the best way to describe an economist?

B. Fill in the gaps.

Type of market Supplier Demander

1.

C. Give the context for

1. “a man who knows the price of everything and the value of
nothing”;
2. emotionally liberating;
3. value-laden;
4. an integrated macroeconomic whole;
5. to line up;
6. to purge your mind of preconceptions.

Part 3. Use of English.

A. Go to (www.freecollocation.com/search?word=market) and find
collocations with the word ‘market’.
B. Study the idioms below.
at the market
Meaning: at the prevailing price in the open market.
e. g. What’s new at the market this season?
in the market (for)
Meaning: ready to buy; interested in buying; in the position of being a
potential buyer:
e. g. I'm in the market for a new car.
56
 on the market
Meaning: available for purchase; up for sale:
e. g. Fresh asparagus will be on the market this week.
Trading has been slow on the New York and Tokyo markets this
morning.
to put something on the market
Meaning: make it available for people to buy
e. g. We’re going to put our house on the market.
to come onto the market
Meaning: become available to buy:
e. g. Some very attractive properties will be coming onto the market next
month.
Insert the missing prepositions.
1) Consumers can hardly benefit when such companies are active …
the market.
2) Our firm is trying to get … this expanding market.
3) After a summer bond binge, signs of angst are growing … the
market.
4) Foods made from insects will soon be … the market in
Switzerland.
5) Our devices will be available … the market from September 20.
6) I want to buy some passion fruit … the market.
7) A report has revealed that not all foods sold … the market under
the brand ‘Organic’ are safe to eat.
8) One-bedroom flat goes … the market for just £ 10,000.
9) Liverpool is still … the market … a midfielder.

Part 4. After you’ve read the text below, be ready to explain what the
term ‘human capital’ means.
Human Capital
The most important element in economic growth is human capital.
Human capital consists of the education, skills, and abilities possessed by
an individual. For example, going to college and gaining work experience
are investment in one’s human capital. By the way, spending on education
accounts for about 5 percent of global GDP. Countries that invest heavily
57
 in human capital tend to have
more economic growth than
similarly endowed countries that
do not. Compulsory primary and
secondary education, mandatory
vaccinations, and abundant
nutrition have contributed to
making America one of the most
productive nations.
Individual freedom and the ability to acquire private property are also
essential elements in developing human capital. When individuals are free
to choose their vocation, and enjoy the benefits of private property, their
productivity is higher than in places where individual freedom or private
property is not valued. By way of comparison, the average German was
far more productive in capitalist West Germany than in communist East
Germany, and the average South Korean today is far more productive
than the average North Korean, because economic freedom provides the
incentive to produce more in order to have more.

ASSIGNMENT
Explain or paraphrase
1) mandatory vaccination;
2) abundant nutrition;
3) private property;
4) incentive;
5) vocation.

Part 5. Read the text below and answer the following questions:
1. What is a market failure?
2. How can governments rectify market imperfections?
3. What are public goods?
4. Explain the meaning of the terms ‘non-rivalry’ and ‘non-excludability’.
5. What is an externality? Give examples of positive and negative
externalities.
6. How can governments enhance positive externalities and decrease
negative externalities?

58
 Market Failures
Sometimes the market fails to provide a necessary good or service or
fails to properly assign costs. Economists refer to this as a market failure.
Government has the capacity to step in and deal with such market failures
in a variety of ways.
Public Goods
Sometimes the market does not
provide a good or service that people
want. If a good is non-rival and
non-excludable, the free market will
probably not provide it.
A good or service is non-
rival / non-rivalrous when one
person’s consumption of the good or
service does not diminish another’s
consumption of the good or service. For example, when you go to the movie
theater, the presence of another person does not diminish your ability to
consume the service, unless of course he has a screaming infant on his lap.
A candy bar is an example of a rival good. If you eat the candy bar, then
another consumer cannot.
A good is non-excludable if the producer can’t withhold it from those
unwilling to pay for it. Public highways are an example of a non-rival, non-
excludable good. A private firm has little incentive to produce a public
highway at its own cost. Therefore, it is up to government to provide these
types of goods.
In a word, public goods (e. g. clean air) are non-rivalrous and non-
excludable, whereas private goods (e. g. a car) are rivalrous and excludable.

Positive Externality
Sometimes the production of a good or service creates a spillover or
unintended benefit / cost for someone who is neither the producer nor
the consumer. Such a spillover benefit is called a positive externality. Flu
vaccines create a positive externality. If you’re concerned about catching the
flu, you would go to your doctor and pay for a flu shot. Your decision to get a
flu shot creates spillover benefits for the people around you. Your immunity
reduces the chance that they will contract the disease even though they
59
did not pay for it. Economists refer to these people as free-riders. When
production of a good or service creates a positive externality, there is never
enough of it. In order to increase the desirable good or service, government
might choose to subsidize its production. Government subsidizes public
schools for this reason.
Negative Externality
Negative externalities
occur when the production
or consumption of a good or
service creates spillover costs to
society. Pollution is an example
of a negative externality of the
production process.
For example, a shoe manu-
facturer produces shoes, but it
also produces air pollution that
is released outside the factory.
When the firm sells the shoes to
its customers, the cost of the pollution is not factored into the price of the
shoes. People living near the factory bear part of the cost of production in the
form of pollution, but do not receive payment for the shoes that the factory
makes. When a firm’s production creates a negative externality, there is too
much of the good being produced. In a situation like this, government can
tax the producer to reduce shoe production and the amount of pollution.
ASSIGNMENTS
A. Suggest the English for
• фиаско рынка / провал или несостоятельность рынка;
• общественные блага;
• неконкурентные общественные блага;
• неисключаемые общественные блага;
• эффект безбилетника;
• внешние эффекты / экстерналии;
• отрицательные экстерналии;
• положительные экстерналии.
60
B. Which of the following are examples of positive externalities and of
negative externalities?
• noise pollution (from neighbours, their stereo system, their barking
dachshund);
• household waste;
• Research & Development;
• bee keeping;
• congestion;
• cigarette smoking; passive smoking / exposure to SHS (second-
hand smoke)
• advanced professional training;
• child care;
• community work;
• methane emissions;
• contraception;
• mass transport services.

Part 6. Translate the text into Russian.

Markets are places that bring together buyers and sellers. Markets
exist whenever and wherever buyers and sellers interact, be it a physical
location, via mail, or over the Internet. Several conditions must be met in
order for markets to function efficiently.
A market is said to be “perfectly competitive” if it meets several
requirements, including:
• there are many firms in the market, each of which acts independently
according to their own self-interest, produces an identical product,
and each of which represents only a very small portion of the total
market.
• there are no “barriers to entry,” meaning that firms are free to
enter (or leave) the market as they please. Licensing requirements
are another example of a barrier to entry.
• buyers and sellers each have perfect information about what is
being traded, meaning, for example, that each buyer knows exactly
how much utility he / she would derive from purchasing the good
and each seller knows the most efficient way to produce the good.

61
 • there are no externalities. That is, the benefit of the good in question
goes entirely to the buyers of the good, and the costs of production
are borne entirely by the producers.
• each firm in the market is chiefly concerned with maximizing
profit.
Some economists argue that the market price effectively captures all
of the available information about the product. Others claim that prices
do not reflect all available information. They posit that this information
asymmetry undermines market efficiency.
A large number of participants in the competitive market ensures that
no one buyer or seller has too much influence over the price or the amount
traded.
Examples of imperfect markets are monopsonies and monopolies.
A monopsony1 is when there’s basically only one buyer for a product.
A monopoly2 is when there’s basically only one seller for a product.

Part 7. Read the text about foreign-exchange markets, and make a

gist (5 sentences) of it. Answer the question: What factors can
influence exchange rates?

TYPES OF FINANCIAL MARKET: FX MARKETS, MONEY

MARKETS, BOND MARKETS & EQUITY MARKETS

Foreign-exchange markets
In every country prices are expressed in units of currency, either that
issued by the country’s central bank or a different one in which individuals
prefer to denominate their transactions. The value of the currency itself
can be judged against an external reference, the exchange rate. Most often,
the references against which a currency’s value is measured are other
currencies. Determining the relative values of different currencies is the
role of the foreign-exchange (FX) markets. They directly influence each
country’s foreign-trade patterns, guide the flow of international investment
and affect domestic interest and inflation rates.

1
from mono- ‘one’ + Greek opsōnein ‘by provisions’
2
from Greek monopōlion: monos ‘single’ + pōlein ‘sell’
62
 By the way, a form of money that is not backed by a physical commodity
such as gold, but gains its value from the confidence people have in it is
known as fiat money. The world’s main currencies are fiat money1.
The FX markets comprise four different markets.

The spot market

Currencies for immediate
delivery are traded on the spot
market. A tourist’s purchase of
foreign currency is a spot-market
transaction. Most large spot
transactions among financial
institutions, currency dealers
and large firms are arranged
electronically. The actual exchange
of the two currencies is usually handled through the banking system and
generally occurs two days after the trade is agreed.

The futures market

The futures markets allow
participants to lock in an exchange
rate at certain future dates by
purchasing or selling a futures
contract.
For example, a US firm
expecting to receive SFr10m might purchase Swiss franc futures contracts
on the Chicago Mercantile Exchange. This would effectively guarantee that
the francs the firm receives can be converted into dollars at an agreed rate,
protecting the firm from the risk that the Swiss franc will lose value against
the dollar before it receives the payment. The most widely traded currency
futures contracts, however, expire only once each quarter.

1
Compare with cryptocurrency, such as Bitcoin, which is one of the first
digital currencies to use peer-to-peer technology to facilitate instant payments.
63
 The options market
A comparatively small amount of currency trading occurs in options
markets. Currency options, which were first traded on exchanges in 1982,
give the holder the right, but not the obligation, to acquire or sell foreign
currency or foreign-currency futures contracts at a specified price during a
certain period of time.
The derivatives market
Most foreign-exchange trading now occurs in the derivatives market.
Technically, the term derivatives describes a large number of financial
instruments, including options and futures. In common usage, however,
it refers to instruments that have different characteristics from exchange-
traded options and futures contracts. Widely used currency derivatives
include the following:
Forward contracts are agreements similar to futures contracts, providing
for the sale of a given amount of currency at a specified exchange rate on
an agreed date. Unlike futures contracts, however, currency forwards are
arranged directly between a dealer and its customer. Forwards are more
flexible, in that they can be arranged for precisely the amount and length of
time the customer desires.
Foreign-exchange (FX) swaps involve the sale or purchase of a currency
on one date and the offsetting purchase or sale of the same amount on
a future date, with both dates agreed when the transaction is initiated.
Normally, swaps are short-term deals, lasting a week or less.
Forward rate agreements (FRA) allow two parties to exchange interest-
payment obligations, and if the obligations are in different currencies there
is an exchange-rate component to the agreement.
Why exchange rates change
In the very short run exchange
rates may be highly volatile,
moving in response to the latest
news. Investors naturally gravitate
to the currencies of strong, healthy
economies and avoid those of
weak, troubled economies. The defeat of proposed legislation, the election
of a particular politician or the release of an unexpected bit of economic

64
data may all cause a currency to strengthen or weaken against the currencies
of other countries.
In the longer run, however, exchange rates are determined almost
entirely by expectations of real interest rates. A country’s real interest rate is
the rate of interest an investor expects to receive after subtracting inflation.
If, for example, an investor was able to lock in a 5% interest rate for the
coming year and anticipated a 2 % rise in prices, it would expect to earn a
real interest rate of 3 %.

ASSIGNMENT
Suggest the Russian for
• to denominate a transaction; a transaction denominated in euros;
• foreign-exchange market;
• spot market;
• futures market;
• options market;
• derivatives market;
• forward contracts;
• foreign-exchange swap;
• forward rate agreements;
• fiat money;
• cryptocurrency.

Part 8. Read the text and explain what money markets do. Give
examples of money market instruments.

Money markets
The term “money market” refers to the network of corporations,
financial institutions, investors and governments which deal with the
flow of short-term capital, e. g. when a business needs cash for a couple of
months until a big payment arrives, or when a bank wants to invest money
that depositors may withdraw at any moment. The money markets are webs
of borrowers and lenders, all linked by telephones and computers. At the
centre of each web is the central bank whose policies determine the short-
term interest rates for that currency.
What money markets do

65
 There is no precise definition of the money markets, but the phrase is
usually applied to the buying and selling of debt instruments maturing in
one year or less.
Investors typically purchase money-market instruments through
money-market funds, rather than buying individual securities directly.
Types of instruments
The best known types are commercial paper, bankers’ acceptances,
treasury bills, government notes, interbank loans, and time deposits.
Commercial paper
Commercial paper is a short-term debt obligation (which is nothing
more than a short-term IOU) of a private-sector firm or a government-
sponsored corporation. The paper has a maturity greater than 90 days but
less than 9 months. In the U.S., most new securities must be registered with
the regulator, the Securities and Exchange Commission, prior to issuance.
Bankers’ acceptances
These are promissory notes issued by a non-financial firm to a bank
in return for a loan. The bank resells the note in the money market at a
discount and guarantees payment. Acceptances have a maturity of less than
6 months. Acceptances are usually tied to the sale or storage of specific
goods, such as an export order. They do not bear interest. An investor
purchases the acceptance at a discount from face value and then redeems it
for face value at maturity.
Treasury bills / T-bills
These are securities with a maturity of 1 year or less, issued by national
governments. T-bills issued by a government in its own currency are
considered the safest of all possible investments in that currency. The most
common maturity is 3 months. They are bonds usually sold at a discount
from their nominal value rather than paying interest. For example, a T-bill
can be sold at 99 % of the face value and redeemed (=paid back) at 100 %
at maturity.
Interbank loans
Loans extended from one bank to another with which it has no
affiliation are called interbank loans. The interest rates at which banks
extend short-term loans to one another can be tied to the London inter-
bank offered rate (Libor), Euribor, the rate at which European banks lend
to each other, or the Fed funds rate in the U.S., which is the primary policy
lever of the Federal Reserve Board.

66
 Time deposits
Time deposits, aka. certificates of deposit/CDs, are interest-bearing
bank deposits that cannot be withdrawn without penalty before a specified
date. Time deposits with terms less than 1 year or as brief as 30 days are
common.

ASSIGNMENT

Suggest the Russian for

• money market;
• maturity;
• money-market fund;
• commercial paper;
• IOU;
• bankers’ acceptance;
• treasury bill;
• to redeem a T-bill at maturity;
• government note;
• promissory note;
• interbank loan;
• time deposit/certificate of deposit;
• debt obligation;
• the Securities and Exchange Commission;
• to extend a loan;
• the London inter-bank offered rate;
• the Federal Reserve Board;
• an interest-bearing bank deposit;
• to purchase a security at a discount from its face/nominal value;
• to withdraw a deposit without penalty.

Part 9. Read the text about bond markets and explain what type of
security is a bond.

Bond markets
For long-term financing, governments and firms can borrow in the
bond market. When investors buy bonds, they are lending money to sellers
with the expectation that they will be repaid their principal plus interest.

67
 For bond issuers, the bond market provides an efficient means of
borrowing large sums of money. For the buyer, bonds provide a relatively
secure financial investment that provides interest income.
Basically, there are two types of bonds:
Coupon1 bonds are sold at or near face value and provide guaranteed
interest payments.
Zero coupon bonds are sold at a discount from face value and pay face
value at maturity.
The U.S. government issues several types of bonds with maturities
greater than a year. Treasury notes and Treasury bonds are primary sources
for financing the federal budget.
Treasury notes are medium-term securities with maturities ranging
from two to ten years. The interest rate on the ten-year Treasury note serves
as a benchmark interest rate for both corporate bonds and mortgages. As
the interest rate on the ten-year Treasury note fluctuates, corporate rates
and mortgage rates fluctuate as well.
Treasury bonds are long-term securities that mature after thirty years.
In addition to the Treasury, independent agencies of the U.S. government
are able to borrow by issuing bonds. Although they lack the guarantee of
repayment that Treasury securities have, agency securities are backed by
the government and as such are seen as virtually guaranteed. The Federal
National Mortgage Association (Fannie Mae), the Federal Home Loan
Mortgage Corporation (Freddie Mac), and the Student Loan Marketing
Association (Sallie Mae) are well-known agencies that issue bonds in order
to finance their operations.
State and local governments are also able to borrow through the bond
market. Municipal bonds often finance schools, roads, and other public
projects. The interest paid on the municipal bonds is exempt from federal
income taxes, which makes them attractive to investors.
Firms are able to borrow in the bond market by issuing corporate
bonds. Corporate bonds provide businesses with the money they need for
capital investment without having to arrange bank financing. In addition,
corporate bonds allow for businesses to obtain funds without diluting
ownership in the company.

1
Coupons are small slips attached to the bonds which can be detached
physically from the main bond after maturity and exchanged for periodic interest
payments.
68
 Bonds are not without their downsides. Investors (bondholders)
face investment risk, inflation risk, interest rate risk, and the risk of early
call (early call means the issuer can recall the bond before the expected
maturity date).
Prospective investors rely on rating agencies to determine the quality of
the bonds. Moody’s, Standard & Poor’s, and Fitch rate bonds from “prime”
to “investment grade” to “junk,” and all the way to “in default.”

ASSIGNMENT

Suggest the Russian for

• bond;
• principal;
• interest;
• coupon;
• capital investment;
• coupon bond;
• zero coupon bond;
• Treasury note;
• Treasury bond;
• the Federal National
Mortgage Association;
• the Federal Home Loan
Mortgage Corporation;
• the Student Loan
Marketing Association;
• municipal bond;
• corporate bond;
• early call;
• 'prime', 'investment grade',
'junk', 'in default'.

69
Part 10. Read the text and explain the difference between bonds
and shares / stocks. Name the basic types of shares. What
companies are listed / quoted on the stock exchange?

Equity / Stock markets

Unlike bond markets, where
investors are making loans to
governments and firms, the stock
market is where investors are able
to purchase partial ownership
in firms represented by shares of
stock.
Companies that are privately
held don’t issue stock for public
purchase. Instead, they keep the shares among a small group of owners,
often the founders. But for companies that want outside investment, trading
on one of the stock exchanges is a good way to do this.
Firms are able to raise the money they need for capital investment by
issuing stock in an initial public offering (IPO).
Investors purchase the stock with the expectation that it will either pay
dividends or earn capital gains. Investors earn dividends when a company
divides a portion of the profits among all of the owners according to the
number of shares each owns.
For example, if there are 100 shares of stock for a company, and the
firm earns profits of $ 1,000,000 and decides to distribute half of the profits
to its shareholders while reinvesting the other half, each share will earn a
dividend of $ 500,000 / 100 or $ 5,000.
Stock earns capital gains when it is sold at a higher price than for what it
was purchased. Suppose you purchase a share of General Motors for $ 35.75
and a few months later, GM announces a hot new car that runs on sunlight
rather than gasoline. It seems likely that GM will earn lots of money selling
that car, so people want to buy stock in the company. Demand drives the
price of the stock higher. When it reaches $ 50.25, you decide to sell and
realize a capital gain of $ 14.50.

70
 Stock options
Stock options are a type
of derivative that allow for the
purchase of shares of stock at a
predetermined price. Companies
often issue stock options to
key employees as a reward for
performance. The recipients can
either sell their option contract on
the options exchange or wait and
exercise their option when the
share price of the stock increases.

Types of stocks
Companies issue two types of
stock, common or preferred.
Common stock provides
investors with partial ownership
of a firm and also grants them
the right to vote for the firm’s
leadership.
Preferred stock also provides
an ownership claim on a firm,
but does not allow for voting
privileges. Preferred stock
is so named because preferred stockholders get paid before common
stockholders when time comes to pay dividends.

ASSIGNMENTS
A. Suggest the Russian for
• stock market / equity market;
• initial public offering;
• to earn capital gains;
• AmE common stock / BrE common shares;
• AmE preferred stock / BrE preference shares;
• AmE stock option / BrE share option.

71
B. Give the terms from the texts you’ve studied for the following
definitions
• an interest-bearing form of loan used to raise capital, issued as
certificates by the issuer (such as a government or firm) in return
for a sum of money; the issuer agrees to repay the borrowed sum
plus interest at a fixed date in the future;
• the price of borrowing money;
• units of ownership in a company;
• an increase in the value of a capital asset (investment or real estate)
that gives it a higher worth than the purchase price.

Part 11. Listening. You are going to listen to an interview with

economist Michael Kitson. This extract begins with “The
second effect…” as Kitson had previously mentioned what
he called the first effect of government intervention, which
is trying to counteract the business cycle.
A. Listen to the audio about government intervention and answer the
questions.
1. Is the speaker in favour of government intervention in the
economy?
2. What areas should the government want to intervene?
B. Insert the missing words.
1. The second effect is whether we think … free markets alone can
ensure the … of resources and ... growth.
2. Often economists talk about notions of … or the fact that markets
…
3. <…> it’s understandable that firms do not …
4. If they (companies) do succeed, somebody else will be able to …
and … and benefit from their effects (from the technology that
those companies develop).
5. If government helps to … science, … new ideas, those products can
then … be developed and … by the market, and by businesses.
6. Ideas ultimately … long-term economic growth.
7. It’s mainly in encouraging those ideas … to become new products,
…, … of doing things.

72
C. Suggest the Russian for
• unfettered free markets;
• the long-term optimal allocation of resources;
• to invest in early-stage technologies;
• to commercialize science;
• to replicate something;
• “ideas ultimately drive long-term economic growth”.

Part 12. Use of English / Listening. Read the conversation between

two colleagues and choose the most suitable verb forms.
With a partner, discuss the reasons for your choices. What
different meanings are expressed by the other choices?
Suggest the Russian equivalents for ‘That’ll suit me down to the ground’, ‘to
blow one’s reputation for competence over some episode’, ‘Drinks are on me’.

Ed: So, what (1) have you been up to / are you up to since I last (2) saw /
have seen you?
Jon: Oh, (3) hasn't anyone been telling you / hasn't anyone told you? I (4)
decided / have decided to go for promotion. You know, for the new
area manager job.
Ed: Great! What exactly (5) would you be doing / would you have been
doing in the new job?
Jon: Well, you need to be quite flexible as there's a lot of travel involved
– in fact the responsibilities (6) cover / have covered six different
countries.
Ed: That'll suit you down to the ground – you (7) have always got / always
got out and about a lot I seem to remember. By the way, you know
Jacob (8) is going / has been going for it as well?
Jon: No, but I'm not threatened – he (9) blew / has blown his reputation
for competence over that lost documents episode.
Ed: OK, but what (10) have you done / have you been doing to make sure
you actually get the job?
Jon: Well, by the end of the week I (11) will have worked out / will be
working out my interview strategy and there's no question they can
ask me I can't answer.

73
Ed: (12) Aren't you being / aren't you a bit over-confident, or should that
be arrogant?
Jon: We'll see. Drinks are on me if I get it.
Ed: Deal.

Part 13. Read the text below and explain what CSR means.
Corporate social responsibility, often abbreviated CSR, is a corporation's
initiatives to assess and take responsibility for the company's effects on
environmental and social well-being. The term generally applies to efforts
that go beyond what may be required by regulators or environmental
protection groups. A business's CSR can encompass a wide variety of
tactics, from giving away a portion of a company's proceeds to charity, to
implementing «greener» business operations.

Part 14. Video. Watch Alex Edmans’ talk on ‘The Social Responsibility
of Business’ and sum it up.

A. Answer the following questions:

1. How is employee well-being (i.e. job satisfaction) linked to firm
value and corporate social responsibility (CSR)?
2. What famous economists or businessmen does A. Edmans mention
in his talk?
3. What does A. Edmans’ academic research focus on?
4. How does A. Edmans question the conventional view/views on
CSR and profitability?
5. How can you measure CSR?
6. So, why do businesses exist?
B. Insert the missing words.
1. But profit is only a by-product; it’s not the …
2. The list of the 100 Best Companies to Work for in America looks
not only at quantitative factors, such as pay and benefits, but also
…, like trust in management, pride in your jobs and … your
colleagues.
3. I found that the 100 Best Companies to Work for in America
delivered … that beat their peers by 2–3 % per year over a 26-year
period.

74
 4. Indeed, perhaps, because the market is so … , perhaps because the
market is so focused on the …, because the market like that stock
analyst in BusinessWeek wrongly thinks that … companies are
tree-huggy I find that it takes the market four to five years before
the benefits of employee well-being fully show up in the stock
price.
C. Explain the underlined words.
1. This view is a bit tree-huggy and out of touch.
2. But George takes the punt and penicillin becomes made by
Merck.
3. His mindset wasn’t “How can I make as much money as possible
selling drugs?”; it was “How can I use science to save people’s
lives?”
4. Treating the employee well will be a bad sign because it suggests
that you’re allowing your workers to slack off.
5. It’s not ‘either or’, it’s not ‘zero sum’. It’s ‘both and’.

TEXTS FOR RENDERING INTO ENGLISH

Text 1
Модель кругооборота. Рынки ресурсов и продуктов
На рисунках 2–6 представлены две группы тех, кто принимает
решения – домашние хозяйства (домохозяйства) и фирмы. Коорди-
нирующим механизмом, который приводит в соответствие друг
с другом решения домохозяйств и фирм, служит рыночная система,
особенно рынки ресурсов и продуктов.
Цены, по которым оплачивают использование земли, труда,
капитала и предпринимательской способности, определяются на
рынке ресурсов, показанном в верхней части схемы. Здесь фирмы
предъявляют спрос, а домохозяйства обеспечивают предложение.
Цены на готовые изделия и услуги определяются на рынке продуктов,
расположенном в нижней части схемы. На этом рынке уже домохо-
зяйства выступают на стороне спроса, а фирмы – на стороне пред-
ложения.
Верхняя часть схемы описывает рынок ресурсов. Здесь домо-
хозяйства, которые прямо или косвенно (через свою долю в собствен-
ности корпораций) владеют всеми экономическими ресурсами,

75
поставляют эти ресурсы
фирмам. Фирмы предъявля-
ют спрос на ресурсы, так как
именно с их помощью они про-
изводят товары и услуги. Взаи-
модействие спроса и предло-
жения применительно к огром-
ному разнообразию людских и
материальных ресурсов опре-
деляет цену каждого из них.
Платежи, производимые фир-
мами за полученные ресурсы,
являются затратами для фирм,
но одновременно представля-
ют собой потоки заработной платы, ренты, процентов и прибыли
для домохозяйств, поставляющих эти ресурсы.
Теперь рассмотрим рынок продуктов, представленный в ниж-
ней части схемы. Денежный доход, получаемый домохозяйствами
от продажи ресурсов, не имеет истинной ценности как таковой. По-
требители не могут есть или надевать на себя в качестве одежды мо-
неты и бумажные деньги. Поэтому, расходуя свой денежный доход,
домохозяйства предъявляют свой спрос на огромное многообразие
товаров и услуг. Одновременно фирмы комбинируют полученные
ресурсы так, чтобы обеспечить производство и предложение това-
ров и услуг на тех же самых рынках. Взаимодействие решений по
поводу спроса и предложения определяет цены продуктов. Заметьте
также, что поток расходов потребителей на товары и услуги состав-
ляет доходы или поступления от продаж с точки зрения фирм.
Модель кругооборота подразумевает сложную паутину приня-
тия взаимосвязанных решений и экономических действий. Отметим,
что домохозяйства и фирмы действуют на обоих основных рынках,
но по разные их стороны. Фирмы на рынке ресурсов являются поку-
пателями, то есть обеспечивают спрос, а домохозяйства как владель-
цы и поставщики ресурсов являются продавцами, то есть обеспечи-
вают предложение. На рынке продуктов они меняются местами: до-
мохозяйства в качестве потребителей выступают на стороне купли
или спроса, а фирмы – на стороне продажи или предложения. Каждая
группа экономических единиц и покупает, и продает.

76
 Более того, над этими взаимообменами витает призрак нехват-
ки. Поскольку домохозяйства располагают лишь ограниченным
количеством ресурсов, которые они могут предложить фирмам,
денежные доходы потребителей также оказываются ограниченными.
Это означает, что доход каждого потребителя может достичь лишь
определенной величины, не более. Ограниченное количество денег
не позволит приобрести все товары и услуги, которые потребитель
мог бы пожелать купить. Равным образом из-за недостатка ресурсов
производство товаров и услуг также ограниченно. Нехватка и выбор
пронизывают все наши рассуждения.
Text 2
Рынки можно классифицировать следующим образом:
1. рынки потребительских товаров и услуг:
а) рынок продовольственных товаров;
б) рынок непродовольственных товаров;
в) рынок услуг;
2. рынки факторов производства:
а) рынок рабочей силы (рынок труда);
б) рынок средств производства;
в) рынок сырья;
3. рынки недвижимости:
а) рынок жилья;
б) рынок земли;
4. финансовый рынок:
а) фондовый рынок;
б) денежный рынок;
в) фьючерсный рынок или рынок срочных контрактов;
5. информационный рынок:
а) рынок духовно-интеллектуального продукта.
На рынке потребительских товаров происходит купля-продажа
предметов потребления. В зависимости от объектов продаж такой то-
варный рынок подразделяется на рынок продовольственных товаров
и промышленных товаров. Рынок продовольственных товаров, или
продовольственный рынок, предназначен для продажи продавцами
и приобретения покупателями продуктов питания, продовольствия.
Рынок промышленных (непродовольственных) потребитель-
ских товаров предназначен для продажи обширной группы товаров

77
народного потребления, включая одежду, обувь, головные уборы, бы-
товые товары, книги, лекарства, отдельные виды строительных мате-
риалов, транспортные средства личного и семейного пользования.
Рынок услуг (бытовых, коммунальных, информационных) охва-
тывает платные услуги по бытовому обслуживанию населения (пра-
чечные, химчистки, парикмахерские, бани, транспортные услуги,
услуги связи, охрана), коммунальные услуги (водоснабжение, тепло-
снабжение, энергоснабжение, газоснабжение жилищ, обслуживание
лифтового хозяйства, поддержание нормального функционирования
домов и квартир) и прилегающие к ним услуги по ремонту жилья, бы-
товой аппаратуры и на информационные услуги (справки, реклама,
размножение информации, консультирование, нотариат, оповеще-
ние, подготовительное обучение).
Рынок рабочей силы или рынок труда – это свободная продажа
каждым трудоспособным человеком своих трудовых возможностей
и свободный наем работников.
Рынок факторов производства предполагает куплю-продажу эко-
номических ресурсов или факторов производства, которые делятся
на первичные производственные факторы, представляемые домаш-
ними хозяйствами, такие, как земля (естественные ресурсы), капитал
(инвестиционные ресурсы), труд, и промежуточные, представляемые
предприятиями другим предприятиям (полуфабрикаты).
Рынок средств производства состоит из трех рынков.
Это, во-первых, рынок купли-продажи производственных зданий
и сооружений;
во-вторых, рынок машин, технологического оборудования,
приборов, аппаратов производственного назначения;
в-третьих, рынок сырья, материалов, полуфабрикатов, энергии,
из которых и посредством которых изготовляется продукция.
Рынок недвижимости охватывает в качестве объекта продаж
недвижимость в виде прежде всего двух основных товаров – жилья
и земли.
Финансовый рынок отражает спрос и предложение финансовых
средств, то есть денег, валюты, акций, облигаций и других ценных
бумаг. С одной стороны, «сегодняшние» деньги продаются и покупа-
ются в обмен на «завтрашние», то есть в долг, в кредит, и в этом пла-
не стоит говорить о рынке ссудных капиталов или денежном рынке
(рынок купли-продажи краткосрочных взаимных ссуд финансовых
78
учреждений). С другой – валюта одного государства передается в об-
мен на валюту другого – это валютный рынок. И наконец, ценные
бумаги в виде акций, облигаций, векселей, ваучеров, лотерейных би-
летов продаются и покупаются за деньги. Это рынок ценных бумаг,
именуемый еще фондовым.
Рынки срочных контрактов, или фьючерсные рынки, выступают
как форма купли-продажи срочных контрактов. Фьючерсные рынки
получили развитие в конце 1970-х – начале 1980-х годов. Вначале по-
явились фьючерсные рынки сельскохозяйственной продукции, когда
продавцы заключали сделки на продажу будущих товаров в надежде
получить реального клиента и застраховаться от снижения цен. Даль-
нейшее развитие фьючерсных рынков приводит к появлению финан-
совых фьючерсных рынков, где объектами купли-продажи выступа-
ют контракты на покупку-продажу векселей, облигаций, фондовых
индексов. Особое развитие получает рынок валютных фьючерсов,
сформировавшийся в середине XX века в условиях золотодолларо-
вого стандарта. Необходимость в таком рынке остро проявилась по-
сле 70-х годов XX века, когда курс валюты перестал быть стабильным
и изменяется в зависимости от состояния экономики той или иной
страны. Основными субъектами данного рынка выступают хеджеры,
покупатели и продавцы того или иного товара, стремящиеся застра-
ховать себя от снижения или повышения цен, и спекулянты, зани-
мающиеся «игрой» на повышение и понижение цен, что дает возмож-
ность получения прибыли.
Рынки фьючерсные или рынки срочных контрактов делятся на
биржевой рынок и внебиржевой.
Биржевой рынок – это совокупность сделок, совершаемых на
фондовых и фьючерсных биржах, а также в фондовых и фьючерсных
отделах товарных и валютных бирж.
Внебиржевой рынок – сделки со срочными контрактами на раз-
личные активы, проходящие вне биржи. Внебиржевой рынок в отли-
чие от биржевого свободен от биржевых стандартов и ограничений,
допускает включение в контракт любых дополнительных условий.
Информационный рынок представляется целесообразным вы-
делить особо. Товаром на подобном рынке выступает специфиче-
ский продукт – информация. К рынку интеллектуального продук-
та следует отнести куплю-продажу услуг культуры, образования,

79
здравоохранения, а также любого информационного продукта,
возникающего в результате духовной деятельности.

Part 14. Discussion. Comment on the following quotes.

1. A business that makes nothing but money is a poor business.

(Henry Ford)
2. Ideas pull the trigger, but instinct loads the gun. (Don Marquis)
3. Good business leaders create a vision, articulate the vision,
passionately own the vision, and relentlessly drive it to completion.
(Jack Welch)
4. When your values are clear to you, making decisions becomes
easier. (Roy E. Disney)

80
UNIT 5
BANKS

Part 1. Read the text and answer the questions below.

1. What is the etymology of the word ‘bank’?
2. Give historical background of the first banks.
3. What services does a typical bank provide?
People have long engaged in borrowing and lending. There is evidence
that these activities took place 5,000 years ago in Mesopotamia (present-
day Iraq) at the very dawn of civilization. But modern banking systems did
not emerge until the 14th century in northern Italy. The word “bank” comes
from the Italian word for the “bench” on which the bankers sat to conduct
business.
In the 14th century the Italian peninsula was a land of city-states that
benefited from the influence and revenue of the papacy in Rome. The
peninsula was ideally located for trade between Asia, Africa, and the
emerging nations of Europe. Wealth began to accumulate, especially in
Venice and Florence. Florence focused on manufacturing and trade with
northern Europe, and there merchants and financiers came together at the
Medici Bank.
The Medici Bank financed
long-distance trade in com-
modities such as wool. In its
heyday, it ran branches in 11 cities,
including London and Geneva.
Its network was decentralized.
Branches were managed not by
an employee but by a local junior
partner, who shared in the profits.
The Medici family in Florence
were the senior partners, earning
most of the profit, and retaining
the family trademark, which
symbolized the bank’s sound reputation. Moreover, branches took in large
deposits from wealthy savers.

81
 These elements of the Medici success story correspond to three
economic concepts highly relevant to banking today. The first is “economies
of scale.” It is expensive for an individual to draw up a single legal loan
contract, but a bank can draw up 1,000 such contracts at a fraction of the
“per-contract” cost (the bigger the firm, the lower the average cost).
The second is “diversification of risk”. The Medicis lowered the risk of
bad lending by spreading their lending geographically. Moreover, because
the junior partners shared in profits and losses, they needed to lend wisely –
in effect they took on some of the Medici risks.
The third concept is “asset transformation”. Merchants might want
to deposit earnings or borrow money. One merchant might want a safe
place to store his gold, from where he can withdraw it quickly if necessary.
Another might want a loan – which is riskier for the bank and may tie up
money for a longer time. So the bank came to stand between the two needs:
“borrowing short, and lending long”.
However, this practice also makes the bank vulnerable – if a large
number of depositors demand their money back at the same time, the bank
may be unable to provide it because it will have used the depositors’ money
to make long-term loans, and it retains only a small fraction of depositors’
money in ready cash.
Lending requires specialized, skilled knowledge, because a lack of
information (known as “information asymmetry”) can result in serious
problems. A bank’s most important function is its ability to lend wisely, and
then to monitor borrowers to deter “moral hazard” – when people succumb
to the temptation not to repay and default on the loan.

Part 2. Listening.

A. Before you listen to Kate Barker, study the list of the words below and
match them with their definitions.
base rate; consume; incentive; plant; capital; demand; labour; supply
1) encouragement or a reason to do something;
2) factories and the machines and equipment in them;
3) money invested in companies to buy buildings, machinery, etc.;
4) the quantity of goods and services offered for sale by companies;
5) the rate at which the central banks lend money to commercial
banks;

82
 6) to spend money on goods and services;
7) what people consume and how much they invest;
8) work done by people employed by businesses.
B Listen to the audio and be ready to answer the questions that follow.
1. What is the aim of monetary policy?
2. What tools does a central bank use to control supply and demand
for money?
3. What tends to happen when interest rates rise?
4. What tends to happen when interest rates fall?
5. What do commercial banks do after the central bank changes the
base rate at which it lends them money?

Part 3. Read the text and answer the questions that follow.
• What is a bank?
• What are the most important types of banks?
• What are the functions of central banks?
A bank is a financial institution licensed to receive deposits and
make loans. Banks may also provide financial services, such as wealth
management, currency exchange and safe deposit boxes. In most countries,
banks are regulated by the national government or central bank.
There are several kinds of banks. Commercial banks, for instance,
are businesses that trade in money. They receive and hold deposits, pay
money according to customers’ instructions, lend money, offer investment
advice and foreign exchange facilities. In some countries these banks have
branches in all major towns; in other countries, there are smaller regional
banks.
Investment banks are
financial institutions that assist
individuals, corporations, and
governments in raising financial
capital by underwriting and/
or acting as the client's agent in
the issuance of securities. These
banks are responsible for finding
Meeting of G20 finance ministers in Germany, sources of money for their client
2017 as well as handling their initial

83
public offerings (IPOs), securities brokerage, and facilitating mergers
and acquisitions.
In Britain, the term ‘merchant bank’ refers to an investment bank.
Like investment banks, merchant banks are not depository / retail lender
institutions. Rather, merchant banks are intermediaries that primarily
perform international financing activities such as foreign corporate
investing, foreign real estate investment, trade finance and international
transaction facilitation. Merchant banks specialize in raising funds for
industry on the various financial markets, issuing securities, dealing with
mergers and so on. They also offer stock broking and portfolio management
services to rich corporate and individual clients.
In some European countries, notably Germany, Austria and
Switzerland, there are universal banks, which combine deposit and loan
banking with share and bond dealing, investment advice, etc. Yet even
universal banks usually form a subsidiary, known as a finance house,
to lend money – at several per cent over the base lending rate – for hire
purchase or instalment credit, that is, loans to customers that are repaid in
regular, equal monthly amounts.
In Britain, there are also building societies that provide mortgages,
i.e. they lend money to home buyers on the security of houses and flats,
and attract savers by paying higher interest on deposits than the banks.
The savings and loan associations in the United States serve a similar
function.
There are supranational banks such as the World Bank or the European
Bank for Reconstruction and Development, which are generally concerned
with economic development.
Central banks supervise the banking system. They fix the minimum
interest rate, issue bank notes, control the money supply, influence exchange
rates, and act as lender of last resort serving as the bank for private banks/
the bankers’ bank and for the nation's government. Central banks do not
accept deposits and make loans to private individuals.
The goals of central banks are to stabilize the nation's currency, keep
unemployment low and prevent inflation. Raising interest rates slows
growth, preventing inflation. That's known as a contractionary monetary
policy.
Lowering rates stimulates growth, preventing or shortening a
recession. That's called expansionary monetary policy. But if central banks
stimulate the economy too much, they can trigger inflation.
84
ASSIGNMENTS
A. Suggest the Russian for
• central bank;
• commercial bank;
• investment bank;
• supranational bank;
• universal bank;
• building society;
• merchant bank.

B. Suggest the English for

• базовая ставка кредита;
• финансовый дом; кредитное учреждение, специализирую-
щееся на потребительских кредитах;
• покупка в рассрочку;
• кредит, погашаемый в рассрочку;
• фондовые операции;
• выступать кредитором последней инстанции;
• гарантировать размещение ценных бумаг;
• брокерские операции с ценными бумагами;
• выпускать облигации государственного займа;
• управление инвестиционным портфелем;
• Европейский банк реконструкции и развития;
• слияния и поглощения;
• выдавать кредит покупателям жилья под залог недвижи-
мости.

Part 4. Listening. Listen to the audio about the Federal Reserve and
do the assignments below.

A. Answer the questions.

1. When was the Federal Reserve Bank created?
2. Name some world-known central banks.
3. Why is the U. S. Federal Reserve called a quasi-public corporation?
4. Speak about the Federal Reserve structure.
5. What is meant by the term ‘monetary policy’?

85
 6. What do you call the demand for products
across the entire country (determined by
the same formula used to calculate GDP,
that is,
consumption + investment + government
spending + exports – imports
GDP=C+I+G+X-M)?
7. What monetary tools does the Federal
Reserve use to regulate money supply?
8. Why have open market operations been
the most commonly used tool of monetary
Jerome Powell Chairman policy in the U. S.?
of the Federal Reserve Board 9. What is the function of the Federal Open
Market Committee1? Who sits on the
FOMC?
10. What are the two practical applications of
the quantitative easing approach?
B. Suggest the English equivalents.
1. Субъект экономики.
2. Принять евро в качестве национальной валюты.
3. Денежная масса.
4. Чеканить монету и регулировать ее ценность.
5. Проводить денежно-кредитную политику.
6. Совокупный спрос.
7. Требования к резервированию.
8. Учетная ставка, ставка дисконтирования.
9. Операции на открытом рынке.
10. Количественное смягчение.
C. Suggest the context for the following.
1. Article 1, Section 8
2. To make a (strong) case for
3. Newly minted tool
4. To encourage or discourage aggregate demand
1
Федеральный комитет по операциям на открытом рынке.
86
 5. $ 41.3 million deposited in checking (UK current) and savings
accounts
6. To adjust the balance of loans and deposits
7. To skirt close to / bump into the reserve requirement
8. M 1 & M 2
9. To phase out
10. $ 1 trillion in financial securities backed by payments from home
mortgages

D. Insert the missing words. Translate into Russian.

1. The Board of Governors consists of … members, each appointed

by the … and confirmed by … Appointments are for … – year
terms. One member’s term expires on … of every … year.
2. The reserve requirement is the … of deposits banks may …
3. When the reserve requirement gets higher, each individual bank has
… money to lend out. Thus, the quantity of loans available in the
economy .., and … shrinks. Interest rates will .., so that borrowing
is … attractive.
4. If the central bank raises the discount rate, this will … banks to
keep money on hand, not to venture too close to the .., because if
they do need to borrow to make up the .., it will cost them … So,
banks will lend out a little bit .., reducing the amount of money in
the economy.
5. Banks take … and they need to invest them. Some of these are
distributed as .., and banks receive … when the … are repaid. Most
banks also hold a certain amount of money in .., and they receive
some … from owning them.
6. When the Fed buys bonds from banks, the banks have more money
to …
7. If banks put depositors’ money in bonds, they can’t … out the
bonds.
8. If the Fed buys bonds, banks hold cash and can … their lending, so
aggregate demand …

87
Part 5. Use of English. Idioms. Explain the meaning of the sentences
below.
1. Share prices have soared.
2. The market is now expecting a surge in the value of the euro.
3. The dollar made significant gains.
4. Another hike in the rate is possible.
5. The yen will strengthen.
6. The pound rallied later in the day.
7. The market is still buoyant.
8. The advice is to snap up the share while you can.
9. The value may plummet even more.
10. The price has slumped to its lowest level.
11. The Federal Reserve has slashed the discount rate.
12. The recession has wiped billions off the stock markets round the
world.
13. The market is still in turmoil.
14. The market remains volatile.
15. There is likely to be short-term turbulence in the market.

Part 6. Texts for Rendering into English

Text 1
Государственное регулирование экономики
Кейнс, когда в 1930-е годы формулировал свою теорию, был за
довольно активное вмешательство в виде государственных расходов,
большего регулирования рынка. Эта идеология доминировала
в послевоенное время, в 1950–1960-е годы, поэтому понятно, откуда
в общественной дискуссии такое отношение к кейнсианской точке
зрения. В 1970-е годы началась волна дерегулирования экономики
в мире.
Единственная отрасль, где к большему регулированию опять
стали призывать после кризиса 2008–2009 годов, – это финансовый
сектор. Хотя многие скажут, что этот кризис, наоборот, был как раз
во многом вызван неверными действиями правительств, которые
в докризисные годы давали неявные гарантии крупным банкам. Эти
гарантии позволили банкам вести себя чрезмерно рискованно, зная,
что в кризисной ситуации их спасут за счет налогоплательщиков.

88
 Среди ученых-кейнсианцев здесь нет единой точки зрения.
Например, нобелевские лауреаты Пол Кругман и Джозеф Стиглиц
являются большими сторонниками вмешательства государства
в экономику, чем многие другие кейнсианцы. А есть, например, Гре-
гори Мэнкью, гарвардский профессор и экономический советник
президента США Джорджа Буша, по своим научным убеждениям
кейнсианец и один из авторов новой кейнсианской теории. Тем не
менее Мэнкью придерживается довольно консервативной точки
зрения, считая, что лучше государству как можно меньше вмеши-
ваться, а если вмешиваться, то только посредством денежной поли-
тики. Это не регулирование, а предоставление кредита экономике
в периоды спада.
Бюджетная политика
Если падает совокупный спрос и начинается рецессия, то естест-
венная реакция на эту проблему – попытаться стимулировать его
искусственно. У правительства здесь есть два инструмента: бюджет-
ная и денежная политика.
Бюджетная политика, за которую ратовал Кейнс, предполагает,
что государство должно предъявить спрос тогда, когда частный сек-
тор его не предъявляет. Правительство увеличивает государственные
расходы на общественные нужды: начинает строить дороги, мосты.
Не все согласны с тем, что это разумно, потому что бюджетная
политика неоперативна, она зачастую волюнтаристская, сразу появля-
ется большое количество вопросов, связанных с коррупцией и неэф-
фективным использованием бюджетных средств. Когда мы пропуска-
ем, особенно в экстренном порядке, большое количество денег через
правительство, неизбежно будут неэффективные траты. Но во время
Великой депрессии именно эта политика стала доминирующей.
Денежная политика
Сейчас в большей степени используется денежная политика, осо-
бенно если спады представляют собой не такие большие катаклиз-
мы, как Великая депрессия. В рамках денежной политики централь-
ный банк снижает процентную ставку, по которой он дает деньги
в долг экономике. Таким образом, он добавляет денег в экономику,
и экономика, получив дешевые кредитные средства, увеличивает
потребительские и инвестиционные расходы. Так совокупный спрос
восстанавливается до исходного уровня.

89
 Денежная политика сейчас считается более эффективной: она бо-
лее оперативна и менее волюнтаристская, чем бюджетная. Хотя, как
показал кризис 2008 года, во время больших катаклизмов правитель-
ства используют оба этих инструмента.
Text 2
Стержнем денежной и банковской систем США является Совет
управляющих Федеральной резервной системы. Семь членов Совета
назначаются президентом с одобрения Конгресса. Им устанавлива-
ются длительные сроки полномочий – 14 лет, но вместе с тем каж-
дые два года заменяется один член Совета. Это делается для того,
чтобы дать возможность Совету действовать последовательно, иметь
компетентных членов, сохранять независимость, или автономию.
Назначение, а не избрание, состава Совета на длительный срок имеет
целью отделить кредитно-денежную политику государства от поли-
тики конкретных партий.
Совет управляющих отвечает за общее руководство денежной
и банковской системами страны и осуществляет контроль за их ра-
ботой. Председатель Совета – самый влиятельный руководитель
центрального банка в мире. Эффективность мероприятий Совета,
которые должны служить общественным интересам и способство-
вать общему экономическому процветанию, достигается с помощью
определенных процедур монетарного контроля, способных воздей-
ствовать на денежное предложение.
В разработке банковской и денежной политики Совет управ-
ляющих опирается на помощь нескольких важных государственных
органов, первому из которых, очевидно, принадлежит особая роль.
1. Комитет по операциям на открытом рынке, в который входят
собственно члены Совета управляющих, а также 5 президентов фе-
деральных резервных банков, определяет политику купли-продажи
на открытом рынке государственных ценных бумаг (векселей, каз-
начейских билетов, облигаций). Эти операции на открытом рынке
представляют собой наиболее важное средство воздействия на пред-
ложение денег из всех имеющихся в распоряжении руководящих
кредитно-денежных ведомств (см. гл. 15 Федеральные резервные бан-
ки и кредитно-денежная политика).
2. Три консультативных совета, состоящие из частных граж-
дан, проводят периодические встречи с Советом управляющих, где

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высказывают свои соображения о банковской и денежной полити-
ке правительства. В состав Федерального консультативного совета
входят 12 руководителей коммерческих банков, которые избираются
ежегодно по одному от каждого из 12 федеральных резервных бан-
ков. Консультативный совет сберегательных учреждений состоит из
представителей ссудо-сберегательных ассоциаций, сберегательных
банков и кредитных союзов. Третья группа советников – это Кон-
сультативный совет потребителей, состоящий из 30 членов, куда вхо-
дят потребители финансовых услуг, ученые и специалисты по потре-
бительскому законодательству. Однако эти советы, как собственно
и следует из их названия, являются чисто консультативными орга-
нами и не имеют полномочий для формирования политики, а Совет
управляющих не обязан строго придерживаться их рекомендаций.
В число 12 федеральных резервных банков входят банки, кото-
рые являются: 1) центральными банками; 2) квазигосударственными
банками (воплощают в себе сочетание частной собственности и го-
сударственного контроля); 3) банками банков (принимают вклады
от банков и сберегательных учреждений и предоставляют ссуды им,
а также выполняют функцию эмиссии наличных денег).

Text 3

Совет управляющих ФРС обязан осуществлять надзор и контроль

за деятельностью денежной и банковской систем. Именно Совет фор-
мулирует основные правила политики, которым следует банковская
система. Коль скоро Совет управляющих – это общественный орган,
его решения направлены на соблюдение и защиту интересов обще-
ства. 12 федеральных резервных – центральных – банков отвечают за
воплощение в жизнь политических решений Совета. Будучи квазиго-
сударственными банками, федеральные резервные банки действуют
не ради прибыли, а в первую очередь ради реализации тех мер, кото-
рые рекомендует Совет управляющих.
Однако сказать, что Совет проводит политику, которая «соот-
ветствует интересам общества», недостаточно. Основополагающая
цель кредитно-денежной политики состоит в том, чтобы помочь
экономике достичь такого общего уровня производства, для которо-
го характерны полная занятость ресурсов и отсутствие инфляции.
Кредитно-денежная политика заключается в изменении денежного

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предложения, направленном на стабилизацию совокупного объе-
ма производства, занятости и уровня цен. Это означает увеличение
денежного предложения в периоды спада для поощрения расходов
и сокращение денежного предложения в периоды инфляции для
ограничения расходов.
Совет управляющих ФРС меняет объем денежного предложения
в стране, регулируя размеры избыточных резервов, имеющихся у ком-
мерческих банков. Избыточные резервы имеют решающее значение
для способности банковской системы создавать деньги. Специфиче-
ские приемы, которыми Совет воздействует на избыточные резервы
в банковской системе, заслуживают обстоятельного рассмотрения.
Совет управляющих располагает тремя инструментами денежно-
го контроля, с помощью которых он воздействует на резервы коммер-
ческого банка:
• операции на открытом рынке;
• изменение резервной нормы;
• изменение учетной ставки.
Операции на открытом рынке
Операции на открытом рынке – наиболее важное средство кон-
троля ФРС за денежным предложением. Термином операции на
открытом рынке обозначают куплю-продажу на открытом рынке
государственных облигаций федеральными резервными банками, то
есть покупку облигаций у коммерческих банков и населения в целом
или продажу им этих ценных бумаг.
Изменение резервной нормы
Повышение резервной нормы увеличивает объем обязательных
резервов, которые должны держать банки. В подобной ситуации либо
банки теряют избыточные резервы, что снижает их способность соз-
дать деньги путем кредитования, либо же их резервы кажутся им не-
достаточными, что вынуждает их уменьшать чековые депозиты и тем
самым денежное предложение.
Снижение резервной нормы переводит обязательные резервы
в избыточные и увеличивает способность банков создавать новые
деньги путем кредитования.
Учетная ставка
Одной из традиционных функций центрального банка являет-
ся роль «заимодателя в крайнем случае». Центральный банк

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предоставляет ссуды коммерческим банкам, занимающим твердое
финансовое положение, но которым неожиданно и безотлагательно
потребовались дополнительные средства. Так, каждый федеральный
резервный банк предоставляет краткосрочные ссуды коммерческим
банкам своего округа.
Здесь важно, что получение коммерческим банком ссуд в феде-
ральных резервных банках увеличивает резервы коммерческих бан-
ков, усиливая тем самым их способность расширять кредит.
Совет управляющих ФРС имеет полномочия устанавливать и из-
менять учетную ставку, по которой коммерческие банки могут брать
займы в федеральных резервных банках. С точки зрения коммерче-
ских банков учетная ставка представляет собой издержки, связанные
с приобретением резервов. Следовательно, снижение учетной ставки
поощряет коммерческие банки к приобретению дополнительных ре-
зервов путем заимствования у федеральных резервных банков. Ссу-
ды коммерческих банков, опирающиеся на эти новые резервы, увели-
чивают денежное предложение.
И наоборот, повышение учетной ставки ослабляет заинтересо-
ванность коммерческих банков в получении дополнительных резер-
вов путем заимствования у центральных банков. Поэтому повышение
учетной ставки соответствует стремлению руководящих кредитно-
денежных ведомств ограничить предложение денег.

Part 7. Discussion. Comment on the following quotes.

1. Great things in business are never done by one person. They're

done by a team of people. (Steve Jobs)
2. Details create the big picture. (Sanford I. Weill)
3. A bank is a place where they lend you an umbrella in fair weather
and ask for it back when it begins to rain. (Robert Frost)
4. Where there is no vision, there is no hope. (George Washington
Carver)

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UNIT 6
TAXATION

Part 1. Read the text and do the assignments.

Types of taxes
Governments finance most of
their expenditure by taxation. If
they spend more than they levy or
charge in taxes, they have to borrow
money.
For businesses, taxation is a very
important factor in the financial
investment decision-making process
because a lower tax burden allows
the company to reduce prices or
generate higher revenue, which can
then be paid out in wages, salaries
and / or dividends.
Direct taxes are collected by the
government from the income of individuals and businesses.
• Individuals pay income tax on their wages or salaries, and most other
money they receive. In the USA, taxes levied by a state or local government
on annual income are called state and / or local income tax. In the UK,
taxes that people pay to their local council for services such as schools and
libraries, based on the value of their house or flat, are called council taxes
(used to be called ‘rates’ before 1990). In most countries, including the USA,
both state and federal authorities collect the payroll tax, which is a tax an
employer withholds and / or pays on behalf of their employees based on the
wage or salary of the employee1. Income taxes paid to a foreign government
on income earned in that country are known as the foreign tax. The U. S.

1
As of 2016, the IRS levies a 12.4 % payroll tax. Employees pay 6.2 %, while
their employers also pay 6.2 %. Self-employed individuals pay the full amount on
their own. This tax is considered flat because it imposes the same percentage on all
wage earners.
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federal tax allocated to state unemployment agencies to fund unemployment
assistance for laid-off workers is called the unemployment tax.
• Most countries have a capital gains tax on profits made from the
sale of assets such as stocks or shares. This is usually imposed or levied at a
much lower rate than income tax.
• A capital transfer tax (commonly called death duty in the UK) is
usually imposed on inherited money or property. Other names for this tax
are inheritance tax or estate tax.
• Companies pay corporation tax (AmE corporate tax, income tax)
on their profits.
• Companies and their employees also have to pay taxes (called
national insurance in the UK) which the government uses to finance social
security spending – unemployment pay, sick pay, etc.
Indirect taxes are levied on the production or sale of goods and services.
They are included in the price paid by the final purchaser.
• In most European countries, companies pay VAT or value-added
tax, which is levied at each stage of production, based on the value added
to the product at that stage. The whole amount is added to the final price
paid by the consumer. In Canada, Australia, New Zealand and Singapore,
this tax is called goods and services tax or GST.
• The vast majority of products sold in the United States are subject
to either a sales tax or a per-unit tax1, collected by retailers. For example,
when you purchase a compact disc you pay the sticker price, but you also
pay a sales tax. There are several types of taxes that local, state, and federal
governments place in markets in the USA, such as vehicle registration taxes
and licensing fees. For example, each year lawyers in most states must pay
a fee in order to practice law in their state. Other examples of licensing
fees include drivers' licenses, business licenses, fire-arms licenses, and hunting
licenses, to name a few.
• Governments also levy excise taxes or excise duties – additional sales
taxes on commodities like tobacco products, alcoholic drinks and petrol.
• Special taxes, called tariffs or customs duties, are often charged
on goods imported from abroad. Most countries have customs duties
on imports, either from all foreign countries, or from those not part of
a customs union such as the EU or NAFTA. Thus, governments make
these goods more expensive and encourage people to buy local products
instead.
1
A per-unit tax is a fixed fee charged on each unit.
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 • Other taxes include road tax (in the UK) or car tax that people
must pay if they drive their vehicles on public roads; fuel duty / fuel tax
or hydrocarbon oil duty is levied on some fuels used by most road motor
vehicles except bus services and aviation in the UK; carbon tax levied on
vehicles or factories that produce a lot of carbon emissions; property tax
that people pay based on the value or the land and buildings they own;
mansion tax is a tax that has to be paid by anyone who owns or sells a house
that is worth a very large amount of money; stamp duty that is paid on
property and financial transactions.

ASSIGNMENTS
A. Answer the questions. What are the standard names for the tax or
taxes paid on the following?
1. Money made by selling shares in companies like Nike or Columbia
at a profit
2. ‘Guinness’, ‘Cointreau’, or ‘Double Crown XO’
3. An English professor’s salary
4. A Chanel tweed jacket to die for
5. Google or Yandex profits
6. Money the granddaughter received from her grandparents after
their demise
7. iPhones imported to Russia
8. On-street parking
B. Find words with the following meanings.
1. An adjective describing taxes on revenue or income
2. Money paid by the government to sick and unemployed people
3. An adjective describing taxes on consumption and spending
C. Translate into Russian.
1) to finance expenditure;
2) to generate revenue;
3) laid-off worker;
4) to withhold a tax;
5) tax burden;
6) unemployment pay;
7) sick pay;

96
 8) direct tax;
9) indirect tax;
10) income tax;
11) state tax;
12) council tax;
13) payroll tax;
14) foreign tax;
15) unemployment tax;
16) capital gains tax;
17) capital transfer tax;
18) corporation tax;
19) national insurance;
20) social spending;
21) VAT;
22) GST;
23) sales tax;
24) vehicle registration fee;
25) licensing fee;
26) fire-arms license (BrE licence);
27) hunting license;
28) excise duty / tax;
29) tariff / customs duty;
30) NAFTA;
31) road tax;
32) hydrocarbon oil duty;
33) carbon tax;
34) property tax;
35) mansion tax;
36) stamp duty;
37) IRS (US), Inland Revenue (UK).

Part 2. Watching. Watch the video ‘Tax burdens and their effect on
social welfare’ and answer the following questions.
1. What effect does taxation have on social welfare?
2. What term refers to ‘surplus that is lost when a mutually beneficial
trade no longer occurs’?
3. Who ends up bearing the effect of taxes?
4. What is tax incidence?

97
 5. How does elasticity determine both the effect of tax burden on
social welfare and who bears tax burden?
6. If taxes are, in fact, inefficient, what’s the point in raising them?

Part 3. Read the text and do the assignments that follow.

A. The primary function of taxation is, of course, to raise revenue to
finance government expenditure, but taxes can also have other purposes.
Indirect excise duties, for example, can be designed to dissuade people
from smoking, drinking alcohol, and so on. Governments can also
encourage capital investment by permitting various methods of accelerated
depreciation accounting that allow companies to deduct more of the cost
of investments from their profits, and consequently reduce their tax bills.
B. There is always a lot of debate as to the fairness of tax systems.
Business profits, for instance, are generally taxed twice (this is known
as double taxation): companies pay tax on their profits (corporation tax
in Britain, income tax in the USA), and shareholders pay income tax
on dividends. Another example of the same amount of money being
taxed more than once includes individual wealth, which is usually taxed
(income tax, capital gains tax, inheritance tax) when it is first received,
but in some countries it is taxed again annually (usually at a low rate) by a
wealth tax if it is not spent, and is subject to sales taxes if it is spent. Income
taxes in most countries are progressive1, and are one of the ways in which
governments can redistribute wealth. The problem with progressive taxes
is that the marginal rate – the tax people pay on any additional income –
is always high, which is generally a disincentive to both working and
investing. On the other hand, most sales taxes are slightly regressive2,

1
In the USA, individuals earning up to $ 9,275 in taxable income pay 10 % in
tax, while those earning over $ 415,050 pay up to 39.6 % on their earnings. In the
UK, individuals earning up to £ 32,000 pay 10 % on dividend income and 20 % on
savings income; individuals whose income is between £ 32,001 and £ 150,000 pay
32.5 % on dividend income and 40 % on savings income, while those earning over
£ 150,000 pay up to 45 % on their earnings.
2
For example, imagine two individuals each purchase $ 100 of clothing per
week, and they each pay $ 7 in tax on their retail purchases. The first individual
earns $ 2,000 per week, making the sales tax rate on her purchase 0.35 % of income.
In contrast, the other individual earns $ 320 per week, making her clothing sales
tax 2.2 % of income. In this case, although the sales tax is the same rate in both
98
because poorer people need to spend a larger proportion of their income
on consumption than the rich.
C. The higher the tax rates, the more people are tempted to cheat,
but there is a substantial ‘black’ or ‘underground’ economy nearly
everywhere. In Italy, for example, self-employed people – whose income
is more difficult to control than that of company employees – account for
more than half of national income. Lots of people also have undeclared,
part-time evening jobs (some people call this ‘moonlighting’) with
small and medium-sized family firms, on which no one pays any tax or
national insurance. In 1986, the Director of the Italian National Institute
of Statistics calculated the size of the underground economy, and added
16.7 % to Italy’s gross national product figure, and then claimed that Italy
had overtaken Britain to become the world’s fifth largest economy.
D. To reduce income tax liability, some employers give highly-
paid employees lots of perks or benefits instead of taxable money, such
as company cars, free health insurance, and subsidized lunches. Legal
ways of avoiding tax, such as these, are known as loopholes in tax laws.
Life insurance policies, pension plans and other investments by which
individuals can postpone the payment of tax, are known as tax shelters.
Donations to charities that can be subtracted from the income on which
tax is calculated are described as tax-deductible.
E. Companies have a variety of ways of avoiding tax on profits (non-
payment of tax). They can bring forward capital expenditure (on new
factories, machines, and so on) so that at the end of the year all the profits
have been used up; this is known as making a tax loss. Multinational
companies often set up their head offices in countries such as Liechtenstein,
Monaco, the Cayman Islands, and the Bahamas, where taxes are low; such
countries are known as tax havens. Criminal organizations, meanwhile,
tend to pass money through a series of companies in very complicated
transactions in order to disguise its origin from tax inspectors – and the
police; this is known as laundering money or money laundering. Using
illegal methods, such as not declaring your income, or reporting it
inaccurately, is called tax evasion, and can lead to big penalties at best.

cases (7 %), the person with the lower income pays a higher percentage of income,
making the tax regressive. A tax can also be considered regressive if it taxes an
activity that low-income individuals engage in more than high-income individuals
(e.g. cigarette and alcohol taxes).
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ASSIGNMENTS
A. Match the headings with the paragraphs (A–E).
1. Pros and cons of different tax systems.
2. Avoiding tax on profits.
3. Avoiding tax on salaries.
4. Tax evasion.
5. The functions of taxation.

B. According to the text, are the following statements TRUE or FALSE?

1. Taxes can be designed both to discourage and to encourage
spending.
2. The same amount of money can be taxed more than once.
3. Progressive taxes may discourage people from working extra
hours.
4. Sales taxes are unfair because poor people spend more than the
rich.
5. The Italian government knows that about one seventh of national
income escapes taxation.
6. ‘Loopholes’ are a common form of tax evasion.
7. If you pay a lot of your income into a pension fund or a life
insurance policy, you never have to pay tax on it.
8. A company that makes an unusually large profit during a tax year
might quickly decide to spend it, for example, on a new factory or
equipment.
C. Find words in the text that mean the following.
1. Reducing the value of a fixed asset1, by charging it against profits
2. Something which discourages an action
3. An adjective describing a tax that is proportionally higher for
people with less money

1
Fixed assets / capital assets / permanent assets are items such as land,
buildings, machines, etc., belonging to a business, which are expected to last for a
long time, and cannot be sold or turned into cash, as they are used for making and
selling the firm’s product. Russian материальные внеоборотные / основные /
капитальные / долгосрочные активы.
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 4. Spending money to buy things, rather than saving it
5. Working for yourself, being your own boss
6. A tax on incomes that pays for sickness benefit, unemployment
benefit, and old-age pensions
7. Non-financial benefits or advantages of a job
8. A way to delay the payment of tax to a later time
9. An adjective describing expenditures that can be taken away from
taxable income or profits
10. A country offering very low tax rates to foreign businesses
11. A tax that has one rate that is the same for everybody
D. Suggest the English equivalents for the words/word combinations.
1. увеличивать доходы;
2. капиталовложения;
3. ускоренная амортизация;
4. инвестиционные расходы;
5. уменьшать сумму налога;
6. перераспределить богатства;
7. предельная ставка налога;
8. двойное налогообложение;
9. отсутствие стимула, сдерживающее средство, препятствие;
10. теневая экономика;
11. подрабатывание, работа на стороне / по совместительству;
12. государственное страхование;
13. валовой национальный продукт;
14. валовой внутренний продукт;
15. сократить общую сумму налога, подлежащую выплате;
16. привилегии и льготы;
17. служебный автомобиль;
18. бесплатный обед;
19. медицинское страхование;
20. лазейка, обход закона;
21. налоговая защита, налоговое укрытие / прикрытие;
22. взносы на благотворительность;
23. полис страхования жизни;
24. система пенсионного обеспечения;
25. подлежащий налоговому вычету;

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 26. капитальные расходы;
27. налоговый убыток;
28. открыть центральный, головной (жарг.) офис;
29. «налоговый рай», «налоговая гавань»;
30. налогоплательщик;
31. налоговый инспектор;
32. налоговая декларация;
33. отмывание денег.

Part 4. Use of English.

A. Go to oxforddictionary.so8848.com/ and find collocations with the

word ‘tax’.
B. Go to oxforddictionary.so8848.com/ and find collocations with the
word ‘bribe’.
C. Wellness programmes, on-site daycare, pet-friendly workplace, gourmet
lunches, sabbaticals, flex time, telecommuting, reimbursement for
commuting costs / gas / parking expenses and share / stock options are
examples of perks. Surf the Internet to find additional information about
them and about companies that offer these perks to their employees.
D. Which terms do the following definitions stand for?

1. The tax people pay on their wages and a) capital transfer tax;
salaries is called b) income tax;
c) wealth tax.
2. A tax on wages and salaries or on company a) direct tax;
profits is a/an b) indirect tax;
c) value-added tax.
3. A tax levied at a higher rate on higher a) progressive tax;
incomes is called a b) regressive tax;
c) wealth tax.
4. A tax paid on property, sales transactions, a) direct tax;
imports, and so on is a /an b) indirect tax;
c) value-added tax.

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5. A tax collected at each stage of production, a) capital gains tax;
excluding the already-taxed costs from b) sales tax;
previous stages, is called a / an c) value-added tax.
6. Profits made by selling assets are generally a) capital gains tax;
liable to a b) capital transfer tax;
c) wealth tax.
6. Gifts and inheritances over a certain value a) capital gains tax;
are often liable to a b) capital transfer tax;
c) wealth tax.
7. The annual tax imposed on people’s fortunes a) added-value tax;
(in some countries) is a / an b) capital gains tax;
c) wealth tax.
8. Making false declarations to the tax a) fiscal policy;
authorities is called b) tax avoidance;
c) tax evasion.
9. Reducing the amount of tax you pay to a a) creative accounting;
legal minimum is called b) tax avoidance;
c) tax evasion.
10. Bringing forward capital expenditure (on a) blunder;
new factories, machines, and so on) so b) tax haven;
that at the end of the year all the profits c) tax loss.
have been used up is known as making a
11. Multinational companies often set up their a) tax havens;
head offices in low-tax countries known b) tax heavens;
as c) tax shelters.
12. Criminal multinationals such as the a) vacuum cleaning;
Mafia tend to pass the money through a b) laundering;
series of companies in very complicated c) handwashing.
transactions in order to disguise its origin
from tax inspectors and the police; this is
known as ... money.

E. Use the correct form of these verbs in the following sentences:

Avoid be liable Deduct evade

Levy lower Pay raise

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 1. If you inherit a lot of money, you … for capital transfer tax.
2. In some countries, employers have to … tax from your pay and …
it direct to the tax authorities, so employers have no possibility of
… income tax.
3. Some people hire expensive accountants to tell them how to …
taxes – legally, of course!
4. The government always tries to … taxes in the year before
elections.
5. The government has a huge deficit and is going to have to … either
the rate of VAT or income tax.
6. The government … special taxes on petrol, alcohol and tobacco.

F. Add tax / taxation before or after the following words.

1) … accounting …
2) … allowance …
3) …authorities …
4) …avoidance …
5) … bonanza …
6) … free …
7) … haven …
8) … income …
9) … indirect …
10) … inspector …
11) … loophole …
12) … loss …
13) … payer …
14) … progressive …
15) … rates …
16) … rebate …
17) … reform …
18) … refund …
19) … regressive …
20) … return …
21) … sales …
22) … shelter …
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 23) … system…
24) … withholding …
25) … year …

Part 5. Video. Watch the video and do the assignments below.

A. Watch Philippa Foster Back talking about business ethics and make a
summary of the video.
B. Give the Russian equivalents for the following words / word
combinations
1) business ethics;
2) the UK Bribery Act;
3) facilitation payments;
4) to be deeply ingrained in the
business culture;
5) extortion;
6) profit shifting;
7) tax avoidance;
8) tax evasion;
9) to hit the news;
10) a cog in the wheel;
11) tax regime;
12) sales director;
13) thriving business;
14) nexus.
C. Decipher the abbreviations
• NGO;
• The IBE.
Who bears the burden of tax?
The key question of “tax incidence” intrigued the gifted economist
Anne-Robert-Jacques Turgot, who was the French Minister of Finance
from 1774–1776. The question is not as simple as “who should pay tax?”
because taxes affect many things, from prices and profits to amounts of
goods consumed and incomes received. Changes in these can ripple through

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 the economy in surprising ways. The “burden”
of a tax – which is taken to mean a decrease in
happiness, welfare, or money – can be shifted
from one person or group to another. If you are
planning a vacation and a new fuel tax puts the
airfare above the level you are prepared to pay,
the tax has made you unhappy. The new fuel tax
has reduced your welfare, but not necessarily the
airline company’s profits.
Who should pay taxes?
Turgot argued that taxes interfere with the free market and should be
simplified. Powerful groups should not be exempt from taxation, and the
details of its implementation matter. His recommendation was for a single
tax on a country’s net product – the value of its total goods and services
minus depreciation. His thinking was influenced by an early school of
economists known as the physiocrats, who believed that only agriculture
(land) produces a surplus. Other industries do not produce a surplus and
so cannot afford to pay tax – they will always try to pass it on by increasing
prices and charges until finally it reaches the landowners. As farmers pay
much of their surplus in rent to landowners, who produce nothing, Turgot
argued that the landowners should be taxed on the rent they charged.

106
 Later economists refined the principles of fairness and efficiency that go
into an optimal tax system. Fairness includes the idea that those most able
to pay should pay the most; that similar people should face similar taxes;
and that those who benefit from government spending, such as users of
a new bridge, should contribute to it. Efficiency means both effectiveness
in collection and maximizing society’s welfare while raising the required
revenue. Economists argue that efficiency means disturbing the market
as little as possible, particularly to avoid blunting incentives for work and
investment.
Perfect tax design
The last few decades have seen huge strides in the sophistication of tax
design, integrating both fairness and efficiency. “Perfect markets” theory, for
example, suggests commodity taxes should be uniform and apply only to
“final” goods (for sale to final users); income taxes should be linked to ability
rather than income; and taxes on company profits and income from capital
should be minimal. “Market failure” analysis, on the other hand, suggests
that taxes on undesirables such as pollution increase people’s welfare. In
general, tax policies have moved in the directions shown by such theories
while paying attention to revenue and political acceptability.

Can tax cuts increase the tax take?

Common sense tells us that if a government wants to raise more money
to spend on public services, it must raise taxes, however unpopular that may
be. Likewise, cutting taxes seems to imply cutting public services. However,
some economists have suggested
that this is not always the case,
and that cutting taxes can result
in governments collecting more,
not less, money.
This is a key idea of 1980s
“supply-side” economists. The
supply side is the part of an
economy that makes and sells
things, as opposed to the demand
side, which is the buying of goods.
Supply-side economists argue that
the best way to make the economy
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grow is to improve conditions for the supply side, freeing companies from
regulations, and cutting subsidies and high-rate taxes.
From tax to tax havens
The revenue argument for
cutting taxes came from US
economist Arthur Laffer. He
said that if a government takes
no tax, it will get no revenue. If
it takes 100 percent tax, it will
get no revenue either, since no
one will work. But even below
100 percent, very high income
tax rates discourage people
from working. This reduction
The Laffer curve displays the relationship in hours worked outweighs the
between tax rates and government revenue. high tax rate, and the result is a
It shows that higher taxes do not always fall in tax revenue. When top-
result in increased revenues.
rate taxes are very high, revenue
can also be lost by the highest
income earners leaving the country or putting their money in tax havens –
countries charging little or no tax. Laffer drew a bell-shaped curve to show
that somewhere between the extremes of no tax and 100 percent tax, there
is a point at which a government will maximize revenue.

ASSIGNMENTS
A. Find in the text the English equivalents for the following
• распределение налогового бремени;
• поступления от налогов;
• коммунальные услуги;
• экономика предложения.
B. Suggest the terms in the text that mean
1) to gradually spread, causing several other events to happen one
after the other;
2) a group of thinkers who believed that nations gained their economic
wealth from nature, through their agricultural sector; they favored

108
 free trade, low taxes, secure property rights, and low government
debt, and argued that the economy was naturally self-regulating
and needed only to be protected from bad influences;
3) an imbalance; in terms of trade it is an excess of exports over
imports; in terms of government budget it is an excess of tax
revenues over spending;
4) to be of greater importance, benefit, or significance than something
else.
C. Translate into Russian
• net product;
• the principles of fairness and efficiency;
• ‘Perfect markets’ theory;
• ‘Market failure’ analysis.

Part 7. Use of English.

A. Mind that the words ‘effective’ and ‘efficient’ are not synonyms and
cannot be used interchangeably. Which of the following definitions
corresponds to the word ‘effective’ or ‘efficient’?
a) achieving maximum productivity with little waste of effort
(e. g. method, manager, accountant);
b) successful in producing the intended result (e. g. remedy, speech,
action).
B. Match the words with their definitions.

1. capitation / poll a) a tax return for individuals paying Income

tax / head tax tax in the UK. The corresponding form filed
by companies paying Corporation Tax is
CT600;
2. tithe b) a tax that you owed at an earlier time but did
not pay;
3. Form 1040 c) an extra amount of tax that the government
charges a company that makes a lot of money
unexpectedly;

109
 4. SA100 d) a hidden and unexpected way of making
people pay more money to the government
as the result of a new tax or an increase in a
particular tax (e. g. sales taxes, value added
taxes, tobacco taxes, liquor taxes, air travel
taxes and gasoline taxes); an indirect tax
(indirectly assessed upon consumer goods
without the consumer’s knowledge);
5. supertax / surtax e) a system that applies the same tax rate to
every taxpayer regardless of income bracket,
e. g. Russia imposes a 13 % tax on earnings;
6. withholding tax f) an amount of money collected as a tax from
every adult citizen of a particular country;
7. windfall tax g) part of a person’s salary that an employer
gives to the government as payment of that
person’s taxes;
8. back tax h) the standard Internal Revenue Service
(IRS) form that individuals use to file their
annual income tax returns in the USA, aka.
the Individual Income Tax Return. The
corresponding form filed by businesses
is Form 1120, aka. the U. S. Corporation
Income Tax Return;
9. flat tax / i) an additional tax on something on which you
proportional tax already pay tax, especially a high income;
10. stealth tax / j) a tax that people paid to the church in the
hidden tax past.

C. Name the country and find its flag.

1. Its capital is Vaduz.
2. Its capital is Monaco.
3. Its capital is George Town.
4. Its capital is Nassau.

110
 1 5

2 6

3 7

4 8

Part 8. Read the text and be ready to sum it up.

There are five main functions of taxation: fiscal, redistributory,
regulating, controlling, and promoting.
1) The main function of taxation is the fiscal one. It is through fiscality
that taxes play their role in the formation of the state budget necessary
for the realization of national and holistic state programmes. The fiscal
function provides for the achievement of the main social goal of taxation –
the formation of the state’s financial resources necessary for executing the
role of the latter (defense, social, environmental protection, etc.)
2) The redistributory or allocation function of taxation expresses
their essence as a special centralized instrument of allocation relations
and consists of the social income redistribution among various groups of
citizens: from wealthy to deprived ones, which ultimately provides for the
assurance of the social stability of the population.

111
 3) The regulating / regulatory function of taxation was initiated as
soon as the state started to take active part in the economic set-up of the
society. This function is aimed at achieving specific goals of the taxation
policy through the taxation mechanism. Taxation regulation entails three
sub-functions:
• The stimulating sub-function is aimed at the development of
special socio-economic processes, and is implemented through a system
of allowances, exemptions and preference arrangements. The legislation
in force stipulates the stimulation of a number of taxpayer categories
such as the owners of small enterprises, the agricultural producers, capital
investors, or charities.
• The destimulating sub-function inhibits some socio-economic
processes through the conscious exaggeration of the taxation burden.
As a rule, the effect of this sub-function is related to the introduction of
excessive tax rates. These are, for example, the protectionist measures of
the state, aimed at supporting local producers through prohibitive import
custom duties. It is important to keep in mind, nevertheless, that taxation
relations, as any other relations, must replicate continuously. Taxes must
be collected today, tomorrow and always. This is why the utilization of
the destimulating sub-function should not lead to the weakening of the
taxation basis, to suppression, or even to liquidation of the tax source. Such
an exaggeration may result in a situation where there will be no income /
processes to be taxed.
• The replication (regeneration) function is explained as follows:
by taxing the utilization of natural resources, roads, mineral and primary
resources, the state uses these proceeds in order to regenerate the exploited
resources.

112
 4) The controlling function of taxation – through taxation, the state
controls the financial-economic activity of juridical and natural persons.
This also contributes to controlling the sources of income and the directions
of spending.
5) The promoting or incentive function stipulates special taxation
arrangements for a certain group of citizens, who are social achievers
(participants in wars, etc.). This function of taxation has a social facet.

Part 9. Discussion. Read the following statements in defence of or

against taxation and government spending. Which of them are
in favour, and which against? Which do you agree with?
1. As Adam Smith wrote, ‘The subjects of every state ought to
contribute toward the support of the government in proportion to
their respective abilities; that is, in proportion to the revenue which
they respectively enjoy under the protection of the state.’
2. It isn’t people who are taxed, but productive activities.
3. Income tax creates a bias against all income-generating activity,
which makes everyone poorer.
4. Society creates conditions under which financial success is possible,
and it therefore has a rightful claim to a share of that success, in the
form of taxes.
5. Taxing savings and capital gains encourages consumption and
reduces capital accumulation and therefore reduces everyone’s
future prosperity.
6. A wealth tax taxes money that has already been taxed before,
perhaps many times, and is therefore unethical.

TEXTS FOR RENDERING INTO ENGLISH

Text 1

Подождать до лета:
ФРС США оставила базовую процентную ставку
на уровне 0,75–1 %
Федеральная резервная система США оставила без изменений
базовую процентную ставку по итогам двухдневного майского за-
седания. Решение монетарного регулятора не стало сюрпризом для

113
участников рынка, которые в большей степени ожидали заявлений
главы ФРС Джанет Йеллен. RT разбирался, почему монетарные
власти решили повременить с укреплением доллара и дать экономике
США небольшую передышку до июня.
Участников рынка больше интересовали заявления главы ФРС
США Джанет Йеллен, чем вероятность изменения ставки. Согласно
опросу CME Group, сохранение показателя на нынешнем уровне –
0,75–1 % годовых – ожидали 95,2 % инвесторов.
Монетарные власти США не будут торопиться с изменением ба-
зовой процентной ставки в ожидании очередной порции внутренней
статистики, считают наблюдатели. Традиционно в первую пятницу
каждого месяца в Соединtнных Штатах публикуют данные по уров-
ню безработицы (в марте годовой показатель составил 4,5 %).
Вице-президент банка «Открытие» Александр Мансир в разгово-
ре с RT отмечает, что американскому регулятору необходимо монито-
рить важнейшие показатели (индекс промышленного производства
и темпы роста ВВП), которые сейчас подходят к целевому уровню,
но не демонстрируют ежеквартальную стабильность.
Ранее Джанет Йеллен объявила, что в 2017 году регулятор еще
дважды повысит базовую процентную ставку. Таким образом, в це-
лом за год её повышение может произойти трижды – это чаще, чем за
последние десять лет, напоминают аналитики Bloomberg. Более того,
Федеральный резервный банк до конца года рассчитывает обнаро-
довать план сокращения своего баланса, который сейчас составляет
$ 4,5 трлн, и добиться устойчивой инфляции на уровне около 2 %.
В интервью RT генеральный директор аналитического де-
партамента Alpari Research & Analysis в Великобритании Робер-
то д'Амброзио подчеркнул, что эпоха нулевых процентных ставок
в США закончилась, поскольку достижение таргета инфляции в 2 %
вкупе с волатильностью американского рынка делает экономику
более уязвимой для внутренних угроз.
Согласно мартовскому прогнозу ФРС на четвёртый квартал этого
года инфляция в США составит 1,9 % в годовом выражении. Именно
приближение к таргету темпов роста потребительских цен в стране
станет для монетарных властей ориентиром для повышения ставки
на заседании в июне.
«ФРС очень осторожны, несмотря на новую экономическую
политику, которую провозгласил Дональд Трамп. В ее основе –

114
снижение налогов и госрасходов, поэтому акцент расставлен на под-
держку бизнеса. Ориентиром для изменения ставки в июне станет
экономическая статистика», – рассказал RT президент ММВА Алек-
сей Мамонтов.
ФРС не повысила ставку 3 мая, потому что существовал риск
бурной реакции фондового рынка, но при этом регулятор сохра-
нил умеренно-жесткую риторику, добавляет Александр Мансир.
«Изменение ставки – это реакция на макроэкономическую ситуацию.
Повышение ставки приводит к тому, что деньги становятся дороже
и экономике сложнее развиваться», – заключил он.
Text 2

Теневая экономика как спасение для российских бедняков –

BBC Русская служба
Кризис последних лет ударил прежде всего по бедному населе-
нию России. За чертой бедности в стране живут миллионы человек.
Особенно тяжело приходится семьям с детьми и инвалидами. Экс-
перты полагают, что выжить россиянам помогает теневая экономика,
однако за борьбу с ней взялось правительство.
В четвертом квартале 2016 года, по данным Росстата, величина
прожиточного минимума составила 9 тыс. 691 рубль. Ниже этого уров-
ня были официальные доходы 14,4 млн человек – это более 10 % все-
го населения России. При этом еще в начале прошлого года за чертой
бедности находились 23,4 млн человек. Столь существенную разницу в
пределах одного года можно объяснить эффектом сезонности – так на-
зывают экономические процессы, связанные со сменой времен года.
В годовом измерении настолько же резких скачков числа людей,
живущих за чертой бедности, не наблюдается. Наиболее резко за по-
следние годы количество бедных выросло в 2015 году – оно увеличилось
сразу на 3,1 млн человек. Среди ключевых причин столь резкого скачка
называли сокращение зарплат и пенсий в реальном выражении.
Если проанализировать доход домохозяйств, то, согласно до-
кладу о социальной политике, которую подготовили эксперты Выс-
шей школы экономики, по состоянию на 2015 год за чертой бедности
часто оказывались семьи с детьми. По этой статистике к бедным
можно отнести 21,4 % российских семей с детьми, то есть примерно
каждую пятую.

115
 Людмила Ниворожкина из Ростовского государственного эко-
номического университета на Апрельской международной конфе-
ренции ВШЭ представила доклад о скрытых доходах населения – это
доходы от неофициальной работы, сдачи квартир и других видов
деятельности, которые не отражаются в финансовой статистике.
«Скрытые доходы – это тот фактор, который позволяет домохозяй-
ствам легче преодолеть падение доходов в период обострения кри-
зиса. Они являются в определенной степени подушкой безопасности
для домохозяйств», – полагает она.
Правительство сейчас обсуждает способы борьбы с неформаль-
ной занятостью и теневой экономикой. Министр труда России Мак-
сим Топилин в прошлом году предложил обложить неработающих
граждан налогом на уровне 20 тысяч рублей в год. Борьба с теневой
экономикой и неофициальной занятостью, о которой в последнее
время много говорят российские чиновники, обречена на провал,
уверены эксперты.
Скрытые доходы помогают сглаживать неравенство, то есть
разрыв в доходах и расходах между разными группами населения,
отмечает Ниворожкина. Они также сглаживают социальную напря-
женность, порождаемую неравенством. По мнению Ниворожкиной,
единственная социальная группа в России, не имеющая скрытых до-
ходов, – это очень пожилые пенсионеры, у которых уже нет возмож-
ности работать.
«Особенно велика доля скрытых доходов как раз у наиболее бед-
ных слоев населения. Бедное население тратит эти доходы на удо-
влетворение своих основных нужд - продукты, оплату жилья», до-
полнила директор институт социальной политики НИУ ВШЭ Лилия
Овчарова.
По мнению экспертов, вывод скрытых доходов из тени может
усугубить проблему бедности. Попытки правительства вывести в
свет доходы репетиторов, няней и прочих групп могут оказаться
опасными, уверены ученые, присутствующие на дискуссии. Участни-
ки дискуссий полагают, что у бедного населения просто нет лишних
денег для легализации своих доходов.

116
 Text 3
Медведев предложил налоговую льготу модернизаторам
производства – BBC Русская служба
Российское правительство предлагает снизить налог на при-
быль, чтобы стимулировать инвестиции в производство, сообщил
премьер-министр Дмитрий Медведев, отвечая на вопросы депутатов
Госдумы.
«Мы предлагаем рассмотреть вопрос о введении инвестицион-
ной льготы, имея в виду понижение налога на прибыль до 5 %, если
средства расходуются в основной капитал предприятия», – заявил
Медведев.
Налог на прибыль сейчас составляет 20 %. Налоговую льготу,
по словам Медведева, смогут получить компании, которые тратят
деньги на реконструкцию, модернизацию производства или покупку
высокотехнологического оборудования. Медведев надеется, что де-
путаты Госдумы поддержат инвестиционную льготу.
Экономисты называют увеличение объема инвестиций услови-
ем ускорения роста экономики России, в чем пока нет устойчивой
положительной динамики. Бизнес не уверен в будущем и потому не
вкладывает деньги в развитие российской экономики, а для решения
этой проблемы нужны серьезные реформы.
Налог на прибыль является одной из основных статей доходов
бюджетов регионов. Из ставки в 20 % до 2017 года в бюджеты ре-
гионов уходило 18 процентных пунктов, а в федеральный бюджет –
2 процентных пункта. С 2017 года отчисления в федеральный бюджет
увеличились до 3 процентных пунктов, а поступления в региональ-
ные бюджеты сократились.
Представители регионов неоднократно критиковали федераль-
ные власти за снизившиеся в 2017 году поступления от налога на
прибыль. Предложенная Медведевым мера может привести к даль-
нейшему снижению поступлений, что ухудшит финансовое состоя-
ние регионов.

117
 Text 4
Подняли ставки:
Минфин предложил увеличить НДС с 18 до 22 %
В понедельник министр финансов Антон Силуанов вновь под-
нял вопрос о налоговых изменениях – один из самых обсуждаемых
в российской экономической политике последнего времени. Свои
варианты дальнейшего сценария фискальной реформы на пери-
од после 2019 года (бюджет на 2017–2019 годы сверстан и одобрен
правительством в конце 2016 года – RT) представители финансово-
экономического блока правительства не раз озвучивали и выноси-
ли на публичное обсуждение. Так, 13 марта, выступая на Налоговом
форуме в рамках Недели российского бизнеса Российского союза
промышленников и предпринимателей (РСПП), Антон Силуанов
рассказал о предложениях министерства.
Речь идет о снижении прямых налогов за счёт увеличения кос-
венных, то есть установления ставок страховых взносов и НДС (став-
ка которого сейчас составляет 18 %) на уровне 22 %. «Эффективная
ставка страховых взносов вырастет до 28,4 % в 2019 году с 21,2 %
в 2008 году. Мы считаем, что нужно снизить тяжелую нагрузку на
предприятия – на фонд оплаты труда. Кстати, она у нас самая тяжелая
не только по сравнению со странами с развивающейся экономикой,
но и с развитыми странами», – передает РИА Новости предложения
главы Минфина. По словам министра, главные причины налоговых
предложений ведомства связаны с увеличением доли теневой эконо-
мики в России, а также высокой налоговой нагрузкой на работодате-
ля, который платит страховые взносы в государственные внебюджет-
ные фонды. Так, 22 % средств отчисляется в Пенсионный фонд РФ,
5,1 % – в Фонд обязательного медицинского страхования (ФОМС)
и 2,9 % – в Фонд социального страхования.
Оппонентом главы Минфина выступил министр труда Максим
Топилин. Он сообщил, что снижение страховых взносов приведет
к ежегодным потерям 2 трлн рублей в бюджете Пенсионного фонда.
По словам главы Минтруда, сейчас в России нагрузка на фонд зарпла-
ты и страховые взносы ниже, чем во многих странах Европы.
Ранее в ходе дискуссии о налоговой реформе власти обсуждали
вариант снижения уровня страховых взносов с нынешних 30 % до
21 % и, соответственно, повышения НДС с 18 % до 21 %. Впрочем,

118
глава Минфина предупредил и о возможных последствиях изменения
налоговых ставок. По словам Антона Силуанова, разовая инфляция
увеличится чуть более чем на 2 %. Однако эксперты уверены, что вре-
менный разгон темпов роста потребительских цен не станет для Цен-
тробанка сигналом к ужесточению денежно-кредитной политики.
Как пояснил RT главный экономист «ПФ Капитал» Евгений
Надоршин, текущая инфляция может совершенно спокойно откло-
няться от таргетируемого значения, если это происходит как разо-
вое событие. «Центробанк никак не компенсирует единовременное
увеличение инфляции ужесточением денежно-кредитной политики.
Всё придет в норму в течение полугода-года, поэтому ЦБ должен ори-
ентироваться не на текущую ставку, а на среднесрочную перспекти-
ву», – пояснил эксперт. По словам экономиста, снижение страховых
взносов повысит конкурентоспособность российского бизнеса, одна-
ко повышение НДС отчасти повлияет на снижение конкурентоспо-
собности российской розничной торговли. По его прогнозу, разовое
повышение инфляции будет не на уровне 2 %, а несколько больше –
в пределах 3 %.
Инфляция в России по итогам 2016 года была на уровне 5,4 %,
как сообщается в сводке Росстата. По информации Центробанка РФ,
в феврале 2017 года годовая инфляция составила 4,6 % при 4-процентном
целевом уровне (таргете) финансовых властей на этот год.

Part 10. Discussion. Comment on the following quotes.

1. Inflation is taxation without legislation. (Milton Friedman)

2. Government's view of the economy could be summed up in a few
short phrases: If it moves, tax it. If it keeps moving, regulate it. And
if it stops moving, subsidize it. (Ronald Reagan)
3. What is the difference between a taxidermist and a tax collector?
The taxidermist takes only your skin. (Mark Twain)
4. The pessimist complains about the wind; the optimist expects it to
change; the realist adjusts the sails. (William Arthur Ward)

119
UNIT 7
FINANCIAL REPORTS
THE BALANCE SHEET

Part 1. Read the text about assets and liabilities and do the
assignments that follow.
The balance sheet1 is the report that shows the financial condition of
the business as of a particular date, usually the end of a month, a quarter, or
a year. It shows all the assets of the company, valued typically at the cost to
acquire them, and liabilities shown at the amounts borrowed or owed. If you
look at Figure 7.1 and Figure 7.2 below, you notice that the two sides of the
balance sheet – assets above and liabilities and stockholders2, equity below are
in balance. The difference between the carrying value of the assets and that of
the liabilities is the equity interest accruing to the owners of the company.
Let’s look at each line item on the balance sheet and see if we can
understand what they are and what they tell us about the company’s
statement of financial condition.
Figure 1
ASSETS
Current Assets
Cash and Equivalents $ 155,000
Accounts Receivable 940,000
Less Allowances for Bad Debts (64,000)
876,000
Inventory
Raw Materials 311,000
Work in Progress 65,000
Finished Goods 215,000
591,000
Prepaid Expenses 45,000
Total Current Assets $ 1,667,000
1
Aka. a Statement of Financial Position.
2
In the UK, shareholders’ equity.
120
 ASSETS
Fixed Assets
Land and Buildings 1,250,000
Machinery and Equipment 750,000
Computers and Office Equipment 250,000
2,250,000

Less Accumulated Depreciation (972,000)

Total Fixed Assets $ 1,278,000

Other Assets
Deposits (held by others) 25,000
Long-Term Investments 276,000
Total Other Assets $ 301,000

Total Assets $ 3,246,000

Figure 2
LIABILITIES

Current Liabilities
Accounts Payable $ 475,000
Accrued Payroll 57,000
Other Accrued Liabilities 31,000
Income Tax Payable 54,000
Notes payable to Banks, Short-Term 150,000
Current Portion of Long-Term Debt 52,000

Total Current Liabilities 819,000

Long-Term Liabilities
Lease (Purchase) Contracts 125,000
Long-Term Debt (other than leases) 300,000
Loans from Stockholders 75,000

Less Current Portion of Long-Term Debt (52,000)

Total Long-Term Liabilities 448,000

121
 Total Liabilities 1,267,000

Stockholders’ Equity
Capital Stock 50,000
Contributed Capital 1,750,000
Retained Earnings 179,000
Total Stockholders’ Equity 1,979,000

Total Liabilities $ 3,246,000

Current assets
These are assets that are cash or are expected to become cash within
the next 12 months. They produce most of the liquidity1 in a company and
they are the main sources of working capital2 for the business. Here are the
most typical examples of current assets.
Cash and Cash Equivalents
Cash itself is the most liquid asset of all and always the first item
listed on any balance sheet. It includes the company’s cash fund, checking
accounts3, and cash reserves (kept in the form of savings accounts, bank
certificates, money market accounts, short-term investments etc.).
Accounts Receivable / Receivables4
These are trade accounts or amounts due from customers as a result
of sales made on credit. It’s expected that customers will pay for those sales
within a relatively short time (typically 30 to 60 days), so they are classified
as ‘current’. Other amounts to be collected within a year might include
loans to employees or officers, tax refunds from the government, and other
amounts due that are not strictly trade accounts with customers.
1
The ability to meet current obligations with cash or other assets that can
be quickly converted to cash, to pay the bills as they come due. The opposite of
liquidity is insolvency.
2
Aka. net working capital. It is a common way to measure the amount of
ready liquidity of a company. To calculate it, deduct current assets from current
liabilities.
3
In the UK, current accounts.
4
The ability to meet current obligations with cash or other assets that can
be quickly converted to cash, to pay the bills as they come due. The opposite of
liquidity is insolvency.
122
 Allowance for Bad Debts
This is a reserve, an estimated amount (typically calculated as a
percentage of all sales made in a given period) the company provides for
the possibility that some customer balances will not be paid at all and will
have to be written off. Any company that sells on credit has these kinds of
issues to deal with – granting credit and managing customer relationships
so that collection losses are as small as possible, consistent with good
business practice.
Inventory1
It’s a term used for production materials or products purchased or
manufactured and then held by the company for sale.
A company that manufactures its products might show several
categories of inventory, such as:
• Raw materials – whatever the company uses in manufacturing
process, before it begins to change them into something else. It might be
whole logs for a sawmill or it might be lumber for a company that makes
furniture. The amount on the balance sheet is the cost of these materials,
the amount paid to its suppliers to purchase them.
• Work in progress – products in the midst of the manufacturing
process, no longer raw materials but not yet finished goods. The balance
sheet will include raw materials costs as well as some labour and related
costs applied to these materials during the manufacturing process.
• Finished goods – fully manufactured products ready for sale to
customers. The balance sheet will show all the costs needed to make the
products, including labour and related overhead costs, such as factory rent,
supervision, and product inspection.
By contrast, retailers, distributors, and trading companies usually
purchase fully manufactured products, which they simply resell, without
processing them any further. Their balance sheet will most likely show only
a single line called inventory.
Prepaid Expenses
These assets will never be turned into cash; they are expenses that have
been paid in advance to a vendor or creditor for goods and services, and
therefore won’t have to be paid again. Because the payments are to obtain
1
In the UK, stock.
123
benefits for the organization over a period of time, the cost of these assets is
charged against profits throughout the period, usually on a monthly basis.
Thus, in a sneaky way they create cash by enabling the company to avoid
paying out that amount during the next 12 months.
Prepaid expenses is a current asset, because the company has paid for
something and someone owes it services or the goods.
Fixed Assets / Tangible Assets
Every company acquires physical assets that it uses to conduct its
business – computers, manufacturing equipment, buildings, land, lorries /
trucks, and so forth. Those assets are used for extended periods of time,
usually years, and are thus not current assets in the sense of the items
discussed above. These are usually called ‘Fixed Assets’ or ‘Property, Plant,
and Equipment’ or perhaps – if no real estate or vehicles are owned –
‘Equipment and Furnishings’.
Since such assets are used for a number of years and are not held for
resale to customers, they are not considered sources of liquidity or cash flow
(all transactions that involved or influenced cash). They are, well, ‘fixed’ in
place, until they are no longer useful to the business. At that point, they
are either sold or discarded and then replaced. During their period of use,
their value declines substantially, often to zero by the end of their service.
The sole exception to this is land (it is more likely to increase in value
over time). In order to recognize that reduction in value, a company will
depreciate, or systematically write down, the cost of each fixed asset (except
land, again) over the period of time that it will be used in the business. On
the balance sheet, the total amount written off to expense since a fixed asset
was purchased is shown under ‘Accumulated Depreciation’.
Other Assets – the ‘Everything Else’ Category
These are holdings of the company that are neither current nor fixed.
They are not expected to become cash in the next 12 months and they are not
real estate, machines, or equipment used in the operation of the company’s
business. They may not even be directly related to the company’s business.
An investment in another company will be listed here. Thus, the company
intends to hold this investment for an extended period of time. In other
words, it’s not a readily marketable security that is going to be sold as soon
as the price goes up a few points.

124
 Current Liabilities
The Liabilities side of the balance sheet also begins with what’s current.
Once again, liquidity is the measure of the label ‘current,’ but in the case of
liabilities it is negative liquidity – cash going out the door. Current liabilities
are all those debts of the company that are expected to be paid within the
next 12 months, the same period in which the current assets are expected
to become cash.
Current assets will become cash to pay off current liabilities. That is the
principle of working capital in any company. If you look at Figure 7.1 and
Figure 7.2, you’ll notice that current assets are about twice current liabilities
(the company has net working capital of $ 848,000), usually thought of as
a pretty good relationship to ensure that the cash will be available when
needed.
Accounts Payable / Payables1
This is the account that includes all the bills yet unpaid from all the
suppliers and service providers. This is usually the largest item among a
company’s current liabilities. Amounts in this category should be paid in
accordance with trade terms printed on the invoices, typically 30 days, or
whatever other payment period was granted by the supplier.
Accrued Payroll
This account represents the amount earned by employees but not yet
paid to them.
Other Accrued Liabilities
These may be expenses the company has incurred, but for which it
has not yet received an invoice to record. Examples might include large
purchases for which the supplier has not yet invoiced the company or
interest expense on a loan that doesn’t get invoiced, but for which the bank
will automatically charge the company.
Notes Payable and Other Bank Debt
Loans from banks and others that represent borrowed money and not
simply trade accounts with suppliers are always shown separately because
the loans and repayments typically have special terms. When you see notes
1
In the UK, creditors.
125
payable to anyone, particularly banking institutions, you can be pretty sure
the company has agreed to some kind of limitation on its range of activity,
called covenants, as a way of ensuring the ultimate repayment of the loan.
You can expect to see other kinds of guarantees provided to the lender,
such as pledging assets as collateral, a personal guarantee of repayment
by the owners of the company, or perhaps even a contingent claim on the
ownership of the company.
Current Portion of Long-Term Debt
It represents the portion of the debt that must be repaid within the
next 12 months.
Long-Term Liabilities / Non-current Liabilities
Lease Contracts
This label shows commitments made by a company in order to lease
equipment or other assets at favourable payment terms, usually followed
with a modest payment buyout option at the end.
Long-Term Debt
A company with financing needs that extend out for years might opt
to borrow money with a payment term that extends out as far as possible,
enabling it to put the money to use and earn enough to easily repay the
loan. In such cases, the entire amount of the loan is reported as a long-
term debt and the portion of that loan that is due to be paid within the next
12 months is shown under ‘Current Liabilities’.
Loans from Stockholders
This is often seen on the balance sheets of privately owned companies
operated by the owners. This is how owners put money into the company
when it needs it and take it back out again when it doesn’t. However,
business conditions may not improve soon, so loans from stockholders
may stay on the balance sheet for years.
Stockholders’ Equity / Shareholders’ Equity1
Owners’ equity or stockholders’ equity (for a corporation) or capital
(for a proprietorship or partnership) is the owners’ stake in the business. It
includes what they have invested to launch, to finance, or to refinance the
company and what the company has earned over its existence.

1
In the UK, shareholders’ funds.
126
 Capital Stock / Share Capital and Contributed Capital / Share
Premium
Capital stock is the amount paid into the company by investors to
purchase stock, at some nominal amount per share, the par value / face
value printed on each share of stock. It is usually a small part of what the
investors actually paid.
Contributed capital (capital surplus) is the amount paid into the
company by investors to purchase stock, beyond the par value of the
stock.
These two amounts – capital stock and contributed capital – when
combined, represent the total amount formally contributed by investors to
finance the company.
Retained Earnings / Reserves
These are profits of a business that have not been paid out to the owners
or stockholders as dividends, as of the balance sheet date. Theses earnings
are reinvested in the business.
Every company, from its inception, develops a history of profits and
losses. Profits add to retained earnings and losses reduce retained earnings.
If a company has operated with overall profitability, it will have accumulated
a substantial amount of earnings over time. If it is a proprietorship
(unincorporated, one owner) or a partnership (unincorporated, two
or more owners), these earnings are usually taxable to the owner(s)
immediately, so they are typically paid out to the owner(s) each year, as
dividends or distributions of profits.
However, if the company is a corporation, its owners will not generally
be taxed on the company’s accumulated profits until the company chooses
to distribute those earnings to its owners in the form of cash dividends.
In the interim, the accumulated earnings not distributed to its owners are
shown as retained earnings.
Earnings are retained in the business for other reasons than just to
avoid paying taxes on them, including enabling the business to retain cash
for expansion or to purchase land, buildings, and equipment (fixed assets)
to facilitate its operations, to buy other companies, to protect itself against
a possible catastrophe, to repurchase its own stock, when prices are low, or
to ensure adequate working capital to run the business.

127
ASSIGNMENTS
A. Say whether the following statements are TRUE or FALSE.
1. On the balance sheet, assets must equal liabilities.
2. The balance sheet provides information about the success of the
company’s cash management practices, its history of profitability,
and the adequacy of its invested capital.
3. The difference between current assets and current liabilities is
called working capital.
4. Current assets and current liabilities are closely related.
5. The collection period of Accounts receivable might extend to
several years.
6. Fixed assets can be quickly turned into cash.
7. If a company is new, its retained earnings are relatively low.

B. Translate into Russian.

1. Carrying value / amount
2. Current assets; current liabilities
3. Cash equivalents
4. Accounts receivable
5. Allowance for bad debts
6. Inventory
7. Work in progress
8. Finished goods
9. Prepaid expenses
10. Fixed / Tangible assets
11. Intangible assets
12. Accounts payable
13. Accrued payroll
14. Notes payable
15. Capital stock
16. To pledge assets as collateral
17. Contingent claim
18. Buyout
19. Incorporated company; unincorporated company

C. Translate into English.

1. Балансовый отчет, балансовая ведомость

128
 2. Долгосрочные обязательства
3. Оборотный капитал
4. Акционерный капитал
5. Договор аренды
6. Ссуда, обеспеченная акциями
7. Внесенный капитал
8. Нераспределенная прибыль
9. За вычетом (амортизации)
10. Накопленная амортизация
11. Наличный резерв
12. Фонд денежных средств
13. Рынок краткосрочного капитала
14. Текущий счет
15. Сберегательный счет
16. Счет расчетов с покупателями
17. Накопленная прибыль
18. Номинальная стоимость (акции)

D. Complete the sentences. Use the words from the box below.

Intangible Cash Stocks / Debtors / Tangible Securities

assets Inventories Accounts
receivable

1. Assets (what the company owns) include:

a) Current assets (… at the bank; … – investments in other
companies; … of raw materials, unfinished goods and finished
goods, that are going to be sold; … – money owed to the
company by customers);
b) Fixed or … assets; equipment, machinery, buildings, land.
c) … such as, goodwill, the value that the company thinks it has as
a functioning organization with its existing customers, and in
some cases brands.

Tax payable Bank loans Overdrafts Creditors / Interest

Accounts payable payments

129
 2. A company’s liabilities (what it owes) are its debts to suppliers,
lenders, bondholders, the tax authorities etc. Liabilities include:
a) Current liabilities (… – money owed to suppliers; … : when the
company spends more money than it has in its bank accounts;
… that have to be paid in the short term; and …);
b) Long-term liabilities (… and bonds).

PROFIT AND LOSS ACCOUNT /

INCOME STATEMENT

Part 2. Study the figure and read the text.

It’s called the Income Statement in the U.S. or the Profit and Loss
Statement / Profit and Loss Account in the UK and Europe. It shows
whether the business made a profit (income less expenses) for the month,
the quarter, or the year. Each line item is explained below.

THE SCHLEP PLC INCOME STATEMENT

Sales1 $ 1,650,000
Cost of Sales 975,000
Gross Profit 675,000
Operating expenses2
Engineering 15,000
Salaries & wages 180,000
Rent 45,000
Heat, light and power 11,000
Office supplies 3,000
Sales and Marketing 25,000
Delivery 70,000
Bad debt charges 40,000
Depreciation 1,000
Total operating expenses 390,000
Operating Profit 285,000

1
aka. Sales revenue / Revenue / Gross income / Income / Fees billed / Turnover.
2
aka. Selling, General & Administration Costs (SG&A)

130
 Other Income and expenses
Interest payable 5,000
Exceptional costs 2,000
Profit before tax 278,000
Taxation 15,000
Profit after tax 263,000
Dividends 60,000
Retained profit 203,000

1. Sales. The first line on a profit and loss account records a business’
overall volume of activity. This is the sale to customers of products and
services that the company regularly offers for sale in the normal course of
business.
2. COS / Cost of Sales / COGS / Cost of Goods Sold1. It always
includes the cost to make or buy the product or service sold, including the
cost of delivering the merchandise or components to the selling company.
It should also include the costs of other services that were packaged and
sold along with the product, such as installation and training (if they were
a part of the sale). Finally, it might also include directly related selling
expenses, such as costs of delivery to the customer.
3. Gross Profit is a key measure of profitability, and it refers to how
much cash remains once the total cost of the products or services being
sold (called COS or COGS) has been subtracted from the total revenue
received for selling these products or services. In other words, Gross Profit
is the gain the company earns after selling its products and paying for all
elements of the cost of sales.
4. Operating expenses. This category includes all the operating costs
of the business. These are typically the following: engineering or research &
development (money spent to create new products or significantly improve
existing products), general and administrative expenses (cost of executive
salaries, accounting and human resources personnel etc.), sales (costs of
actually selling products and services, and advertising) and marketing
(expenditures a company makes to find out what people want to buy from
it, to interest prospects in its products) expenses.

1
Occasionally, economists distinguish between Cost of Sales and Cost of
Goods Sold. To be precise, COS = COGS – the costs incurred to get the products
to the customer, such as delivery freight, commissions, etc.
131
 5. Operating profit is the next important measure of overall
profitability, and it is the amount of cash left over in a business once
operating expenses have been subtracted from Gross Profit.
6. EBITDA. The statement can also show EBITDA (earnings before
interest, tax, depreciation and amortization1), aka. Operating Profit before
depreciation, and EBIT (earnings before interest and tax).
7. Other income and expenses. These are non-operating items, such
as interest expense on borrowed money, gain or loss on selling off equipment
no longer used by the company.
8. Exceptional or one-off costs are usually shown separately from
operating expenses because they are normally non-reoccurring costs (e. g.
unusual or infrequent in nature, such as storm damage).
9. Profit before tax (aka. income before taxes, pretax income) is the
amount of cash left over in a business once interest payable and exceptional
costs have been subtracted from the operating profit and the profit that the
company expects to pay tax on.
10. Profit after tax (aka. net profit, net income) is the cash that remains
in a business after corporate tax due is subtracted for the Profit before tax.
11. Profit after tax is also referred to as earnings, which is what we
normally refer to as ‘profit’ or the bottom line. The formula for determining
‘the bottom line’ is:
Total Income – Total Expenses = Profit
12. Retained profit is the amount of cash left over in a business once
dividends payable have been issued to the shareholders.
13. Normally shareholders do not receive 100 % of the earnings. Usually
about 30 % of the earnings are issued to the shareholders as dividends. The
70 % of earnings that remains is reinvested in the business to help create
additional wealth for the shareholders.
14. Cash reserve refers to the amount of cash taken from the retained
profit and kept as operating cash.

1
Depreciation is the amount of expense that a company charges against
earnings to write off the cost of a capital asset. Amortization is the process of
spreading the cost of an intangible asset over its expected useful life.
132
ASSIGNMENTS
A. Answer the questions.
1. What kind of financial report is a typical income statement? In
what way does it differ from the balance sheet?
2. Name the five types of profit mentioned.
3. What is the difference between the terms ‘revenue’, ‘income’, ‘profit’
and earnings?
B. Suggest the English for the following
• отчет о прибылях и убытках;
• общий объем продаж, товарооборот;
• издержки на реализованную продукцию;
• коммерческие, общие и административные расходы;
• прибыль до уплаты процентов, налогов, износа и аморти-
зации;
• чистая прибыль.

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CASHFLOW STATEMENT

Part 3. Sum up the text below.

The third financial report is called the Cashflow statement.
CASH IS KING!
Investments in the company, purchases of assets, borrowing, and
other activities to finance company operation and growth usually involve
significant amounts of cash. They are most easily seen and tracked in the
cashflow statement. The cashflow statement shows money coming into
and going out of a company in a particular period: cash inflows and cash
outflows. Investors check this statement to see how effectively the company
is obtaining and using its cash.

Types of cashflow
Net cashflow from operations is the money generated by the sales of
the company’s goods or services, minus the money spent on supplies, staff
salaries, and other day-to-day activities in the period.

134
 Net cashflow from investment activities is the result of purchases of
securities in other companies, money received from sales of securities in
other companies, loans made to borrowers and loans repaid / loan interest
paid by borrowers, purchases of land, buildings and equipment, as well as
sales of land, buildings and equipment.
Net cashflow from financing activities is the result of money received
through short-term borrowing, money repaid in short-term borrowing,
money received through issuing new shares and bonds in the company,
and dividends paid to shareholders.

ASSIGNMENT.
A. Suggest the English for the following
• отчет о движении денежных средств;
• движение денежных средств по текущей деятельности / от
операционной деятельности;
• движение денежных средств от инвестиционной деятельности;
• движение денежных средств от финансовой деятельности.

TOP TIPS FOR INVESTING IN THE STOCK MARKET

Part 4. Use of English. Idioms. Study the tips for investing and do the
assignment below.
1. Don’t invest more than you can afford, or you could land yourself
in trouble.
2. Don’t invest off your own bat – seek proper financial advice first.
3. Err on the side of caution if you don’t have a lot of money to play
with.
4. Don’t let all the jargon put you off – you’ll pick it up as time goes
by.
5. Once you’ve bought stocks, hold on to them for a while. Fast trading
can be expensive.
6. Don’t forget to add on the fees you will have to pay: this could come
to 3 or 4 per cent.
7. Don’t expect your investments to bear fruit immediately – you
need patience.
8. Remember shares go down as well as up, so go into it with your
eyes open.
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 Which of the idioms above mean the following? Use the idioms in
sentences of your own.
a) be careful and not take many risks;
b) to make sb dislike smth;
c) knowing that there could be problems in a situation;
d) informal get sb / yourself into a difficult situation;
e) have a successful result;
f) informal if you do it, it is your idea and do it without help from
others;
g) have enough money / time, etc. for doing sth;
h) include sth extra;
i) as time passes;
j) add up to a total amount;
k) keep sth; not give or sell sth to sb else.

Part 5. Video. Watch Bill Ackman’s lecture ‘Everything you need to

know about finance and investing in under an hour’ and do the
assignments below.
A. Answer the following questions.
1. How does an entrepreneur raise money to kick off a startup?
2. Why borrow money instead of selling more stock?
3. What key financial statements used in financial reporting were
mentioned?
4. What fixed assets does Bill’s Lemonade Stand own?
5. What underlying assumptions should be made to predict how the
business will be doing?
6. What do you call ‘money received from the sales of inventory less
the cost of the labour, machine depreciation, plant electricity etc.
and the cost of materials used to produce inventory’?
7. What is a ‘growth assumption’?
8. How much is the income / corporate tax Bill’s Lemonade Stand has
to pay?
9. What do you call ‘the amount earned in direct proportion to the
capital invested’?
10. Who gets a better deal: the lender or the equity investor? Why?
11. What’s the difference between debt and equity?
12. What’s the difference between a senior debt and a junior debt?

136
13. Which of the following receives a fixed dividend, which is
paid before other shares get any dividend: common stock or
preference / preferred stock?
14. When you plan to invest in a business should you be concerned
about fluctuations in price?
15. What US securities are considered to be the lowest risk form of
investment?
16. What is the relationship between the risk and the rate of return?
17. What are the alternatives of raising capital if the business is
growing in value?
18. What is an IPO?
19. What institution supervises the US stock exchanges?
20. How can a business owner figure out the value of their
company?
21. What’s the difference between a public company and a private
company?
22. Spell out the options of successful investing mentioned in the
video.
23. Quote Warren Buffet’s adage about investment.
24. What are the best places to invest in, according to Bill Ackman?
25. What do you call ‘a licence giving someone an exclusive right to
manufacture or sell certain products in a certain area’?
26. What is consumer loyalty?
27. What are outside factors?
28. What is capital intensity?
29. Is it wise for students to start investing early?
30. What do stock prices reflect in the short term? What do they
reflect in the long term?
31. What does it mean to ‘have a stomach to withstand the volatility
of the stock market’?
32. What ratio shows how expensive a company’s stocks / shares are?
If it’s high, then investors are willing to pay a high multiple of the
earnings for a stock / share, because they expect it to do well in
the future.
33. What is a coupon?
34. What is leverage?
35. What is a mutual fund?

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B. Translate into English.
1. чистый капитал, чистые активы;
2. доля в акционерном капитале;
3. нанимать персонал;
4. US отчет о прибылях и убытках (UK profit and loss account);
5. себестоимость реализованной продукции;
6. прибыль до уплаты процентов и налогов;
7. маржа (разница между доходами и расходами);
8. отчет о движении денежных средств;
9. чистая прибыль;
10. прогноз;
11. прибыль на капитал, рентабельность инвестированного
капитала;
12. преимущественное требование;
13. обеспеченный кредит;
14. старший (привилегированный) долг;
15. субординированный долг;
16. мезонинный долг;
17. привилегированная акция;
18. US обыкновенная акция (UK ordinary share);
19. остаточное требование;
20. доходность, рентабельность;
21. первоначальное размещение акций;
22. публикация об организации акционерного общества;
проспект предстоящей эмиссии;
23. Комиссия по ценным бумагам и биржам;
24. регистрационное заявление;
25. акции в обращении;
26. сложный процент;
27. временные трудности;
28. результаты деятельности, достижения, репутация;
29. роялти (лицензионные платежи, франшизы);
30. иметь большую долю рынка («сильное присутствие» на
рынке);
31. капиталоемкость;
32. миноритарный акционер;
33. непогашенный долг;
34. входной барьер;

138
 35. индивидуальный пенсионный счет;
36. поддаваться стадному чувству;
37. экономический спад;
38. отношение цены к прибыли (финансовый коэффициент);
39. доходность по прибыли;
40. US кредитное плечо (привлечение заемных средств; отноше-
ние заемного капитала к собственному) / UK gearing;
41. ПИФ, фонд коллективного инвестирования;
42. диверсифицированный портфель ценных бумаг;
43. инвестиционный менеджер;
44. Федеральная комиссия по средствам связи.

TEXTS FOR RENDERING INTO ENGLISH

Text 1

Власть дракона:
в 2016 году Китай скупил мировые активы на $ 206,6 млрд
В 2016 году Китай впервые обогнал США по покупке мировых
активов, совершив сделки на сумму более $ 200 млрд. В инвестицион-
ный портфель бизнесменов из КНР вошли различные проекты – от
нефтегазовых компаний до итальянского футбольного клуба. Участ-
ники рынка объясняют активную инвестиционную политику КНР
желанием элиты переформатировать собственную экономическую
систему, которая сейчас ориентирована на экспорт, в сторону увели-
чения внутреннего потребления.
«Китай успешно следует модели поведения японских компаний
в послевоенные годы, когда они с помощью финансирования ино-
странных компаний получили доступ к новым технологиям, которые
стали драйверами технологического превосходства Японии. Факти-
чески КНР, покупая зарубежные активы, получает двойную выгоду:
прибыль от прямых инвестиций и трансфер технологий на собствен-
ный рынок», – рассказал RT директор по стратегическим инвестици-
ям Российской венчурной компании Ян Рязанцев.
Традиционно Китай инвестирует в энергетику. Так, в 2012 году
крупнейшая нефтяная компания страны CNOOC Ltd купила канад-
скую Nexen Inc. за $ 14,3 млрд, что послужило зеленым светом ки-
тайским нефтяным магнатам к последующему заключению сделок

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в Центральной Азии, Европе и Южной Америке на сумму от $ 500 млн
до $ 3 млрд.
В последние годы китайские бизнесмены стали ориентировать-
ся на рынок потребительских товаров. Согласно данным газеты The
Washington Post, в 2014 году китайцы купили активы американского
холдинга Smithfield Foods Inc. по производству свинины, стоимость
которых составила $ 4,7 млрд. А в этом году инвесторы из КНР удиви-
ли участников рынка вложениями в «непрофильные» отрасли. В июне
китайская компания Suning Commerce Group приобрела за € 270 млн
68,55 % акций итальянского футбольного клуба «Интер». В октя-
бре холдинг Alibaba Group купил миноритарную долю (менее 50 %)
в Amblin Partners – студии известного американского кинорежиссера
Стивена Спилберга. Согласно договору, холдинг займется продвиже-
нием фильмов на рынке Китая, сообщает The Hollywood Reporter.
Китайская инвестиционная экспансия в мире начиналась с по-
купок в сфере тяжелой промышленности и энергоресурсов. Однако
сейчас этот вектор сместился в сторону легких отраслей, таких как
информационные технологии, товары широкого потребления и ме-
диауслуги. Китайцы хотят построить новую экономику, ориентиро-
ванную на внутренний спрос», – считает глава юридической фирмы
London LLP Linklaters Никола Maуньо, которая специализируется на
сделках Китай – Европа.
В России китайских инвесторов интересуют преимущественно
энергетические ресурсы. В 2016 году нефтегазовая компания «Итера»
продала китайскому холдингу Winsway Group за $ 90 млн 60 % про-
екта освоения Апсатского каменноугольного месторождения, ресур-
сы которого оцениваются в 2,2 млрд тонн, говорится в пресс-релизе
компании.
«Китайские компании пытаются войти на нефтяные и газовые
рынки России через долевое участие в совместных проектах. Напри-
мер, в 2013 году «Роснефть» заключила с Sinopec экспортные кон-
такты на $ 85 млрд. Кроме того, китайская нефтегазовая корпорация
CNPC владеет 20 % акций газодобывающего проекта «Ямал – СПГ», –
пояснил RT главный стратег УК БСК Максим Шеин.
Впрочем, в последние годы активность китайцев сместилась
в сторону информационных технологий и автопрома. В 2015 году
холдинг REX Global Entertainment Holdings приобрел 64,9 % акций

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производителя российских смартфонов Yota Devices за $ 100 млн. По
словам гендиректора Yota Devices Владислава Мартынова, на первом
этапе REX Global вложит в Yota Devices $ 50 млн, которые пойдут на
выпуск линейки продуктов и YotaPhone 3.
Text 2
Прибыль – одна из самых распространенных категорий совре-
менной экономики. Целевая функция фирмы – это максимизация
именно прибыли.
Прибыль – это и одна из самых неоднозначных категорий в эко-
номической науке. Четкой, принимаемой всеми экономистами трак-
товки прибыли сегодня нет. Причем экономисты спорят не об опреде-
лении прибыли как таковой – с этим как раз вроде бы уже все ясно.
Прибыль – это «нечто», остающееся в выручке предприятия по-
сле вычета из нее всех затрат. Различные толкования вызывает дру-
гой вопрос – о происхождении прибыли.
Исторически сложились две укрупненные трактовки прибыли:
прибыль как доход собственника специфического фактора – пред-
принимательского таланта – и прибыль как некая остаточная величи-
на, остающаяся после вменения каждому фактору своего дохода.
Назовем их условно объективными и субъективными теориями.
Объективные теории объясняют происхождение прибыли неки-
ми внешними причинами, так или иначе связанными с нарушениями
конкурентного равновесия.
Согласно конъюнктурным теориям, прибыль представляет собой
результат рыночного неравновесия. Представим себе, что в результа-
те каких-то внешних причин внезапно изменилась рыночная конъ-
юнктура, например, произошло повышение спроса на некий товар.
Это привело к росту его цены. Следовательно, выручка фирмы воз-
росла. Однако цены факторов производства (и, следовательно, затра-
ты фирмы) не изменились (они, как правило, закреплены более или
менее долгосрочными договорами), их производительность также
осталась неизменной. Таким образом, нет причин выплачивать вла-
дельцам факторов доход сверх прежнего, и, следовательно, у фирмы
остается некая часть дохода, не доставшаяся никакому фактору. Это
и есть прибыль фирмы. И наоборот, при падении спроса возникает
убыток (отрицательная прибыль).

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 Так, мы можем дать достаточно простое объяснение появления
прибыли или убытка в зависимости от изменения рыночной конъюн-
ктуры. А эта конъюнктура может изменяться из-за самых неожидан-
ных причин. Например, прежде малоизвестный сериал Яна Флеминга
о похождениях некоего Джеймса Бонда стал супербестселлером по-
сле того, как американский президент Д. Кеннеди объявил его своей
любимой книгой.
Прибыль можно интерпретировать и как проявление монополь-
ной власти. Одно из известных объективных объяснений появления
прибыли связано прежде всего с ссылками на несовершенство конку-
ренции. Прибыль получается фирмой вследствие ее доминирования
на рынке.
Субъективные теории предполагают наличие четвертого факто-
ра производства – «предпринимательского таланта» и соответствен-
но наличия дохода у владельца этого фактора (предпринимателя) –
предпринимательской прибыли.
Text 3
Отчет о движении денежных средств – это документ, в котором
отражается поступление и выбытие денежных средств и их эквива-
лентов за отчетный период. К денежным средствам относятся непо-
средственно деньги и банковские вклады до востребования.
К денежным эквивалентам относятся краткосрочные высоколик-
видные инвестиции, риск изменения стоимости которых незначи-
тельный, и которые могут быть легко обращены в заранее известную
сумму денег.
Денежные потоки в отчете о движении денежных средств класси-
фицируются по трем видам деятельности:
• операционной, т. е. основной приносящей доход деятельности,
и прочей деятельности (за исключением инвестиционной
и финансовой);
• инвестиционной, т. е. деятельности, направленной на при-
обретение и выбытие долгосрочных активов и других
инвестиций (кроме эквивалентов денежных средств);
• финансовой, т. е. деятельности, приводящей к изменению
в составе и величине капитала и заемных средств.
142
 Text 4
Отчет о совокупном доходе (statement of comprehensive income) –
это документ, в котором отражается величина прибылей, убытков
и изменений прочего совокупного дохода за отчетный период.
Отчет о совокупном доходе состоит из двух разделов:
• отчета о прибылях и убытках;
• отчета о прочем совокупном доходе (т. е. о статьях, влияющих
на нераспределенную прибыль, но не отраженных в отчете о прибы-
лях и убытках, например, объявленные дивиденды, изменение резер-
ва переоценки и т. п.).
Расходы могут классифицироваться в отчете о совокупном дохо-
де по их функции:
• выручка;
• себестоимость;
• валовая прибыль / убыток;
• прочие доходы;
• затраты на сбыт;
• административные расходы;
• прочие расходы;
• прибыль до налогов.
Text 5
Отчет о финансовом положении (Statement of financial position) –
это документ, в котором отражается стоимость активов, обязательств
и собственного капитала предприятия на отчетные даты. Это – клю-
чевой отчет бухгалтерской отчетности в системе МСФО (Междуна-
родные стандарты финансовой отчетности International Financial
Reporting Standards). В системе РСБУ (Российские стандарты бухгал-
терского учёта Russian Accounting Standards) аналогом данного отче-
та является бухгалтерский Баланс.
Отчет о финансовом положении может быть представлен в двух
формах в зависимости от способа представления входящих в него
строк:
• активы и обязательства могут разделаться на краткосрочные
(со сроком обращения не более 12 месяцев после отчетной
даты, или обычного операционного цикла) и долгосрочные
(более распространенный вариант, соответствующий россий-
ской форме Бухгалтерского баланса);

143
 либо
• представляться в порядке убывания ликвидности, с разбивкой
на краткосрочные и долгосрочные активы и обязательства
(такой порядок составления отчета о финансовом положении
часто используют финансовые организации).
Отчет о финансовом положении должен включать статьи, пред-
ставляющие следующие суммы:
• основные средства;
• инвестиционное имущество;
• нематериальные активы;
• финансовые активы;
• инвестиции, учитываемые по методу долевого участия;
• биологические активы;
• запасы;
• торговая и прочая дебиторская задолженность;
• денежные средства и их эквиваленты;
• торговая и прочая кредиторская задолженность;
• резервы;
• финансовые обязательства;
• обязательства и активы по текущему налогу
• отложенные налоговые обязательства и отложенные налого-
вые активы
• неконтролирующие доли, представленные в составе капитала;
• выпущенный капитал и резервы, относимые на собственников
материнского предприятия.

Part 8. Discussion. Comment on the following quotes.

1. Stock market bubbles don’t grow out of thin air. They have a solid
basis in reality, but reality as distorted by a misconception. (George
Soros)
2. If you put the federal government in charge of the Sahara Desert, in
5 years there'd be a shortage of sand. (Milton Friedman)
3. Foolish people follow the system, get caught up in media news,
what the government wants you to believe and all the higher powers
want you to believe, and go down the same path as all the sheep in
the cattle market. (Tyson Fury)
4. Try not to become a man of success, but rather try to become a
man of value. (Albert Einstein)

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UNIT 8
TYPES OF BUSINESS ENTITIES

Part 1. Read the text and make a list of 10 questions about it.
Do the assignment that follows.
A business entity is an
organization created by one or
more natural persons to carry on a
trade or business. Business entities
are created or formed at the state
level, often by filing documents
with a state agency.
Types of business entities
include sole proprietorships, cor-
porations, partnerships, limited
liability companies, limited liabili-
ty partnerships.
Sole trader / proprietor
A sole proprietorship is the simplest form of business structure which
legally has no separate existence from its owner. It’s headed by a single
individual, and the management and ownership are usually vested in the
same person, who is personally responsible for all the debts of the business,
and may thus risk becoming bankrupt.
Corporations
A corporation (often referred to as a legal person) is a legal entity that is
separate and distinct from its owners. Corporations have the right to enter
into contracts, lend and borrow money, sue and be sued, hire employees,
own assets and pay taxes. The most important aspect of a corporation
is limited liability1, which means that shareholders have the right to
participate in the profits, through dividends and / or the appreciation of

1
Cf. unlimited liability, which typically exists in general partnerships and sole
proprietorships, indicates that whatever debt accrues within a business each of the
business’ owners is equally responsible and personal wealth could reasonably be
seized to cover the balance owed.
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stock (an increase in the value of a stock), but are not held personally liable
for the company's debts.
Partnerships
A partnership is a legal relationship formed by the agreement between
two or more individuals to carry on a business as co-owners. A partnership
is a business with multiple owners, each of whom has invested in the
business. Partners share with each other the profits or losses of the business
undertaking in which all have invested. In most countries, a partnership is a
nominate contract between individuals who agree to carry on an enterprise,
contribute to it, by combining property, knowledge or activities and to
share its profit. Partners may have a Partnership Agreement, or Declaration
of Partnership, or a Deed of Agreement, and in some jurisdictions such
agreements may be registered and available for public inspection.
The most basic form of partnership is a general partnership (also
referred to as unlimited partnership), in which all partners manage the
business and are personally liable for its debts. A general partnership is a
business that has more than one owner and that has not filed papers with
the state to create a specific entity such as a corporation or a limited liability
company1.
Two other forms which have developed in most countries are
• the limited partnership (LP), in which certain «limited partners»
(aka. “sleeping partners”) relinquish their ability to manage the
business in exchange for limited liability for the partnership's debts;
in LPs at least one of the owners is a general partner who makes
business decisions and is personally liable for business debts;
• the limited liability partnership (LLP), in which all partners have
some degree of limited liability for business debts; LLPs have no
general partners.
Limited company (AmE Corporation)
There are two kinds of limited companies:
1
An LLC is a flexible type of business that combines some characteristics of
partnerships (partnerships in terms of the availability of pass-through income
taxation) and corporations (in terms of limited liability). It has a choice of how the
business will be taxed. Partners can choose for the LLC to be taxed as a separate
entity or as a partnership-like entity in which profits are passed through to partners
and taxed on their personal income tax returns. An LLC can operate with as little
as one owner or multiple members.
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 • those limited by guarantee, and
• those limited by shares.
Private Companies Limited by Guarantee
A private company limited by guarantee is a registered company in
which the liability of each of the members is limited to a particular amount
of money that they guarantee they will contribute personally in the event
that the company fails and owes debts. This can be as low as ₤ 1. Guarantee
companies are widely used by charities, schools, professional and trade
organisations. There can be no shareholders as such because the company
does not have a share capital.
Companies Limited by Shares (UK)
In a company limited by shares the capital is divided into shares, which
are held by shareholders. There are two types of such companies:
1. in a private limited company, all shareholders must agree before
shares can be bought and sold.
2. in a public limited company shares are bought and sold freely, for
example on a stock exchange.
Public limited companies can either be formed ‘from scratch’ or can be
converted from private limited companies.
The main differences between public and private limited companies
• Authorised minimum share capital: a public company cannot start
trading until it has received a certificate from the Registrar of Companies
stating that it has a share capital of ₤ 50,000 or over.
• Public offers of securities: only a public limited company can offer
to sell its shares to the general investing public.
• Name: The words ‘Public Limited Company’ (or ‘Plc’) and ‘Limited’
(‘Ltd’) must be added at the end of the company name.
• Directors: whilst a private limited company must have at least one
director, a public limited company must have at least two at all times.
• Shareholders: whilst a private limited company must have at least
one shareholder, a public limited company must have at least two at all
times. A private company is one which restricts the right to transfer its
shares. The number of shareholders in a private company is limited to fifty.
A private company is not allowed to advertise the sale of its shares; it must
not invite the public to subscribe for its shares.

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ASSIGNMENT
SUGGEST THE ENGLISH FOR
1) типы коммерческих организаций;
2) индивидуальный предприниматель;
3) юридическое лицо;
4) физическое лицо;
5) договор определённого установленного вида;
6) товарищество, партнерство;
7) простое товарищество;
8) коммандитное товарищество;
9) компания-гарант;
10) договор простого товарищества;
11) негласный партнер, компаньон-вкладчик;
12) ограниченная ответственность;
13) акционерное общество;
14) закрытое акционерное общество;
15) открытое акционерное общество;
16) общество с ограниченной ответственностью;
17) акционерное общество, зарегистрированный как корпо-
рация;
18) акционерный капитал;
19) учредительный договор о создании акционерной компании;
20) устав акционерного общества;
21) регистрационная палата;
22) свидетельство о регистрации компании.

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 Part 2. Study the table. Read the definitions of different business entities and insert their names (the list
is given below) in the corresponding headers.
S Corporation, Sole Proprietorship, Limited Partnership,
Partnership, Limited Liability Company
C Corporation ... ... ... ... ...
Definition A legal entity regulated by A corporation that is taxed A business whose A partnership with many of A cross between a A business that
the state that has an identity like a partnership gains & losses are the liability protections of a corporation and a operates under
separate from that of its passed to individual corporation partnership the auspices of an
members partners individual
Ownership Owned by shareholders who Owned by 75 or fewer Owned by 2 or more Owned by a general Owned by members Owned by a person
can be individuals or other shareholders partners partner who controls the similar to shareholders;
legal entities business and limited may be managed by a
partners who have no member or by a manager
active role
Taxation Files its own tax return Profits & losses are Taxes are passed Taxes are passed through May be taxed as a pass- Owner pays income
passed through to through to the partners to the partners through entity or as a tax- tax and 15,3 % self-
shareholders paying association employment tax
Protection Shareholders are not Same liability protection Partners are liable for Partners can avoid liability Same liability protection None
personally responsible for as a C Corporation the company’s actions through a legal charging as a corporation
liability except in the case order
of fraud
Advantages Asset protection; privacy; tax Same as C corporation Easy to set up Asset protection; privacy; Flexibility in management; Easy to set up
savings; easier transfer of estate planning and real asset protection; tax
ownership estate holding savings; easy to set up
Dis- Must comply with Same as C corporation; No liability protection; General partner may be Laws differ among states No liability protection;
advantages governance, document- restriction on number and personal assets are liable for certain types of personal assets are
ation, reporting, and other type of shareholders; one at risk lawsuits filed by limited at risk
corporate regulations stock class partners or others

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Part 3. Listening. Listen to the excerpt from the book by W. Pelfrey
‘Billy, Alfred, and General Motors’ and do the assignments
that follow.

A. Answer the questions or prove the statements.

1. Prove that William C. (Billy) Durant and Alfred P. Sloan were
opposites in all respects.
2. When was General Motors established?
3. How did the company expand?
4. What were W. Durant’s and A. Sloan’s mistakes, according to the
author?
5. Describe their last official oil portraits.
6. When did Billy Durant venture into the automobile business?
7. What was the city B. Durant founded?
8. Was media coverage of B. Durant’s business life one-sided?
9. What was one of the local Flint jokes after B. Durant died?

B. Complete the sentences below.

1. In 1904 the average life expectancy in the
United States was a) … years; only b) … percent
of households had bathtubs; the average wage was
c) … cents an hour; and there were only d) …
motor vehicles in the country, with a total of just
e) … miles of paved road to drive them on.
2. In the 1950s, when Alfred Sloan was putting
Billy Durant together a team to write his story, wages had risen by
a factor of close to a) …; most working Americans
looked forward to retirement with a pension after the age of b) …
3. Under A. Sloan’s leadership, the company’s share of the U. S.
automobile market had risen from a) … percent to b) … percent.
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C. Reproduce the word combinations in sentences based on the audio.
1) a flamboyant dreamer and gambler;
2) an MIT engineer;
3) in bold defiance of the industrial and financial
powers of his day;
4) to set precedents in motion;
5) financial manipulation and speculation;
6) corporate vision;
7) nuts-and-bolts management;
8) to stand ramrod straight;
Alfred Sloan 9) a perfectly tailored suit;
10) a nationwide interstate highway system;
11) to live off the charity;
12) to bring smb onto the board of directors;
13) the art of management;
14) to revitalize and transform a city / company etc.;
15) the story of the ascendance.
D. Match the words and their definitions.

1. Wizardry a. any large, overpowering, destructive force or

object, as war, a giant battleship, or a powerful
football team;
2. Memo b. the unification of two or more corporations by
dissolution of existing ones and creation of a single
new corporation;
3. Juggernaut c. a coach or carriage kept for hire; also a saddle
horse used for transportation;
4. Acquisition d. great skill or cleverness in an activity;
5. Consolidation e. the purchase of one business enterprise by another;
6. Hack f. an informal record; a usually brief communication
written for interoffice circulation.

E. Explain or paraphrase.
1. Billy and Alfred had wrought not only the largest but one of the
most misunderstood enterprises in the annals of business.
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 2. Billy Durant had amassed and lost several personal fortunes.
3. Television host Dinah Shore was striking a chord in every American
household when she sang, ‘‘See the USA in your Chevrolet.’’
4. Thanks to the Sloan team’s mastery of the annual model change,
retail finance, and mass marketing, everyone yearned to buy next
year’s model.
5. The organizational structure and product strategy of General
Motors were emulated by corporations around the world.
6. Business theorists, executives, and investors alike are questioning
whether the structures and policies established by Alfred Sloan
have become barriers rather than enablers of speed and innovation
in the twenty-first century.

F. Replace the Russian words / phrases with their English equivalents.

1. When he finally (объявил себя банкротом), after losing all in the
(крах фондовой биржи) of 1929 and the Great Depression, he
listed his total (активы) at $ 250, the value of the clothes on his
back.
2. The company’s (годовой доход) surpassed the annual (валовой
национальный продукт) of half the world’s countries.

Part 4. Use of English.

A. Go to (time.com/money/4729788/10-companies-control-food-
industry) and find information about the 10 companies that control
the global food industry.
B. Use the link (www.behindthebrands.org/brands) to find out what
companies own the brands listed.
C. Surf the internet to find out what types of business entities the
world-famous companies listed below belong to.
D. Make a report about a company below or any other business entity of
your choice.
• Warner Bros.
• Johnson & Johnson
• Twitter
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 • Facebook
• Danone
• Associated British Food
• Mars
• Hewlett Packard
• McDonald’s
• Microsoft
• Apple
• Google
• Nestlé
• PepsiCo
• Kellogg’s
• Walt Disney Company
• J. P. Morgan Chase & Co
• Amazon.com
• Unilever

Part 5. Translate into Russian.

1. European markets ended little changed. Frankfurt ended marginally
higher, Paris a couple of points lower, while London’s FTSE ended
down 0.2 per cent.
2. European markets closed slightly higher this evening, with Ryanair
shares bouncing after its half-year report reassured investors on its
full-year outlook.
3. London’s FTSE and the CAC 401 in Paris both ended up around 0.2
per cent.
4. Kerry Group’s shares were up 1.92 per cent yesterday, from € 84.49
to € 86.11 as the company announced its sales were up 4.2 per cent
in the nine months to the end of September.
5. European markets advanced yesterday, as a jump in oil prices
boosted energy shares. London’s FTSE added 0.6 per cent, with BP
up 2.5 per cent and Royal Dutch Shell rising by 1.7 per cent.
6. Uncertainty about Brexit talks sent European markets lower yester-
day, though the falls were small. Paris lost 0.3 per cent. London’s

1
The CAC 40, the most widely-used indicator of the Paris market, reflects the
performance of the 40 largest equities listed in France.
153
 FTSE slipped 0.2 per cent, led by mining stocks. In Dublin, the ISEQ
closed up just two points, with AIB1 gaining almost 1 per cent.
7. The price of Brent oil stood at $ 46.57 a barrel, compared with
$ 45.84 the previous month. Over last twelve months the price has
fallen 2.2 %.
8. In June 2005, crude oil prices broke the psychological barrier of
$ 60 per barrel.
9. Shares of Frontline Ltd. rose 18.64 percent to close at $ 4.20 per
share as over 8,593,000 shares changed hands on the NYSE on
Tuesday – four times the stocks average daily volume. Shares hit
a high of 4.87 intraday after the troubled company announced a
major restructuring approved by its board, which would shift debt
and assets to a new entity called Frontline 2012.
10. European shares rose yesterday as US president Donald Trump
toned down his rhetoric on potential air strikes in Syria. Frankfurt’s
DAX closed up 1 per cent, while Paris added 0.6 per cent. London’s
FTSE was flat at 7,258.

TEXTS FOR RENDERING INTO ENGLISH

Text 1
Деловые предприятия распределяются по трем основным
организационно-правовым формам: 1) индивидуальная частная фир-
ма; 2) партнерство (товарищество); 3) корпорация.
Индивидуальная частная фирма – это, по существу, индивиду-
альное (самостоятельное) ведение бизнеса в своих интересах. Част-
ный предприниматель-собственник изначально владеет материаль-
ными ресурсами и капитальным оборудованием, необходимыми для
производственной и коммерческой деятельности, или приобретает
их, а также лично контролирует деятельность предприятия.
Этот чрезвычайно простой тип организации бизнеса имеет
определенные достоинства.
1. Индивидуальную частную фирму легко учредить, так как это
не вызывает практически никаких юридических или бюрократиче-
ских препон и связанных с ними расходов.
2. Частный предприниматель – сам себе хозяин и пользу-
ется значительной свободой действий. Получаемый частным
1
AIB, or Allied Irish Banks, is one of the Big Four commercial banks in Ireland.
154
предпринимателем доход зависит от успешной деятельности его
предприятия, и это дает мощный и непосредственный стимул вести
дела эффективно. Однако недостатки этой организационной формы
бизнеса весьма значительны.
3. За редким исключением, финансовые ресурсы частного пред-
принимателя недостаточны для того, чтобы фирма могла вырасти
в крупномасштабное предприятие. Финансовые средства обычно
ограничены той суммой, которую предприниматель имеет на своих
банковских счетах, и тем, что он может занять. Поскольку среди инди-
видуальных частных фирм относительно высок процент банкротств,
коммерческие банки не слишком охотно предоставляют им крупные
кредиты.
4. Полностью и единолично отвечая за деятельность предприя-
тия, частный предприниматель вынужден сам выполнять все основ-
ные управленческие функции. Ему приходится принимать все реше-
ния по поводу закупок, продаж, привлечения и обучения персонала;
он должен также держать под контролем технические аспекты, свя-
занные с производством, рекламой и распределением продукции.
5. Наиболее важный недостаток заключается в том, что инди-
видуальный частный предприниматель несет неограниченную ответ-
ственность. Это означает, что он рискует не только активами фирмы,
но и своими личными активами. Если активы бесприбыльного част-
ного предприятия недостаточны для удовлетворения притязаний
кредиторов, то последние могут предъявить требования к личной
собственности владельца предприятия.
Text 2
Деловые предприятия распределяются по трем основным
организационно-правовым формам: 1) индивидуальная частная фир-
ма; 2) партнерство (товарищество); 3) корпорация.
Партнерство (товарищество) как форма организации бизнеса
в большей или меньшей степени является следствием естественного
развития индивидуальной частной фирмы. Партнерства зародились
в попытке преодолеть некоторые из основных недостатков индиви-
дуального предпринимательства. Партнерство – это форма органи-
зации бизнеса, при которой два или более человека договариваются
о владении предприятием и его управлении. Обычно они объединяют

155
свои финансовые ресурсы и деловые навыки. Подобным же образом
они распределяют риски, а также прибыли или убытки, которые могут
выпасть на их долю.
Каковы преимущества партнерства?
1. Подобно индивидуальной частной фирме, партнерство легко
организовать. Почти во всех случаях заключается письменное согла-
шение, и, как правило, это не связано с обременительными бюрокра-
тическими процедурами.
2. Благодаря участию в бизнесе нескольких партнеров становит-
ся возможной более высокая степень специализации в управлении.
3. Объединение в партнерстве нескольких участников позво-
ляет расширить его финансовые ресурсы в сравнении с ресурсами
индивидуальной частной фирмы. Партнеры могут слить воедино
свои денежные капиталы, и обычно их предприятие представляется
банкирам менее рискованным.
Вопреки ожиданиям партнерству зачастую не удается преодо-
леть несовершенства индивидуального предпринимательства, и даже,
наоборот, порой оно порождает такие проблемы, с которыми не стал-
кивается частная фирма, находящаяся в единоличном владении.
1. Если в управлении участвует несколько человек, подобное
разделение власти может привести к несогласованной политике или
к бездействию, когда требуются решительные действия. Еще хуже,
если партнеры расходятся во взглядах по стратегическим вопросам.
2. Финансовые ресурсы параметров остаются ограниченными,
хотя обычно и превосходят возможности индивидуальных частных
фирм. Но у трех или четырех партнеров может также не хватить
средств для успешного роста их предприятия.
3. Продолжительность деятельности партнерства непредсказуе-
ма. Выход из партнерства или смерть одного из партнеров, как прави-
ло, влекут за собой распад и полную реорганизацию фирмы, полное
прекращение ее деятельности.
4. Наконец, неограниченная ответственность досаждает пар-
тнерствам точно так же, как и индивидуальным частным фирмам.
Фактически каждый партнер несет ответственность за все неудачи
предприятия – не только за результат собственных управленческих
решений, но и за последствия действий любого другого партнера.
Преуспевающему партнеру приходится рисковать своими деньгами,
полагаясь на благоразумие и расчетливость своего менее предпри-
имчивого коллеги.
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 Text 3
Деловые предприятия распределяются по трем основным орга-
низационно-правовым формам: 1) индивидуальная частная фирма;
2) партнерство (товарищество); 3) корпорация.
Корпорация – это организационно-правовая форма бизнеса,
отличающаяся и отграниченная от конкретных лиц, владеющих ею.
Такая структура, получившая от правительства статус «юридическо-
го лица», вправе приобретать ресурсы, владеть активами, произво-
дить и продавать продукцию, брать в долг, предоставлять кредиты,
предъявлять иск и выступать в суде ответчиком, а также выполнять
все те функции, которые выполняют деловые предприятия любого
другого типа.
Преимущества корпорации определили ведущую роль этой орга-
низационной формы бизнеса в современной американской экономи-
ке. Хотя корпорации относительно немногочисленны, они отличают-
ся широкими масштабами операций и крупными размерами.
1. Корпорация значительно более эффективно по сравнению со
всеми другими формами организации бизнеса справляется с задачей
привлечения денежного капитала. Корпорациям присущ уникальный
способ финансирования – посредством продажи акций и облигаций, –
который позволяет привлекать сбережения многочисленных домохо-
зяйств. Через рынок ценных бумаг корпорации способны объединять
в общий фонд финансовые ресурсы огромного числа людей.
Более того, корпорациям обычно легче, нежели другим фор-
мам бизнеса, получить доступ к банковскому кредиту. Во-первых,
корпорации более надежны (с ними сопряжен меньший риск),
а во-вторых, они скорее, чем все другие, способны обеспечить банкам
прибыльные вклады.
2. Корпорации обладают также одним явным преимуществом –
это ограниченная ответственность.
Владельцы корпорации (то есть держатели акций) рискуют толь-
ко той суммой, которую они заплатили за покупку акций. Их личные
активы не ставятся под удар, даже если корпорации угрожает бан-
кротство. Кредиторы могут предъявить иск корпорации как юри-
дическому лицу, но не владельцам корпорации как частным лицам.
Ограниченная ответственность заметно облегчает корпорации при-
влечение денежного капитала.

157
 3. Благодаря своим преимуществам в привлечении денежного
капитала преуспевающей корпорации легче увеличивать объем, рас-
ширять масштабы операций и реализовывать выгоды роста. В част-
ности, корпорация способна извлекать преимущества из технологий
массового производства, а также из более глубокой специализации
в использовании человеческих ресурсов. В то время как управляю-
щий индивидуальной частной фирмой вынужден делить свое вре-
мя между производством, бухгалтерским учетом и маркетинговыми
функциями, крупная корпорация в состоянии привлечь специализи-
рованные кадры в каждую из этих сфер и тем самым достичь боль-
шей эффективности.
4. Будучи юридическим лицом, корпорация существует не-
зависимо от ее владельцев и от ее собственных должностных лиц.
Индивидуальные фирмы могут внезапно и непредсказуемо погиб-
нуть, а корпорации, по крайней мере юридически, вечны. Передача
собственности корпорации через продажу акций не подрывает ее це-
лостность и непрерывность деятельности. Иными словами, корпора-
ции обладают известным постоянством, которого недостает другим
формам бизнеса и которое открывает возможности для перспектив-
ного планирования и роста.
Преимущества корпораций огромны и обычно перевешивают их
недостатки. Однако такие недостатки все же существуют.
1. Регистрация устава корпорации сопряжена с бюрократиче-
скими процедурами и с расходами на юридические услуги.
2. С общественной точки зрения в корпоративной форме биз-
неса заложены возможности для некоторых злоупотреблений. Так
как корпорация является юридическим лицом, некоторым недобро-
совестным владельцам компаний иногда удается избежать личной
ответственности за сомнительные коммерческие операции благодаря
возможностям, которые открывает перед ними корпоративная фор-
ма организации бизнеса.
3. Следующий недостаток корпораций состоит в двойном нало-
гообложении корпоративной прибыли. Та часть дохода корпораций,
которая выплачивается в виде дивидендов держателям акций, обла-
гается налогом дважды — первый раз как часть прибыли корпорации
и второй раз как часть личного дохода владельца акции.
4. В индивидуальной частной фирме и партнерстве владельцы
реальных и финансовых активов сами непосредственно управляют

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этими активами и контролируют их. Но в крупных корпорациях,
собственность которых широко распылена среди десятков или даже
сотен тысяч акционеров, происходит разделение функций собствен-
ности и управления (контроля).
Причины этого расхождения кроются в бездеятельности типич-
ного держателя акций. Большинство акционеров не принимают уча-
стия в голосовании, а если они и участвуют в нем, то лишь опосре-
дованно, передавая свои голоса действующим должностным лицам
корпорации и тем самым наделяя последних практически безгранич-
ными полномочиями и возможностью самостоятельно определять
свою судьбу.

Part 6. Discussion. Comment on the following quotes.

1. If you don᾽t drive your business, you will be driven out of business.
(B. C. Forbes)
2. Business opportunities are like buses, there᾽s always another one
coming. (Richard Branson)
3. I don᾽t create companies for the sake of creating companies, but to
get things done. (Elon Musk)
4. A leader is one who knows the way, goes the way, and shows the
way. (John C. Maxwell)

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UNIT 9
MORTGAGES

Part 1. Read the text and do the assignments that follow.

A mortgage is a loan you take
out to finance the purchase of a
home. Mortgage loans are generally
paid in monthly instalments (AmE
installments) over either a 15- or 30-
year time span (called the term).
In the early years of repaying your
mortgage, nearly all of your mortgage
payment goes toward paying interest
on the money that you borrowed. Not
until the later years of your mortgage
do you rapidly begin to pay down
your loan balance (the principal).
Mortgage lenders have their own
criteria for approving and denying
mortgage applications and calculating
the maximum that you're eligible to
borrow. A mortgage lender tallies up your monthly housing expense, the
components of which the lender considers to be the mortgage payment,
property taxes, and homeowners insurance.
For a given property that you,re considering buying, a mortgage lender
calculates the housing expense and normally requires that it not exceed
40 percent or so of your monthly before-tax (gross) income.
So, for example, if your monthly gross income is $ 6,000, your lender
may not allow your expected monthly housing expense to exceed $ 2,400.
If you,re self-employed and complete IRS Form 1040, Schedule C1, mortgage
lenders use your after-expenses (net / after-tax) income, from the bottom
line of Schedule C. This housing expense ratio completely ignores almost

1
To find out what this form is about please follow these links: www.investopedia.
com/ask/answers/081314/whos-required-fill-out-schedule-c-irs-form.asp; www.irs.
gov/pub/irs-pdf/f1040sc.pdf
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all your other financial goals, needs, and obligations. It also ignores
property maintenance and remodeling expenses, which can suck up a lot of
a homeowner,s dough. Never assume that the amount a lender is willing to
lend you is the amount you can truly afford.
In addition to your income, the only other financial considerations
a lender takes into account are your debts. Specifically, mortgage lenders
examine the required monthly payments for other debts you may have,
such as student loans, auto loans, and credit card bills. In addition to the
percentage of your income that lenders allow for housing expenses, they
typically allow an additional 5 percent of your monthly income to go toward
other debt repayments.
After you know the amount you want to borrow, calculating the size
of your mortgage payment is straightforward. The challenge is figuring
how much you can comfortably afford to borrow given your other financial
goals.
Suppose you work through your budget and determine that you can
afford to spend $ 2,000 per month on housing. Determining the exact size of
mortgage that allows you to stay within this boundary may seem daunting,
because your overall housing cost is comprised of several components:
mortgage payments, property taxes, insurance, and maintenance.
As youu’re already painfully aware if youu’re a homeowner now, you
must pay property taxes to your local government. The taxes are generally
paid to a division typically called the County or Town Tax Collector.
The first major expense you’ll encounter is the down payment. The
down payment is some amount of money that you pay your lender to
reduce the amount of your loan (thus reducing your monthly payment)
and to demonstrate to the lender that you have a serious financial stake in
the transaction. Some mortgage loans may not require a down payment,
but most do – perhaps 5 or 10 percent or more of the price of the home. In
the case of a $ 250,000 home, this amount could come to about $ 12,500 to
$ 25,000 – or more. The larger your down payment, the smaller your loan.
If you make a 20-percent down payment on a $ 250,000 home ($ 50,000),
you need only a $ 200,000 loan. If you make a 10-percent down payment on
the same property ($ 25,000), you need a $ 225,000 loan.
If you make a smaller down payment – less than 20 percent of the
homeu’s purchase price – you may have an impound account. Such an
account requires you to pay your property taxes, and often your homeowners
insurance, to the lender each month along with your mortgage payment. The
lender is responsible for making the necessary property tax and insurance

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payments to the appropriate agencies on your behalf. Property taxes are
typically based on the value of a property, and vary from one locality to
another.
When you own a home with a mortgage, your mortgage lender
will insist as a condition of funding your loan that you have adequate
homeowners insurance. The cost of your insurance policy is largely derived
from the estimated cost of rebuilding your home. Although land has value,
it doesnu’t need to be insured, because it wouldnu’t be destroyed in a fire.
Buy the most comprehensive homeowners insurance coverage you can and
take the highest deductible you can afford, to help minimize the cost.
In years past, various lenders learned the hard way that some
homeowners with little financial stake in the property and insufficient
insurance coverage simply walked away from homes that were total losses
and left the lender with the loss. Thus, nearly all lenders now require you
to purchase private mortgage insurance (PMI) if you put down less than
20 percent of the purchase price when you buy. The smaller the down
payment, the more likely a homebuyer is to default on a loan when the
mortgage matures1. PMI can add hundreds of dollars per year to your loan
costs. After the equity in your property increases to 20 percent, you no
longer need the insurance.

ASSIGNMENTS
A. Answer the questions.
1. What is a mortgage?
2. What technical terms (and lingo) should mortgage borrowers
know before committing to a mortgage?
3. What pitfalls await prospective mortgage borrowers?
4. What practical tips does the text offer homebuyers?

B. Give the English equivalents for the following words / word combinations.
1) вносить ежемесячные платежи по ипотеке;
2) выплачивать ипотеку;
3) взять ипотеку в банке;
4) выплачивать проценты по ипотечному займу;
5) выплачивать основную сумму долга;
1
Maturity date is the termination or due date on which an instalment loan
must be paid off.
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 6) ипотечный кредитор;
7) налог на имущество;
8) страхование домовладельцев;
9) доход до уплаты налогов;
10) чистый доход;
11) собственник жилья;
12) автокредит;
13) купить страховку;
14) свести затраты к минимуму;
15) страховое покрытие;
16) не выполнить обязательств по займу.
C. Translate the terms into Russian.
1) homebuyer;
2) self-employed;
3) to go toward (paying smth, debt repayments etc.);
4) to approve or deny mortgage applications;
5) debt repayments;
6) to be eligible to borrow;
7) to tally up monthly housing expenses;
8) private mortgage insurance;
9) the County or Town Tax Collector;
10) to make a down payment;
11) loan costs;
12) to put down … percent of the purchase price;
13) impound account;
14) to take the deductible; tax deductions; to be tax deductible;
15) a serious financial stake in the property / transaction;
16) (home) equity;
17) to mature (of a loan); maturity date;
18) to suck up dough (slang).
D. Guess the words and word combinations by their definitions.
1. The part of the purchase price that the buyer pays in cash, up front,
and does not finance with a mortgage.
2. A policy that protects you against accidents that occur on your
property that mortgage lenders require that you have before
funding your loan.

163
 3. The amount borrowed for a loan.
4. Aka. mortgage default insurance. Insurance that protects the lender
in case a borrower defaults on a mortgage.
5. Yearly tax paid by the owner assessed on a home. This type of tax
annually averages 1 to 2 percent of a home's value.
6. Payments that you may deduct against your federal and state
taxable income.
7. In a mortgage plan, the amount of time a lender gives a borrower
to repay the loan.
8. When a loan becomes due and payable.
9. Charges accrued as a percentage of the amount borrowed usually
quoted in percent per year.
10. A form you need to fill in if you are self-employed to report how
much money you made or lost in your business.
11. Disheartening, intimidating, shocking.
12. The value of a mortgaged property that represents its current
market value less any remaining mortgage payments.
E. Insert the missing words. Use your topical vocabulary.
1. If a homebuyer b…s $ 300,000, his p… is $ 300,000. Each monthly
m…e p…t consists of a portion of p… that must be repaid plus
the i… that the mortgage lender is charging you for the use of the
money. During the early years of your mortgage, your l… p…t is
primarily i...
2. Buying a home is a l…g-t…m financial commitment. You’ll
probably take out a …- to …-year mortgage to finance your p…e,
and the home that you buy will need m…e over the years. So before
you decide to buy, take stock of your overall f…l health.
3. M…e l…s calculate the maximum amount that you can b… to buy
a piece of real estate. They want to gauge your ability to r… the
money that you b…, so you have to pass a few tests. For a home in
which you’ll reside, they t… up your m…y h…g e… They define
your housing costs as m… p… + p… t… + i…
4. Most lenders charge a…n and processing fees to complete
your paperwork and process it through their underwriting (l…
evaluation) department. The justification for this fee is that if your
l… is rejected or you decide not to take it, the lender needs to c…r
the costs.
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Part 2. Use of English. Internet links.
1. Go to (oxforddictionary.so8848.com) and find collocations with the
words ‘mortgage’ and ‘loan’.
2. Go to (www.dictionary.com) and find the etymology of the word
‘mortgage’.
3. Go to (dic.academic.ru) and find the etymology of the Russian
word ‘ипотека’.

CLOSING COSTS. TYPES OF MORTGAGES

Part 3. Read the text and do the assignments that follow.

Three key parts of mortgages
Homebuyers must consider three key parts of any mortgage, that is the
principal (aka. size), the term and the interest rate. In the U. S., federal
law requires lenders to provide buyers with the annual percentage rate
(APR), which is the effective interest rate over the life of the loan taking
into account upfront fees and other associated costs.
Smaller mortgage loans are sometimes less expensive than larger
mortgage loans. A jumbo mortgage is a loan that exceeds the Federal National
Mortgage Association1 single-family limit. The interest rate on jumbo loans
is usually higher than the interest rate on conforming loans, because the
federal government doesn’t stand behind jumbo loans. The 2017 maximum
limit for one-unit properties is at $ 424,100 in the vast majority of the
continental U. S. 108 counties have a loan limit of $ 636,150, including New
York City, Los Angeles and San Francisco. The majority of high-cost areas
are in California – which is no surprise, considering that the Golden State is
home to some of the most expensive housing markets in the country. Loan
limits are often even higher outside of the continental U. S. The FNMA
limits on family mortgages in Alaska, Hawaii, Guam, and the U. S. Virgin
Islands are 50 percent higher than the limits for the rest of the country, that
is the limits range between $ 636,150 and $ 721,050.
Although most people go to a bank or mortgage loan broker (a loan
salesperson who can often obtain loans from many different sources,
1
FNMA, often written and pronounced Fannie Mae. Other U. S. government
agencies are the Federal Home Loan Mortgage Corporation (pronounced Freddie
Mac) and the Federal Housing Administration (the FHA helps low-to-moderate
income homebuyers get mortgages).
165
including banks and private investors), those sources may not be the only
options. In some cases, instead of making monthly payments to a bank,
homebuyers would make the payments to the home seller.
Typical loan expenses. Down payment and Closing costs
Down payment
As you have learned from Part 1, the down payment is some amount
of money that is paid to the lender to reduce the amount of the loan and to
demonstrate to the lender that the homebuyer has a serious financial stake
in the transaction. Some mortgage loans may not require a down payment,
but most do – perhaps 5 or 10 percent or more of the price of the home. In
the case of a $ 250,000 home, this amount could come to about $ 12,500 to
$ 25,000 – or more.
The ratio of the total amount of the mortgage the homebuyer applies
for to the appraised value of their home (determined in advance by an
independent appraiser or by a look at recent sales records) is known as
the loan-to-value ratio, commonly abbreviated as LTV. In the 10-percent
down payment example above, the LTV is 90 percent ($ 225,000 divided by
$ 250,000), assuming that the appraised value of the home is the same as
the sale price of $ 250,000. In the 20-percent down payment example, the
LTV is 80 percent.
The Federal National Mortgage Association backs only loans that
have an LTV of 80 percent or less. If the LTV exceeds 80 percent, the loan
requires private mortgage insurance (PMI), which protects the lender in
case the homebuyer defaults on their home loan.
Closing costs
Closing costs are charged during the loan-closing process. Consider
these common closing costs.
Points
These are fees (1 point is 1 percent of the loan amount) paid either
to generate cash at loan closing to pay loan officers and origination
departments, or to reduce the interest rate by compensating upfront for
the interest the banks pay to their investors. Points are also sometimes
called loan origination fees. For example, for a $ 100,000 loan, one point
costs $ 1,000. Generally speaking, the more points a loan has, the lower
its interest rate should be. Points are actually prepaid interest, so they’re
tax deductible.

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Credit report
The lender will want to check on the homebuyer’s creditworthiness, to
see if they are a good credit risk. Credit reports are widely available for less
than $ 30.
Without a high credit score, you won’t qualify for the best mortgage
rates available, which could mean you’ll end up paying more money over
the term of your mortgage. Along with a low debt-to-income ratio and a
strong financial history, a high credit score gets you a low mortgage rate.
The homebuyer’s credit score is calculated most often with the FICO scoring
model1 and is derived from the information on their credit reports, which
are compiled by credit reporting companies. These reports include a history
of payment habits with borrowed money.
For instance, if you’re at the top of the scale, say 720 or above, you’re in
the territory known as excellent. As you move down toward 700, your score
is considered good. Once you get to 680, you’re heading toward average,
and if you’re closer to 640, you might have trouble getting a conventional
mortgage from a bank or online lender2.
Appraisal fee
The lender will likely require that the property the homebuyer wants to
buy be appraised, in which a licensed and trained professional (coincidentally,
known as an appraiser) assesses its true market value. This fee may vary
from $ 250 to $ 1,000 or so, depending on the value of the house.
Title insurance
This insurance policy protects the homebuyer in case someone comes
forward with a claim against the property after they have already bought it.
Survey fee
The lender may require that a surveyor determine the precise
boundaries of the property. The homebuyer should figure on $ 200 to $ 400
to cover this expense.

1
For more information, you can visit (www.fico.com/en/products/fico-
score#overview).
2
A borrower with a 20 % down payment is applying for a 30-year, fixed-rate
$ 300,000 loan to purchase a single-family home in New York’s Westchester County.
She has a 780 FICO credit score, which gets her a 3.5 % rate. That’s $ 1,347 a month.
If the borrower’s score dropped by 100 points to 680, her rate would bump up to
3.75 %, and her monthly payments would increase to $ 1,389.
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 Recording and transfer fees
The local government probably
charges a nominal fee to record the
homebuyer’s real estate transaction
and transfer the deed into their
name. Fees average about $ 50 to
$ 150 for most jurisdictions.

Application fee
Some lenders require payment of a fee to defray their costs for
processing the loan application. Loan brokers are not allowed to charge
an application fee, and banks rarely charge it except to cover the cost of an
appraisal or credit report.
Flood (or earthquake) determination
This fee (usually no more than $ 30) is paid to determine whether the
property is in a flood (earthquake) zone.
Flood (or earthquake) certification
If the house is determined to be clear of a flood zone, this piece of
paper certifies it.
Courier fee
Well, someone has to get paid to run all the loan paperwork all over
town at the last minute.
Closing fee
The loan closes at the exact moment the real estate transaction is
executed. The entity handling this
transaction may be a title or escrow
company, or an attorney. Fees
generally average about $ 1.50 per
$ 1,000 in loan value.
Understanding the two major
types of mortgages.
Two major types of mortgages
exist – those with a fixed interest rate
and those with a variable or adjustable
rate.

168
 With a fixed-rate mortgage, the interest rate the homebuyer pays
remains constant for the duration of the loan. So, if they have a 30-year
mortgage loan for $ 300,000 – with an interest rate of 7 percent – they’ll pay
the same 7-percent rate with their last payment as they did with their first.
Two major kinds of fixed-rate mortgages are available today.
30-year.
This fixed-rate mortgage is amortized (that is, the total cost of the
loan – principal and interest – is spread out) over a 30-year period of time.
15-year.
This fixed-rate mortgage is amortized over a 15-year period of
time – exactly half the time of a 30-year loan. Because of the significantly
shorter loan term, a monthly payment for a 15-year fixed-rate mortgage is
generally higher than for a comparable 30-year fixed-rate loan, although
the homebuyer actually pays far less interest over the life of a 15-year loan
than they do with a 30-year loan. Additionally, the interest rate lenders offer
is often lower than for a 30-year fixed-rate loan.
Let’s weigh up the pros and cons of fixed-rate mortgages.
Pros
1. The homebuyer always knows exactly what their monthly house
payment will be – yesterday, today, and tomorrow. Their long-term financial
planning is thus much more accurate.
2. They are protected against inflation because, as prices rise on other
things they may buy during the coming years, the house payment remains
the same.
3. Because the payment is fixed and predictable, the financial risk is
less than for nonfixed-rate loans, which may change at virtually a moment’s
notice.
Cons
1. The interest rate on a new fixed-rate loan is usually higher than the
interest rate on an adjustable-rate loan, thus the homebuyer may pay more
money over the life of the loan than for an adjustable-rate loan.
2. Because the interest rate for a fixed-rate loan is usually higher than
for alternative loan vehicles, it may be harder to qualify for a fixed-rate loan
based on their income and other financial considerations.
3. If market rates fall below the rate the homebuyer is paying with
their fixed-rate loan, they will be paying more for the home than someone
entering into a comparable loan agreement.

169
 Even if the homebuyer finds themselves in a bad fixed-rate mortgage,
they’ve always got the option of refinancing their loan. Thus, they can
take out a new mortgage loan that pays off the old loan and restarts the
mortgage clock – this time with a better interest rate and probably a lower
monthly payment.
During the early 1980s, interest rates for home mortgages went through
the roof. At the time, fixed-rate mortgages of 13, 14, and 15 percent weren’t
just common – they were the norm. Many prospective home buyers simply
didn’t have enough income to qualify for fixed-rate loans at these rates,
despite the fact that home prices were considerably less than they are
today. As you learned in high school physics, nature abhors a vacuum. In
response to this need for affordable mortgage loans, the industry invented
the adjustable-rate mortgage (ARM) loan.
Also known as a variable-rate loan, adjustable-rate mortgages start
out at a relatively low rate – sometimes several points or more below a
comparable fixed-rate loan – and then adjust up or down on a periodic
basis.
• Every adjustable-rate loan has to start somewhere, and this
somewhere is the initial interest rate – the rate the homebuyer pays until
the first loan rate adjustment. This rate could last anywhere from one
month to ten years.
• After the initial interest rate expires, the ARM will adjust on a
regular schedule called the adjustment period. At the end of the adjustment
period, the rate is reset and the monthly loan payment is recalculated. The
adjustment period may last anywhere from one month to five years.
• Adjustable-rate mortgage interest rate changes are usually linked
to changes in a specific index rate. The most common indexes include the
rates on one-year constant-maturity Treasury (CMT) securities, the Cost of
Funds Index (COFI), and the London Interbank Offered Rate (LIBOR).
• Most lenders add a few extra percentage points to the index rate to
determine the actual interest rate that will be used when the ARM adjusts.
The index rate plus the margin is called the fully indexed rate – the rate the
homebuyer pays. For example, if the index rate is 4 percent and the margin
is 2.5 percent, the fully indexed rate is 6.5 percent.
• Interest rate cap, which is a periodic adjustment cap, is a limit on
the maximum interest rate increase that can be charged at the end of each
adjustment period, perhaps half a percentage point. A lifetime cap is the

170
maximum interest rate that can be charged over the life of the loan, such
as 12 percent.
Let’s weigh up the pros and cons of adjustable-rate mortgages.
Pros
1. Because the initial interest
rate on an adjustable-rate loan is
often significantly less than for a
comparable fixed-rate loan, a home
buyer may save a significant amount
of money — particularly in the first
years of the loan.
2. Adjustable-rate loans are
often easier for home buyers to
qualify for than fixed-rate loans.
3. A lot of different adjustable-rate mortgage programs are available.
4. Adjustable-rate loans can be good if the homebuyer plans to keep
the property for only a few years before they sell it.
5. When interest rates are declining, an adjustable-rate loan gives the
homebuyer a distinct advantage over borrowers who are stuck in higher-
interest fixed-rate mortgages.
Cons
1. Although adjustable-rate mortgages generally start at a lower
interest rate than fixed-rate mortgages, this situation may not last forever.
Many such loans experience their first (usually upward) adjustment just
a year after loan inception, with subsequent adjustments on a quarterly or
semiannual basis.
2. Most adjustable-rate mortgages have a maximum interest rate cap,
but the maximum rate is often far above what home buyers with fixed-rate
mortgages will experience.
3. In a worst-case scenario, if the homebuyer makes only the minimum
payment their loan may negatively amortize – that is, the loan principal can
grow instead of shrink as the homebuyer makes payments.
4. This kind of loan is unpredictable, making long-term financial
planning difficult, if not impossible.
Consider the following example that shows the impact of a number of
common mortgage loans for a $ 200,000 home with a 10-percent ($ 20,000)
down payment.

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Traditional fixed-rate mortgage
• 30-year term; 6.7-percent interest rate
• Loan balance after five years: $ 168,882
• Equity after five years: $ 31,118 ($ 20,000 down payment plus
$ 11,118 principal paid on mortgage)
Traditional 5/1 ARM
• 30-year term; 6.4 percent for first 5 years
• Loan balance after five years: $ 168,305
• Equity after five years: $ 31,695 ($ 20,000 down payment plus
$ 11,695 paid on mortgage)
Foreclosure
Homebuyers must remember that when they default on a mortgage,
the lender forecloses, or terminates the mortgage, and their house is
consequently taken away from them.
If a homebuyer is 30 or 60 days late and they make a partial payment,
the servicer usually credits their account with the payment. After they are
90 days late on a mortgage, unless they take action, the servicer requires
the homebuyer to pay the entire overdue balance at once. If they fail to do
so, the servicer proceeds to foreclosure. Furthermore, when the homebuyer
is late on their first payment, their grace period disappears. A grace period
is a period of time specified in the mortgage loan agreement during which
a default will not occur even though the payment is past due. The grace
period applies only to loans that are up to date, or current.
For example, imagine that your loan papers state your due date as
March 1. Assuming that you have a typical two-week grace period, your
payment actually has to be in by March 15. If you don’t submit your
payment by March 15, you miss that window of opportunity and lose your
grace period. Your April payment is now due April 1. April 15 is no longer
an option. In other words, you have no more grace period in April. If you
pay April’s payment on or before April 1, you get your grace period back
for May and thereafter, as long as your payments stay on time. If you lose
your grace period, the company that services your loan starts counting the
number of days you are late from the first of the month, not the 15th. So if
you don’t send in a payment on March 15, April 1, or May 1, then on May 2,
you need to catch up all the payments for March 1, April 1, and May 1, plus
any fees and penalties, all at once. For instance, after 30 days, you get a late

172
notice; at 60 days late, you receive a demand letter; at 90 days, you receive
an acceleration notice; and by 120 days, the foreclosure and sale or auction
can be scheduled.

ASSIGNMENTS
A. Answer the questions.
1. What is the APR?
2. What costs does a homebuyer have to pay to complete a home
purchase?
3. What basic types do mortgages fall into?
4. Compare the mortgage types described. What is the downside to
each type? What advantages does each mortgage type offer?
5. What determines an ARM’s interest rate?
6. What are the consequences of defaulting on a mortgage?
B. Give the English equivalents for the following terms.
1) процентная ставка в годовом исчислении;
2) ставка предложения ЛИБОР, Лондонская межбанковская
учётная ставка;
3) плавающая процентная ставка с фиксированным максиму-
мом;
4) Федеральная национальная ассоциация по кредитованию
жилищного строительства;
5) коэффициент обеспечения, соотношение между суммой
ипотечного кредита и стоимостью залога;
6) ипотечные издержки;
7) пункты уплаченные;
8) кредитная история;
9) кредитоспособность;
10) плата за оценку стоимости недвижимости;
11) титульное страхование, страхование от дефектов в праве соб-
ственности;
12) гонорар за проведение экспертизы (по установлению границ
собственности / межеванию);
13) реестровые пошлины;
14) переводной комиссионный сбор;
15) ипотечная комиссия, операционный сбор;

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 16) комиссия за посреднические / курьерские услуги;
17) ипотечный кредит с фиксированной процентной ставкой;
18) ипотечный кредит с плавающей процентной ставкой;
19) издержки на заключение сделки; расходы, связанные с пере-
дачей недвижимости от продавца к покупателю;
20) заключение кредита, последняя стадия заключения соглаше-
ния о предоставлении кредита;
21) система рейтинга кредитоспособности заемщиков в США,
разработанная корпорацией Fair Isaac;
22) Федеральная корпорация жилищного ипотечного кредита.
C. Translate the terms into Russian.
1) upfront costs;
2) associated costs;
3) jumbo mortgage;
4) margin;
5) constant-maturity Treasury securities / CMT securities;
6) the Cost of Funds Index (COFI);
7) appraiser;
8) to assess the true market value of some property;
9) to defray costs;
10) fully indexed rate;
11) foreclosure;
12) grace period;
13) window of opportunity;
14) adjustment period;
15) alternative loan vehicle;
16) to refinance a loan;
17) to amortize (of a loan); amortization; negative amortization;
18) demand letter;
19) acceleration notice;
20) title or escrow company;
21) loan inception;
22) servicer.
D. Guess the words and word combinations by their definitions.
1. The longer it is, the lower the monthly payment, but the more
interest the homebuyer will end up paying over the life of the loan.

174
 2. The two largest sources of mortgage money in the U. S. Most lenders
comply with underwriting guidelines of these two institutions.
3. The legal process by which a lender takes possession of and sells
property in an attempt to satisfy mortgage indebtedness.
4. The process of gradually paying down a debt.
5. A relatively stable, slower moving ARM index that tracks the
weighted average cost of savings and borrowings for Federal Home
Loan Bank Board1 member banks.
6. Aka. the loan origination fee.
7. Costs that generally total from 2 to 5 percent of a home᾽s purchase
price and are completely independent of the down payment.
8. A measure of the level of interest rates that the lender uses as a
reference to calculate the specific interest rate on an ARM.
9. One of two different types of limits for ARMs. The life variety limits
the highest or lowest interest rate that is allowed over the entire
life of a mortgage. The periodic variety limits the amount that an
interest rate can change in one adjustment period.
10. It᾽s the main report – and the homebuyer certainly has to pay for
it – lenders utilize to determine the homebuyer’s creditworthiness.
11. The amount (around 2.5 percent for most loans) that᾽s added
to the index in order to calculate the interest rate for an ARM.
Unlike the index (which constantly moves up and down), it never
changes over the life of the loan. Aka. the spread.
E. Insert the missing words. Use your topical vocabulary.
1. The larger your d … p … the smaller your l … If you make
a 20-percent d … p … on a $ 250,000 home ($ 50,000), you need
only a $ 200,000 l …
2. Many borrowers roll their annual p…t … p…s into their m…y
m…e p…t, thus spreading the expense over an entire year instead
of paying it all at once annually.
3. PITI stands for p … i…t, t…s, and i…
4. With a f…-r … loan, the i … r … remains the same for the duration
of the loan. In the case of an a…-r … loan, the i … r … changes
during the course of the l … t … based on a specific formula spelled
out in the loan agreement.

1
Федеральный совет банков жилищного кредита США.
175
Part 4. Video. Watch ‘Keiser Report. Episode 1038’ and do the
assignments.
A. Complete the sentences using the words from the box.

Bailout Mortgage guarantor Regulatory arbitrage

Net worth GSE Uncollateralized loans
Hedge funds Liquidation Bond / bonds
Credit default swap Money supply Private equity

1. The term … is used to refer to people or organizations who

guarantee to pay for a borrower’s debt by pledging their own assets
or services if the borrower should default on a loan obligation.
2. … is an event that usually occurs when a company is insolvent,
meaning it cannot pay its obligations as and when they come due.
The company’s operations are brought to an end, and its assets are
distributed among creditors and shareholders.
3. … use pooled funds to employ various strategies to generate high
returns. They are accessible to a limited number of accredited
investors who must make a large initial investment. They face less
regulation than other investment vehicles.
4. Unlike shares that are units of ownership interest in a corporation
that provide for an equal distribution in profits in the form of
dividends, … are debt investments in which an investor loans
money to a firm or government which borrows the funds for
a defined period of time at a variable or fixed interest rate. A …
holder is the owner of a government, municipal or corporate …
5. … is a practice whereby firms capitalize on loopholes in regulatory
systems in order to circumvent unfavorable regulation.
6. … is the standard abbreviation that stands for ‘government
sponsored enterprises’.
7. … is a situation in which a government, business, or an individual
provides money to a failing business to prevent the consequences
that arise from its downfall. It can take the form of loans, bonds,
stocks or cash that may require reimbursement.
8. A way of transferring the credit risk (of securities and / or corporate
debt) between two parties, and insuring the credit risk via regular
payments (periodic protection fees), that work in a similar fashion
to an insurance premium, is called a …

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 9. … is money invested in firms which have not gone public and
therefore are not listed on any stock exchange. It is composed of funds
and investors that, e. g., directly invest in private companies.
10. Aka. unsecured loans. … are issued and supported only by the
borrower's creditworthiness, rather than by any type of collateral.
Borrowers generally must have high credit ratings to be approved
for ...
11. … is the amount by which assets exceed liabilities or in other
words assets minus liabilities. It is also known as book value or
shareholders᾽ equity.
12. … is the stock of currency, cash, coins etc. circulating in a country᾽s
economy as of a particular time. An increase in … typically lowers
interest rates, which generates more investment and puts more
money in the hands of consumers, stimulating consumer spending.
Businesses order more raw materials and increase production. The
increased business activity raises the demand for labor.
B. Answer the questions.
1. What happened to Fannie Mae and Freddie Mac back in 2008?
2. What is their current stock rating? What brought about the slump
in their stock price?
3. What is a profit / net worth sweep?
4. How much of the total bailout costs was the US government allowed
to recapture?
5. What is vulture capitalism?
6. According to Max Keiser, why is money supply circulation going
down?
7. What was the context for mentioning Greece and Ireland?

C. Match the people’s names with the background information below.

Greg Palast Paul Singer John Paulson Goldman Sachs

1. He is an American hedge fund manager, self-made billionaire, and

the founder and leader of Paulson & Co., Inc. that specializes in
arbitrage strategies, bankruptcy reorganizations, distressed credit,
restructurings etc. He is famous for betting on the subprime
mortgage crisis and making billions.

177
 2. His hedge fund, Elliott Management Corporation, specializes in
buying the debt of distressed countries (or companies, such as
General Motors in 2014) and making a profit from suing them in
courts to recover the funds.
3. It engages in global investment banking, securities, and investment
management, which provides a range of financial services to
corporations, financial institutions, governments, and individuals.
4. He published a series of investigations on vulture funds.

Part 5. Read the text about mortgage types in the UK and do the
assignments that follow.
Mortgages in the UK
In a hugely competitive market, building societies and banks are
continually updating and extending their range of mortgages. The basic
decision you have to make is how you're going to repay the money you've
borrowed. You can either pay a little at a time as you go (repayment
mortgage) or pay it all off at the end (interest only mortgages or endowment
mortgages).
Mortgage types
Repayment
An initial deposit is the sum you put down as the first instalment in a
series of payments. Each monthly payment pays off a little of the underlying
debt, as well as interest on the loan. At the end of the term the mortgage is
cleared.
Interest only
You only pay off the monthly interest on the mortgage. but not the
capital. At the end of the mortgage term you are expected to repay the
capital.
Endowment
You use an endowment policy to provide life insurance and save
funds to repay the loan at the end of the term (usually 20–25 years). If the
investment performs badly, you could face a shortfall on your loan at the
end of the repayment period. In the 1980s endowments were very popular
and heavily marketed by lenders. However, many people were not told
of the investment risk. This ended in mis-selling and lenders faced huge
claims for compensation. As a result, endowment mortgages have declined
sharply in popularity.
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Interest rates
Your other big decision is what type of interest rate to have on your
mortgage.
• Fixed rate
• Variable rate
Fixed rate mortgages
The interest rate is fixed for the period agreed – often 2 to 5 years.
These are ideal for budgeting or if you think rates might increase. The
disadvantage of a fixed rate mortgage is that if interest rates drop you’ll
be tied into your set higher rate until the end of the agreed period, and
will face penalties if you try to quit. So you won᾽t see any decrease in your
monthly repayments. At the end of the two- to five-year term borrowers
will typically be converted to the standard variable rate.
Variable rate mortgages
In the UK variable rate mortgages are more common than in the U. S.
Variable rate mortgages come in various forms.
Standard variable rate
mortgage / SVR mortgage /
reversion rate mortgage
A standard variable rate
mortgage is a lender’s ‘default’ rate
linked to market conditions, which
means that if the Bank of England
puts the interest rate up – it’s likely
your SVR will also go up and vice
versa. This is the normal interest
rate your mortgage lender charges homebuyers and it will last as long as
your mortgage or until you take out another mortgage deal. Changes in the
interest rate may occur after a rise or
fall in the base rate set by the Bank
of England.
Tracker
Tracker mortgages move directly
in line with another interest rate –
normally the Bank of England base
rate at a set margin above or below
it (for example, the base rate+1 %).

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The overall effect of any interest rate changes is calculated once a year and
payments are altered accordingly. Usually they have a short life, typically
2 to 5 years or until you switch to another deal. Then it reverts back to the
lender’s standard variable rate.
Lifetime tracker / term tracker
Some lenders offer trackers which last for the life or span of your
mortgage.
Discount rate mortgages
With discount rate mortgages, the interest rate you pay is set below the
SVR for a specific period, typically 2 or 3 years. For example, if the SVR is
5 per cent, your rate could be 4 per cent, giving you a 1 per cent discount.
Then if the variable rate rose to 6 per cent yours would rise to 5 per cent. As
with the variable rate, this would mean that you could benefit from lower
payments but they may go up as well as down. At the end of the discounted
term your mortgage repayments will increase back to the standard rate.
Flexible mortgages / personal choice mortgages / open plan mortgages /
freedom mortgages
Flexible mortgages have been developed p to cope
p with changes
g that
can occur in a borrower’s financial
circumstances (e. g. through job loss).
They are designed to allow you to alter
your repayments to suit your situation.
But you’ll probably be asked to build
up a reserve through overpayments
beforehand.
The sort of features that these
mortgages may offer include the
following:
• monthly overpayments (so that
you reduce the term and save
on interest);
• reducing / stopping payments
during times of financial hardship;
• payments over 10 months rather than 12 months;
• payments four weekly (that is, 13 times a year);
• lump sum payments (one-time payments).

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Cashback mortgages
A cashback mortgage will give you a lump sum back once you’ve
completed your purchase. This can either be in the form of a set amount or
a percentage of the amount you have borrowed (typically 3 to 6 per cent).
However, cashback mortgages may be weighed down with hefty penalty
charges if you later want to switch lender.
Capped rate mortgages
The mortgage interest rate may fluctuate up and down below the
specified rate, but the cap means the rate can’t rise above it. Some capped
mortgages will not only have a 'ceiling' but also a 'floor' between which
the rate payable may move. These loans may be known as cap and collar
mortgages.
Offset mortgages / Current account mortgages
These mortgage types work by linking your savings and current account
to your mortgage so that you only pay interest on the difference. You can
draw down on the money when you need to. You still repay your mortgage
every month as usual, but your savings act as an overpayment which helps
to clear your mortgage early. E. g. If you borrow £ 100,000 and you have
£ 3,000 in your account you’ll only be charged interest on £ 97,000.

ASSIGNMENTS
A. Answer the questions.
1. What are the three basic types of mortgages in the UK?
2. What are the advantages and disadvantages of fixed-rate mortgages?
3. What subtypes do variable rate mortgages fall into?
4. What other products do lending institutions provide potential
homebuyers with?
B. Suggest the English for the following synonyms or words / word
combinations.
1) agreed / fixed period; given / set term; tie-in period (rare or out of
use);
2) loan seeker;
3) loan applicant;
4) FICO score (Fair Isaac Corporation score) / credit score;
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 5) lender / mortgage provider
6) mortgage broker;
7) collateral;
8) huge / hefty / harsh / heavy / high / hiking fee or penalty;
9) to secure a mortgage / repayment deal;
10) interest rates go up / move up / increase / take off / speed up / grow /
rise / shoot up / rocket / skyrocket / soar / jump / leap / improve /
surge;
11) interest rates decline / decrease / go down / drop / come down /
plummet / plunge / fall / slump / slow / slip / dive / go downhill;
12) to hit a peak; to peak at … %; to hit … %;
13) to be near historic lows; to be at an all-time low / hit an all-time
low; to reach a low point;
14) to rise to an all-time high of … %;
15) to keep a lid on interest rates;
16) interest rates stand at … %;
17) to reach … %;
18) to increase substantially by … %;
19) an increase / surge / upturn / rise / growth1 in interest rates / prices
etc.;
20) a decrease / fall / downturn / drop / decline in interest rates etc.;
21) a dramatic / sharp rise from … to …;
22) a slight / moderate increase of … % over last year;
23) interest rates fluctuate;
24) interest rates level off / remain steady / remain stable / stabilise;
25) to increase / lift / put up / raise interest rates;
26) to cut / lower / reduce / slash / push down interest rates;
27) to pay a fee / redemption penalty (rare or out of use);
28) the mortgage is cleared;
29) to pay off / redeem / pay back / repay a mortgage / debt / loan / the
capital;
30) to reduce the mortgage term;
31) to reduce the loan balance;
32) to charge smb interest / a premium on / fees etc.;
33) to repossess the property;

1
Growth of is also possible. E. g. a steady growth of traffic; the explosive growth
of personal computers etc.
182
 34) to foreclose a mortgage; to proceed to foreclosure;
35) to face a shortfall on the loan.
C. Translate from Russian into English.
1) первоначальный взнос;
2) погашение;
3) ипотека, обеспечиваемая полисом страхования жизни;
4) ипотека с меняющейся / плавающей суммой погашения / про-
центной ставкой;
5) ипотека со стандартной переменной ставкой;
6) ипотека с выплатой;
7) ипотека со взаимозачетом;
8) ипотека с дисконтом;
9) ипотека с отслеживающей ставкой, ипотека, следующая за
базовой ставкой;
10) ипотека с гибкой системой выплат;
11) ипотека с фиксированным верхним пределом.
D. Use of English. Suggest the UK terms for the following types of
mortgage loans in the U. S. WHERE POSSIBLE.
1. A down payment.
2. An adjustable rate mortgage.
3. A Savings and Loan association (S & L) is a lending institution
that specializes in loans for house purchase.
4. A hybrid ARM is a mix of a fixed-rate and adjustable rate loan.
Generally, a hybrid ARM starts with an introductory interest
rate that is fixed for a period of time – commonly 3, 5, 7, or
even 10 years – and then converts to an adjustable loan after the
introductory period expires. In the case of a 3/1 hybrid ARM, the
introductory interest rate is fixed for 3 years and, after the three-
year period expires, adjusts annually).
5. An interest-only ARM is like a hybrid ARM, except that you only
pay interest and not principal. You’re not paying any money toward
the principal and you’ll be stuck owing the entire amount when the
mortgage term ends.
6. A payment-option ARM is a unique adjustable-rate mortgage that
allows you to decide each month what kind of payment you want
to make. The choices commonly include these:

183
 • making an interest-only payment.
• making a standard payment of principal and interest.
• making a minimum payment that keeps your account current
but that does not reduce your principal and interest owed.

Part 6. Use of English.

A. Study the following fees charged in the UK. Suggest US equivalents
for the terms WHERE POSSIBLE.
E. g. In the US some lenders punish borrowers severely for repaying all or part
of their conventional loan’s remaining principal balance before its due date. As
punishment, they impose a charge known as a prepayment penalty.
In the UK an Early Repayment Charge (ERC) is a charge you may
have to pay if you repay the whole or part of your mortgage early (or when
you move to a different mortgage product or move to a different lender)
during a certain period.
1. A Mortgage account fee (£ 100–300) is charged for setting up and
managing your mortgage account. This might also include closing
your mortgage account when your mortgage ends.
2. A Mortgage broker fee (£ 500) is for a mortgage broker, if you choose
to hire one, for arranging the mortgage or giving you advice.
3. A Higher lending charge is likely to be a requirement if you have
a small deposit, as this pays for the lender’s insurance if you can’t
pay back the mortgage and they have to sell your property at a loss.
The fee is often 1.5 % of the mortgage – for example, £ 3,000 on
a £ 200,000 mortgage.
4. A Product fee / Booking fee (£ 0 – £ 1,999) is charged on some
mortgages to secure a mortgage deal. It can be paid up-front
or added to the total mortgage amount. If you add it to your
mortgage, you’ll pay interest on it at the same rate as the rest of
your borrowing.
5. A Mortgage exit fee / Repayment administration fee / Closure fee
is payable by the borrow if the mortgage term comes to an end.
6. A Valuation fee / Building survey and valuation report / the
Lender’s valuation report / Standard Valuation Report (£ 0 –
£ 1,500) is used to calculate how much the lender will lend you. This
is separate from any valuation or survey of the property you might

184
 want to commission. A chartered surveyor to visit the property
and ensure it is worth enough to cover the mortgage amount.
7. An Arrangement fee (£ 0 – £ 2,000) is charged by a lender to cover
the administration involved with arranging the loan.
8. A Service fee is charged by a lender who, with the customer’s
written consent, requests details from their existing mortgage
lender.
9. A Completion fee / Funds transfer fee / Telegraphic transfer fee /
CHAPS (Clearing House Automated Payment System) (£ 25 –
£ 50) is charged by the lender to cover the cost of electronically
transferring the mortgage funds to the borrower or their solicitor.

B. Match the terms with their definitions.

1. Building society a. Loans that require level payments, just as fixed-

rate mortgages do, but well before their maturity
date (typically 3 to 10 years after the start date),
the full remaining balance of the loan becomes
due and payable. Although they can save you
money because they charge a lower rate of
interest relative to fixed-rate loans, homebuyers
risk not being able to refinance this loan.
2. Balloon mortgage b. A loan that enables elderly homeowners to tap
into their home’s equity without selling their
home or moving from it. A lending institution
makes a check out to the homeowners each
month; the homeowners then use the proceeds
any way they wish. This money is really a loan
against the value of a home.
3. Amortization c. A type of financial institution that provides
banking and other financial services to
customers in the UK. They are owned entirely
by their members. These institutions are now
major competitors of banks in the UK. and
are the equivalent of U. S. savings and loan
institutions.

185
4. Reverse mortgage d. The process of liquidating / repaying a debt
by making periodic instalment payments
throughout the loan’s term.

TEXTS FOR TRANSLATION

A. Translate into Russian.
1. A mortgage is a debt instrument, secured by the collateral of
specified real estate property, that the borrower is obliged to pay
back with a predetermined set of payments. Mortgages are used
by individuals and businesses to make large real estate purchases
without paying the entire value of the purchase up front. Over a
period of many years, the borrower repays the loan, plus interest,
until he / she eventually owns the property free and clear. Mortgages
are also known as «liens against property» or «claims on property.»
If the borrower stops paying the mortgage, the bank can foreclose.
2. A lender assumes a level of risk when it issues a mortgage, for there
is always the possibility a customer may default on his loan. There
are a number of factors that go into determining the mortgage rate,
and the higher the risk, the higher the rate. A high rate ensures the
lender recoups the initial loan amount at a faster rate in case the
borrower defaults, protecting the lender’s financial investment.
3. Since the beginning of 2007, around 300 regulated mortgage
lenders and administrators have been required to submit a
Mortgage Lending and Administration Return (MLAR) each
quarter, providing data on their mortgage lending activities.
Following the commencement of the Financial Services Act 2012,
responsibility for the prudential supervision of MLAR reporters
has been split between the Prudential Regulation Authority and
Financial Conduct Authority. The PRA is responsible for the
banks, building societies, credit unions and insurers. The FCA is
responsible for prudential supervision of all other types of firm
including mortgage administrators and other lenders which do
not take deposits.
B. Translate into English.
Плавающая процентная ставка – эта система начисления про-
центов, которая «привязана» к какому-либо рыночному показателю.

186
Для выдачи кредитов на российском рынке чаще всего используются
два индекса: LIBOR (Лондонская межбанковская ставка предложе-
ния) для кредитов в валюте и MosPrime (MosPrime Rate – Moscow
Prime Offered Rate) – в рублях. Значительная доля ипотечных креди-
тов на Западе оформляется с плавающей ставкой. Кредитные органи-
зации, опасаясь банкротства своих клиентов при резком увеличении
рыночных индексов, самостоятельно устанавливают черту, выше
которой они не поднимут ставки ни на каких условиях. Плавающая
процентная ставка по ипотечному кредиту обычно состоит из двух
частей: фиксированной (базового процента) и некоего плавающе-
го индекса. При сложении этих двух величин итоговая процентная
ставка будет плавающей. Если индекс идет вверх, то и суммарный
процент будет возрастать, и заемщику придется платить больше по
такому ипотечному кредиту. Если же значение индекса снижается,
заемщик может сэкономить на платежах.

TEXTS FOR RENDERING INTO ENGLISH

Text 1
Памятка ипотечному заемщику
Перед обращением к услугам банка необходимо окончательно
определиться, нужна вам ипотека или нет! Решение серьезное: на
многие годы вперед ваша жизнь будет тесно связана с кредитной
организацией. Поэтому к выбору банка, в котором вы предполагаете
сделать заем, нужно отнестись со всей серьезностью. Спешка на этом
этапе может обернуться большими проблемами в будущем.
На что стоит обратить внимание при получении консультации
в банке?
• Прежде всего, необходимо взять на руки:
− условия выдачи заинтересовавшего вас ипотечного кредита
(тарифы);
− образец анкеты заемщика;
− обязательно – образец кредитного договора;
− перечень документов, необходимых для выдачи кредита;
− перечень страховых и оценочных компаний, с которыми
работает банк;
− требования к предмету залога;
− предварительный расчет суммы кредита с графиком
платежей и суммой ежемесячных платежей;
187
 − перечень всех дополнительных расходов, связанных с
получением кредита;
− перечень пунктов оплаты с адресами, где можно вносить
платежи по кредиту.
• Задать кредитному специалисту все вопросы, возникшие
в ходе консультации (не забыв спросить о сроке рассмотрения
заявки после предоставления всех документов и сроке действия
положительного решения банка – это важно в условиях роста
цен на жилье). Все сомнительные моменты предстоящей
сделки лучше выяснить заранее, а не в момент подписания
кредитного договора!
• Обязательно уточните, имеется ли возможность внесения
изменений в условия договора в случае, если вас что-либо не
устраивает.
• Не стоит подписывать документы до принятия вами
окончательного решения! Ознакомиться с документами,
предоставленными кредитной организацией, необходимо
дома, в спокойной обстановке. Если есть возможность,
проконсультируйтесь с юристом.
На что необходимо обратить внимание при изучении документов?
Анкета
В последних пунктах анкеты банк попросит вас дать письменное
согласие на использование ваших персональных данных. Обратите
внимание на то, каким образом банк собирается их использовать.
Ваши персональные данные охраняются действующим законодатель-
ством Российской Федерации. Вы – их единственный владелец. Вы
даете банку разрешение на временное их использование, и у вас всег-
да должна быть возможность отозвать свое разрешение. Подумайте,
зачем банку хранить копии предоставленных вами документов в те-
чение долгих лет, даже в случае отказа в кредите? А ведь информация,
которую вы предоставляете, максимально полная и правдивая! О по-
следствиях утечки информации или «некорректного» ее использова-
ния, думаем, говорить не надо.
Кредитный договор
Самый важный документ! Как правило, длинный и сложный
для восприятия. Тем не менее, читать его нужно очень вниматель-
но, отмечая для себя пункты, которые вызывают вопросы. Кстати,

188
хорошие банки всю документацию печатают шрифтом одинакового
размера, легко доступным для чтения.
Следует обратить внимание, с какого момента вы начинаете
пользоваться кредитом: с момента перечисления денег на ваш счет
или с момента поступления денежных средств на счет.
Обязательно проясните для себя ситуацию со всевозможными
штрафами, неустойками, пенями. Желательно письменно и на кон-
кретном примере.
Узнайте условия досрочного погашения кредита: на каком осно-
вании вы можете погасить его досрочно и какие при этом будут
последствия? Уменьшится ли сумма вашего месячного платежа или
срок договора?
Уточните, какую дату внесения платежей назначит банк. Банку,
скорее всего, все равно, а вам, например, удобнее дата выдачи зарп-
латы.
Иногда банк оставляет за собой право без предварительного
уведомления заемщика повышать процентную ставку в случае изме-
нения ситуации на рынке, например. Вам понравится такой пункт?
Будьте внимательны!
Банк в пункте договора «Ответственность сторон» предусматри-
вает длинный перечень возможных нарушений, за которые заемщик
отвечает собственными денежными средствами. Но при этом банк не
предусматривает ответственности со своей стороны. А как быть с за-
держкой выдачи кредита, например, если в итоге цена квартиры вы-
росла? Или с несвоевременным зачислением внесенных вами денег?
Или с зачислением их на другие цели? Или с самовольным изменени-
ем назначения платежа? В результате формально вы попадаете под
штрафные санкции и деньги с вас снимут без вашего согласия!
Страховые и оценочные компании
Все страховые и оценочные компании зарегистрированы госу-
дарством и имеют соответствующие лицензии и разрешения. В тео-
рии можно выбирать любую и идти с ней в банк. На практике вам
предложат ограниченный список компаний, с которыми у банка пар-
тнерски отношения. Страховаться по условиям договора придется
каждый год, сумма страховки различная у разных компаний, при-
мерно от 0,5 до 1,5 % оставшейся суммы долга. Просчитайте, сколько
вы могли бы экономить только на разнице процентов. Здесь есть еще

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один интересный момент: поскольку вы все страхуете в пользу банка,
то в случае наступления страхового случая банк получит компенса-
цию, а вы – нет.
Обязательно уточните, есть ли у вас возможность сменить стра-
ховую компанию в будущем и на каких условиях. Вдруг у какой-
нибудь компании появятся программы с лучшими условиями! Или
ваша родная страховая компания, почетным клиентом которой вы
являетесь уже лет 10, станет вдруг партнером банка.
Не забудьте, что через год можно поинтересоваться у страховой
компании по поводу скидки!
К выбору оценочной компании тоже стоит отнестись серьезно.
Мало того, что у разных компаний разных тарифы, но еще и различ-
ные методики оценки недвижимости. А ведь размер кредита зависит
от суммы оценки!
График платежей
График поможет наглядно увидеть те суммы, которые вы будете
выплачивать ежемесячно, и ту сумму, которую вы заплатите банку
в итоге. Кроме того, станет понятней, что будет происходить в слу-
чае досрочного погашения. К тому же вы увидите полную стоимость
кредита в процентном отношении и в рублевом эквиваленте (или
иной валюте). Скорее всего, при дифференцированных платежах
сумма кредита при прочих равных условиях будет изначально мень-
ше, а сумма платежей при погашении в первые месяцы будет больше.
При аннуитетных платежах1 сумма ежемесячных выплат будет неиз-
менной в течение всего срока договора, но при досрочном погашении
возможно уменьшить размер ежемесячного платежа либо сократить
срок кредита.
Помните главное:
Перед тем как принять решение и что-либо подписать, необхо-
димо внимательно изучить документы! После того как кредитный
договор подписан, изменить его условия не удастся, а платить по сче-
там должны будете вы. Ведь кредиты надо и придется возвращать!
(Всё про вклады и займы, 2010)

1
Аннуитетные платежи – ежемесячные равные платежи в счет возврата
кредита и уплаты процентов за пользование кредитом.
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 Text 2
АИЖК экспериментирует с плавающей ставкой в ипотеке
06.04.2016
Переменная ставка является доступной опцией в рамках оформления
кредита на покупку новостройки, готового жилья или перекредитование, но
эксперты рассказали, что такая ипотека мало привлекает потребителей
и банки.
МОСКВА, 6 апр. – РИА Новости, Денис Давыдов. Агентство по
ипотечному жилищному кредитованию (АИЖК) экспериментирует
с новыми ипотечными продуктами, вводя кредиты с плавающей став-
кой и фиксированным ежемесячным платежом. Однако предложение
не пользуется пока повышенным спросом у потребителей и банков,
а эксперты, опрошенные РИА Новости, не видят в нем особой но-
визны.
АИЖК в конце января ввело новый продукт – ипотечный кре-
дит с переменной ставкой, привязанной к инфляции, и фиксирован-
ным платежом. Формула определения ставки по кредиту – текущая
инфляция плюс 4,9 %.
Первоначальная ставка по такому кредиту составляет 13,2 % при
инфляции в РФ в 2015 году в 12,9 %.
К настоящему времени АИЖК выдало только десять таких кре-
дитов на общую сумму 13 миллионов рублей, сообщили РИА Ново-
сти в пресс-службе агентства.
Переменная ставка является доступной опцией в рамках оформ-
ления кредита на покупку новостройки, готового жилья или пере-
кредитование. Заемщик может выбрать либо фиксированную ставку,
либо переменную ставку, которая зависит от уровня инфляции и пе-
ресматривается раз в квартал. При этом размер ежемесячного плате-
жа фиксируется на весь срок кредитования, пояснили в АИЖК.
Неинтересно рынку
Ипотека с плавающей ставкой мало привлекает потребителей
и банки, рассказали РИА Новости эксперты.
Как сообщили в пресс-службе «Метриум групп», на рынке суще-
ствует порядка пяти банков, которые предлагают ипотеку с плаваю-
щей ставкой, остальные уже ушли от нее. «Плавающая ставка по ипо-
теке не является новостью на рынке ипотечного кредитования. Она
191
применялась и применяется многими банками, хотя в 2014–2016 го-
дах уже значительно реже. В «Дельтакредит» ранее были продукты
с плавающей ставкой, однако они не пользовались особым спросом
и были закрыты», – сказала зампред правления банка «Дельтакредит»
Ирина Асланова.
Сегодня большинство банков выдают кредит на покупку вто-
ричного жилья под ставку от 13 % до 14 %, также предлагая допол-
нительные льготные программы, например молодым семьям или
участникам зарплатных проектов, напомнила руководитель отдела
ипотечного кредитования компании «Миэль – Сеть офисов недвижи-
мости» Ольга Солунина. «Принимая во внимание все составляющие,
в некоторых банках можно оформить ипотеку на более выгодных
условиях», – заметила она. C ней солидарна руководитель ипотечного
центра компании «МиэльНовостройки» Татьяна Гусева, которая на-
помнила, что по программе льготной ипотеки ставка начинается от
11 %. Немаловажно, по ее словам, и то, что в нестабильных экономи-
ческих условиях потенциальных заемщиков не привлекает продукт,
где нет точного понимания размера переплаты. «В-третьих, так как
программа предлагается АИЖК, то, следовательно, не все банки мо-
гут принимать участие в программе. Как раз крупных банков среди
партнеров АИЖК нет. При этом в кризис заемщики стараются обра-
щаться за кредитом как раз в наиболее крупные, надежные банки», –
заключила Гусева, добавив, что клиентов многому научила история
с валютными заемщиками.
Ставка больше, чем жизнь
Вице-президент банка «Открытие» Анна Юдина подчеркнула,
что клиент в случае с ипотекой, привязанной к инфляции, принима-
ет на себя инфляционный риски, и, соответственно, риск увеличения
стоимости своего кредита за счет увеличения процентной ставки.
При этом рост инфляции может весьма драматично сказаться
на сроке кредита. «Основываясь на условиях продукта, изложенных
в открытых источниках, при простом расчете для кредита на 2 мил-
лиона рублей, сроком 15 лет и процентной ставкой 13,2 % годовых
рост ставки на 0,4-процентных пункта увеличит срок выплаты по
кредиту на один год», – сказала Юдина.
У самого АИЖК несколько иные расчеты. Как пояснили в пресс-
службе агентства, для условного ипотечного кредита в 1 миллион
192
рублей на 15 лет в первом квартале 2016 года ставка будет зафиксиро-
вана на уровне 13,2% годовых.
Ожидаемый срок погашения кредита составит 11 лет. «Если
инфляция вырастет на 1-процентный пункт и ставка по кредиту
в 2016 году составит 14,2 %, срок кредита составит 11 лет 4 месяца.
Если ставка по кредиту составит по итогам года 15,2 %, то плановый
срок погашения кредита – 11 лет 7 месяцев», – подсчитали в АИЖК.
Агентство при расчете ставки по кредиту ориентируется на целе-
вые значения инфляции Банка России на 2016–2018 годы, отметили
в пресс-службе.
Ранее Центробанк РФ прогнозировал инфляцию на 2016–
2017 годы в размере 4 % годовых. Однако в феврале глава регулято-
ра Эльвира Набиулина говорила, что экономическое развитие РФ по
рисковому сценарию ЦБ при цене нефти 25 долларов за баррель мо-
жет поставить под сомнение реалистичность достижения инфляции
в 2017 году уровня в 4 %. Инфляция же в конце 2016 года, по ее словам,
может составить 7–8 % при стоимости нефти 35 долларов за баррель.
(ria.ru/economy/20160406/1403426478.html)

Text 3
Ипотека с плавающей ставкой
Ипотека с плавающей ставкой – это кредит, что выдается под
обеспечение недвижимости, процентная ставка по которому не фик-
сируется, а через согласованные кредитором и заемщиком определен-
ные промежутки времени периодически пересматривается.
Плавающая ставка по процентам включает в себя две составляю-
щие: постоянную величину; переменную величину, которая изменя-
ется в связи с положениями, которые прописаны в кредитном дого-
ворном соглашении.
Как рассчитывается данная ипотека?
Переменная составляющая ставки с «плавающими» процентами
зависит от рыночного индикатора. Для расчета данной ставки бан-
ковские учреждения могут применять следующие рыночные индика-
торы: MosPrime; LIBOR; EURIBOR.
MosPrime считается независимой индикативной ставкой, она
применяется для исчисления данной ипотеки в рублях. MosPrime
формируют восемь ведущих банков страны. По ипотечным кредитам,

193
как правило, плавающая ставка в российских банковских учреждени-
ях рассчитывается на три или шесть месяцев. Это означает, что раз
в полгода или каждый квартал плавающая составляющая по ипотеке
будет изменяться.
Формула для расчета ставки по ипотеке с «плавающими» процен-
тами выглядит следующим образом:
Ставка процентная, плавающая = 3,5 % + MosPrime3М
Показатель 3,5 % – постоянная составляющая данной ставки, ко-
торая устанавливается банковским учреждением и прописывается
в договорном соглашении.
MosPrime3М – это переменная составляющая данной ставки,
которая в зависимости от рыночного индекса, рассчитывается на три
месяца.
Если закладная с плавающей ставкой оформляется в валюте
(в России это бывает в крайне редко), то для ее исчисления исполь-
зуется рыночный индикатор LIBOR или EURIBOR.
Ставка с «плавающими» процентами может быть привязана
к ставке рефинансирования. Последняя устанавливается Центробан-
ком России и изменяется только по его указаниям. Ставка рефинан-
сирования российского Центробанка не подвержена сильным коле-
баниям, в отличие от других рыночных индикаторов.
При расчете ставки с «плавающими» процентами по ипотеке
с помощью индекса ставки рефинансирования, пересмотр ее осу-
ществляется ежегодно.
Плюсы и минусы вышеуказанной ипотеки
Плюсы: плавающая ставка по ипотечной ссуде всегда будет ниже
фиксированной (дело в том, что банки при расчете фиксированной
ставки обязательно учитывают свои риски, что приводит к ее удоро-
жанию); плавающая ставка предоставляет возможность банковским
учреждениям с «легким сердцем» оформлять своим клиентам ипо-
теку на более длительный период (это, в свою очередь, способствует
тому, что кредит становится более доступным за счет уменьшения
ежемесячной долговой нагрузки на заемщика).
Минусы: процентная ставка может резко подняться в зависи-
мости от финансовой ситуации в мире; потребителю тяжело рассчи-
тать, хватит ли ему возможностей, исходя из заработной платы, вы-
плачивать ипотеку; структура данной ставки довольно-таки сложна

194
для понимания заемщика и требует достаточно высокой финансовой
грамотности (в большинстве случаев потребитель оценивает плаваю-
щую ставку как одностороннее право банковского учреждения повы-
шать проценты по ипотеке).
Специалисты отмечают, что значение MosPrime зависит от фи-
нансовой ситуации как на мировой, так и российской арене. Ана-
лизируя показатель MosPrime за последний год, можно увидеть, что
этот рыночный индикатор не стабилен.
Специалисты отмечают, что сегодня заемщики, которые планирую
оформлять ипотеку более чем на 5 лет, сильно рискуют. Кроме того,
если ипотечный кредит не предусматривает досрочного погашения,
то это является дополнительным риском для заемщика.
Краткий итог
Данная ипотека выгодна для тех заемщиков, которые оформля-
ют ее на короткий период и планируют погасить досрочно, например,
за счет реализации иного имущества. Потребитель понимает, что он
берет жилье в ипотеку на достаточно короткий срок и вероятность
сильного изменения плавающей составляющей ставки не так уж
велика.
(utmagazine.ru/posts/10617-ipoteka-s-plavayuschey-stavkoy)

Text 4
Квартира в лизинг
Лизинг, как форма финансовых услуг или вид кредитования
широко распространен за рубежом, и не так давно стал появляться
у нас в разных сегментах экономики. Этот инструмент часто
использует в транспортной и промышленной сфере, клиентам он
удобен, понятен. Фактически лизинг представляет собой кредит,
только с дополнительными преимуществами.
В некоторых случаях использование лизинга помогает заметно
снизить налоговую нагрузку, может способствовать увеличению
оборотных средств или являться способом целевого финан-
сирования.
Есть существенные отличия лизинга от кредита: когда требуется
кредит, мы идем в банк, оформляем все необходимые документы,
получаем деньги и приобретаем товар. Участников отношений двое –
банк и клиент.

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 Когда речь идет о лизинге, тогда мы идем в компанию, которая
для нас приобретает товар, а потом по договору долгосрочной
аренды за ежемесячные платежи передает его нам в пользование.
Здесь участников отношений трое: клиент, лизинговая компания
и продавец (организация или лицо, продавшее нужный нам товар).
По истечении срока договора клиент, по желанию, может выкупить
товар по остаточной стоимости или не делать этого.
Отмечу еще раз, в ряде случаев, например, когда речь идет
о дорогостоящем оборудовании или технике, это действительно
удобный финансовый инструмент.
Теперь о лизинге в недвижимости. В сфере коммерческой
недвижимости он также распространенное явление, а вот для жилой –
редкость, тем более, когда речь идет об использовании данного
инструмента физическими лицами.
За последний год резко возросло число предложений приобрести
квартиру в лизинг, такой финансовый продукт появился у ведущих
банков. Так что, пора разобраться в том, что же такое лизинг в сфере
жилой недвижимости, каковы его недостатки и есть ли преимущества
перед ипотекой. Мы опросили ведущих экспертов и игроков рынка,
их мнения и рекомендации можно найти ниже.
Специфика приобретения
В чем главное отличие лизинга от кредита было сказано выше –
это не деньги, а товар, который не становится собственностью клиен-
та, а берется в аренду. Договором лизинга может быть предусмотрена
дальнейшая передача в собственность этого товара (чаще всего так
и делается), когда выплачена вся сумма его стоимости, но это необя-
зательное условие.
Когда речь идет о приобретении квартиры, здесь работает то же
самое правило. Наталья Саакянц, коммерческий директор Компания
Rose Group считает, что в ряде случаев лизинг может быть рассмо-
трен покупателем как альтернатива ипотеки. Эксперт подчеркивает,
что кредит предоставляется не деньгами, а приобретаемой недвижи-
мостью.
Покупая квартиру в лизинг, клиент берет ее в долгосрочную арен-
ду, чаще всего на 10 лет. Как и в случае с ипотекой, в расчете лизинго-
вых платежей используются процентные ставки, клиенту необходи-
мо внести первоначальный взнос, например, в банке ВТБ24 он может

196
составлять от 20 % стоимости квартиры. В течение действия лизинго-
вого договора покупатель должен выплатить всю сумму, только после
этого он может оформить право собственности на свое жилье.
Продолжая тему специфики лизинга, отдельно скажем о возмож-
ности последующего получения товара в собственность. Договором
лизинга может быть, как предусмотрен последующий выкуп кварти-
ры арендатором (клиентом) по остаточной цене, так и не предусмо-
трен. Для арендодателя (т. е. лизинговой компании) лизинг – это вид
инвестиционной деятельности, цель которого получить доход.
В зависимости от условий договора он может после окончания
действия документа оставить имущество в собственности и продать
его, а может по остаточной стоимости передать арендатору. В этом
случае арендатору надо быть готовым к тому, что по истечении дого-
вора лизинга ему придется приобрести недвижимость. В противном
случае лизинговая компания может потребовать и заключения соот-
ветствующего договора в судебном порядке, и взыскания с клиента
соответствующую сумму.
Что еще важно сказать, клиент самостоятельно находит тре-
бующуюся ему недвижимость, потом лизинговая компания ее при-
обретает и передает арендатору. Никакой ответственности за выбор
предмета аренды и продавца лизинговая компания не несет, а вся
ответственность ложится только на клиента, который в последую-
щем станет арендатором выбранной недвижимости.
Как отмечает адвокат Инна Белякова, что выбрал арендатор, на
что показал пальцем, то арендодатель и приобрел, и передал в ли-
зинг клиенту. Соответственно, и требования, касающиеся качества
и своевременной передачи товара арендатор вправе предъявлять не
к лизинговой компании, а непосредственно к продавцу, а лизинговая
компания в данном случае не за что не отвечает.
Ипотека, рассрочка, лизинг
Выше уже было сказано о том, что есть в договоре лизинга не-
которое сходство с ипотечным кредитом: использование процентных
ставок, ежемесячных платежей. Лизинг, как и ипотека, используется
на первичном и вторичном рынках недвижимости во всех существу-
ющих сегментах (от экономкласса до элитки). С применением дан-
ного финансового инструмента можно приобрести и апартаменты,
юридически не относящиеся к жилью. Но, есть и отличия от ипотеки.
Давайте остановимся на этом вопросе подробнее.

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 В отличие от ипотеки, право собственности (и все сопутствующие
права и обязанности по сохранности имущества, по уплате налогов
и пр.) ложится не на клиента как на лицо, фактически пользующееся
товаром (в том числе недвижимостью), а на собственника этого това-
ра. Это логично и многие опрошенные нами эксперты и игроки рынка
говорят об этом как о преимуществе лизинга перед ипотекой.
Но, увы, в недвижимости это условие соблюдается лишь неко-
торыми компаниями. Чаще всего, особенно если речь идет о круп-
ных банковских структурах, это не так. В процессе подготовки
материала мы проконсультировались с менеджером по лизингу для
физических лиц в банке ВТБ24 Лизинг. Так вот, этот банк все свои
дополнительные налоговые и операционные расходы упаковывает
в клиентские выплаты. С юридической точки зрения, действительно,
банковская структура является собственником имущества и долж-
на за него платить, но фактически все выплаты совершает клиент.
Алексей Гордейчик, управляющий Группы компаний «Гордей-
чик и партнеры», сравнивая лизинговую схему приобретения жилья
с ипотекой или предоставлением рассрочки непосредственно за-
стройщиком, говорит о том, что лизинг предоставляет меньше пра-
вовых гарантий, так как позволяет банку относительно легко изъять
у клиента предмет финансовой аренды (квартиру). С другой стороны,
эксперт, как и многие игроки рынка, уверен, что он менее обремени-
телен, с финансовой точки зрения, чем ипотека, кроме того, рассчи-
тан на больший период платежей, чем рассрочка.
Есть еще один нюанс, он касается выплат. По словам Инны Бе-
ляковой, если клиент просрочит уплату платежей более чем два раза
подряд, лизинговая компания вправе списать эти деньги со счета
клиента без дополнительных согласований (то есть без уведомления
арендатора, просто предъявив в банк соответствующее требование).
При использовании ипотеки и рассрочки таких рычагов давления на
клиента нет. Обойти это условие у клиента не получится, посколь-
ку при заключении договора лизинга требованием компании будет
обязательное наличие соответствующего банковского счета с на-
личием на нем минимально необходимой неснижаемой денежной
суммы. Учитывая, что передачей недвижимости в лизинг гражданам
в основном занимаются как раз банки (или другие специализирован-
ные организации), обеспечить соблюдение указанных требований не
станет для них большой проблемой.

198
 Преимущества и недостатки
Прочитав внимательно все вышеперечисленные особенности
лизиноговой схемы, наверное, каждый смог для себя сделать вывод:
в чем заключаются ее плюсы и минусы. Сейчас есть возможность
сравнить, насколько эти выводы совпадают с экспертной оценкой.
Итак, вначале о хорошем. Главным достоинством лизинга Наталья
Саакянц считает упрощенную схему оформления сделки. Так, клиен-
ту лизинговой компании не нужно предоставлять о себе подробную
информацию, можно отказаться от обязательного страхования, а рас-
смотрение заявок проходит быстрее.
Медина Кульшманова, юрист компании «Генезис» видит главное
преимущество лизинга в том, что это в основном небанковский про-
дукт; требования к лизингополучателю ниже; деятельность лизинго-
вых компаний не требует лицензии. Для желающего приобрести жи-
лье лизинг актуален тогда, когда ипотечный кредит недоступен.
Теперь про недостатки, главным из которых является невозмож-
ность оформления права собственности до момента полного погаше-
ния задолженности. В случае неуплаты договор просто расторгается,
и арендатор вынужден покинуть жилье. Если говорить о выгоде, то
расходы по ипотеке и лизингу сопоставимы, однако, в случае с по-
следней схемой нужно учитывать выплату процента за работу лизин-
говой компании.
Существенным недостатком является ограниченное использова-
ние лизинговых схем на первичном рынке недвижимости: крупные
банковские структуры чаще всего работают исключительно с гото-
вым жильем, и лишь организации поменьше готовы рассматривать
первичный рынок, отсюда высокая стоимость покупки.
В каких случаях актуально?
Ранее уже было сказано, что лизинг может быть востребован
клиентами, которые по какойлибо причине не могут оформить ипо-
теку, так как при лизинговой схеме требуется намного меньше доку-
ментов, подтверждающих финансовое состояние. По мнению Светла-
ны Денисовой, начальника отдела продаж ЗАО «БФАДевелопмент»,
схема лизинга уместна исключительно в тех случаях, когда речь идет
о приобретении оборудования, высококлассных станков, механиз-
мов, транспортных средств, сооружений производственного назна-
чения и т. д. В недвижимости такая схема не получила и не получит
199
широкого распространения в связи с большими издержками, непро-
стым администрированием и высокими рисками.
Длительные рассрочки при приобретении недвижимости в ли-
зинг – это альтернатива ипотечному кредитованию. Если ипотека
предлагается по привлекательным процентным ставкам компании-
застройщику предпочтительно получить всю сумму целиком, прове-
дя сделку с ипотекой. В конце 2014 года ЦБ поднял ключевую ставку,
в связи с этим многие коммерческие банки выставили заградитель-
ные ставки по ипотечным программам.
Объем ипотечных продуктов на рынке резко снизился, застрой-
щики были вынуждены прибегнуть к различным инструментам, что-
бы привлечь покупателя. Лизинг в их числе. Но сейчас, при субсиди-
ровании ипотечной ставки, конкурировать сложно: средняя ставка,
которую предлагают лизинговые компании – 18 %, в то время как
ипотека с государственной поддержкой – 11 %.
Если речь идет о приобретении жилья на вторичном рынке, то
здесь конкуренция возможна, процентные ставки в ипотечном и ли-
зинговом кредите могут быть вполне сопоставимыми. Но есть нюанс,
который мешает лизингу активно развиваться даже на вторичном
рынке: схема лизинга в недвижимости в плане законодательства
слабо регламентирована и значительно проигрывает ипотечному
продукту.
(vsenovostroyki.ru/expert/9633/)

Part 7. Discussion. Comment on the following quotes.

1. Great companies are built on great products. (Elon Musk)
2. Small business is the backbone of our economy. I'm for big business,
too. But small business is where the jobs are generated. (Michele
Bachmann).
3. In all cities, the better classes - the business men - are the sources
of corruption, but they are so rarely pursued and caught that we do
not fully realize whence the trouble comes. (Lincoln Steffens)
4. If a window of opportunity appears, don't pull down the shade.
(Tom Peters)

200
UNIT 10
MARKETING

Part 1. Read the text about Marketing and do the assignments that
follow.
Marketing, more than any other business function, deals with
customers. Perhaps the simplest definition is this one:
Marketing is engaging customers and managing profitable customer
relationships.
The twofold goal of marketing is to attract new customers by promising
superior value, and to keep and grow current customers by delivering
satisfaction.
For example, Walmart has become the world’s largest retailer – and the
world’s largest company – by delivering on its promise “Save Money. Live
Better.” Coca-Cola has earned a 49 percent global share of the carbonated
beverage market – more than twice Pepsi’s share – by fulfilling its “open
happiness” motto with products that “spread smiles and open happiness
every day all across the world.” Facebook has attracted more than 1.4 billion
active Web and mobile users worldwide by helping them to “connect and
share with the people in their lives.” Large for-profit firms, such as Google,
Target, Procter & Gamble, Coca-Cola, and Microsoft, use marketing. But
so do not-for-profit organizations, such as colleges, hospitals, museums,
symphony orchestras, and even churches.
Many people think of marketing as only selling and advertising. We
are bombarded every day with TV commercials, catalogs, spiels from
salespeople, and online pitches. However, selling and advertising are only
the tip of the marketing iceberg.
Today, marketing must be understood not in the old sense of making
a sale but in the new sense of satisfying customer needs. If the marketer
engages consumers effectively, understands their needs, develops products
that provide superior customer value1, and prices, distributes, and
promotes them well, these products will sell easily. Selling and advertising

1
The gain the consumer receives for the benefit weighed against the cost that
the consumer must pay to acquire the benefit. The value the individual consumer
places on a product or service becomes the customer value for that offering.
201
are only part of a larger marketing mix – a set of marketing tools that work
together to engage customers, satisfy customer needs, and build customer
relationships.
Broadly defined, marketing is a social and managerial process by which
individuals and organizations obtain what they need and want through
creating and exchanging value with others.
In a narrower business context, marketing involves building
profitable, value-laden exchange relationships with customers. Hence, we
define marketing as the process by which companies engage customers,
build strong customer relationships, and create customer value in order to
capture value from customers in return.

A. Answer the questions.

• What is marketing? Give its broad and narrow definitions.
• Give examples of large for-profit corporations mentioned in the
text.

B. Translate the terms into Russian.

• to engage customers and manage profitable customer relationships;
• to fulfill one’s motto;
• marketing mix;
• to be the tip of the iceberg;
• commercial;
• the twofold goal of marketing;
• marketer;
• to promise superior value;
• to deliver on one’s promise; to deliver (as in ‘Britain can deliver’);
• to deliver satisfaction;
• to earn a 49 percent global share of the carbonated beverage market;
• spiel;
• pitch.

Part 2. Use of English.

A. Go to (freecollocation.com/search?word=price) and find collocations

with the words ‘price’.
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B. Pricing strategies. Match the terms with their definitions.

1. Psychological a. Use a high price where there is a substantial

pricing. competitive advantage – for example, rooms in
Savoy hotels.
2. Economy pricing b. The price charged for products and services is
set artificially low in order to gain market share.
Once this is achieved, the price is increased.
3. Captive product c. Marketing and manufacturing costs are kept to
pricing a minimum. Supermarkets often have economy
brands for soups, spaghetti, etc.
4. Product bundle d. Charge a high price because you have a new
pricing product type. However, the high price attracts
new competitors into the market, and the price
falls due to increased supply. DVD players were
launched with this strategy.
5. Premium pricing e. The consumer responds on an emotional, rather
than rational, basis. For example, charging 99
cents instead of 1 dollar.
6. Price skimming f. Companies will charge a premium price where
the consumer cannot choose a competitive
product. This involves a retailer selling a base
product for an inexpensive price or even giving
it away for free. Additional products are required
to receive full benefit of the item received.
7. Penetration g. Sellers combine several products in the same
pricing package. This also serves to move old stock. Videos
and CDs are often sold using this approach.

C. Look at the pictures below. Name the pricing strategy that is used.

203
 2

D. Match the description of product manufacturing with the type of

packaging.

A B
C

D E F

204
 G H
I

K
J L

1. We manufacture trigger spray bottles. All our sprays are made of

plastic.
2. We make clear plastic bottles with a screw cap or sports cap, which
are usually used for water.
3. Our drinks cans are manufactured in aluminium. We can
personalize the ring-pull, or tab, in your brands colours.
4. We manufacture the machinery that wraps chewing gum in
aluminium foil. The packets are then wrapped in cellophane. The
packet has a tear opening.
5. Our tubes come with screw-top lids or flip-top lids. The flip-tops
are more and more popular.

205
 6. We make nozzles for aerosol cans and trigger sprays. The aerosols
are manufactured in aluminium.
7. We produce blister packs. For non-medical products there is usually
a card backing. For tablets, pills and medicine there is always a foil
backing.
8. We make pots for yoghurt and tubs for ice cream. The ice cream
tubs have snap-on lids and the yoghurt pots have peel-back lids, or
peelable lids, made from foil or plastic.
9. We produce cartons in coated paper or waxed paper in a range of
colours and sizes.
10. Cereal boxes are eco-friendly, made out of recyclable card that can
be treated and used again, so they’re better for the environment.
Sample-size packets are also available.
11. We make child-resistant packaging for medicines and for cleaning
products that might be dangerous.
12. We specialize in glass bottles and jars. The wine bottles are sealed
with a cork.
13. You just shake the pouch, tear it open and pour out the food.

Part 3. Read the text and do the assignments that follow.

Marketing in a nutshell

The figure above presents a simple, five-step model of the marketing

process for creating and capturing customer value. In the first four steps,
companies work to understand consumers, create customer value, and build
strong customer relationships. In the final step, companies reap the rewards
of creating superior customer value. By creating value for consumers, they
in turn capture value from consumers in the form of sales, profits, and
long-term customer equity1.
1
Customer equity is the value of potential future revenue generated by a
company’s customers in a lifetime. Firms like McDonalds, Apple and Facebook
have very high customer equity.
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 As a first step, marketers need to understand customer needs and wants
and the marketplace in which they operate. We examine five core customer
and marketplace concepts:
(1) needs, wants, and demands;
(2) market offerings (products, services, and experiences);
(3) value and satisfaction;
(4) exchanges and relationships; and
(5) customer needs.
Human needs are states of felt
deprivation. They include basic
physical needs for food, clothing,
warmth, and safety; social needs
for belonging and affection; and
individual needs for knowledge and
self-expression.
Wants are the form human
needs take as they are shaped by
culture, society and individual personality. An American needs food
but wants a Big Mac, French fries, and a soft drink. A person in Papua,
New Guinea, needs food but wants taro, rice, yams, and pork. Wants are
described in terms of objects that will satisfy those needs. When backed by
buying power, wants become demands.
Outstanding marketing companies go to great lengths to learn about
and understand their customers’ needs, wants, and demands. They conduct
consumer research, analyze mountains of customer data, and observe
customers as they shop and interact, offline and online. People at all levels
of the company stay close to customers. Target’s1 energetic CEO, Brian
Cornell, makes regular unannounced visits to Target stores, accompanied
by local moms and loyal Target shoppers.
Consumers’ needs and wants are fulfilled through market offerings –
some combination of products, services, information, or experiences
offered to a market to satisfy a need or a want. They also include services –
activities or benefits offered for sale that are essentially intangible and do
not result in the ownership of anything. Examples include banking, airline,
hotel, retailing, and home repair services.

1
Target is the second-largest discount store retailer in the United States.
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 More broadly, market offerings also include other entities, such as
persons, places, organizations, information, and ideas. For example, San
Diego launched a $ 9 million “Happiness Is Calling” advertising campaign
that invites visitors to come and enjoy the city’s great weather and good
times – everything from its bays and beaches to its downtown nightlife and
urban scenes.
Many sellers make the mistake of paying more attention to the specific
products they offer than to the benefits and experiences produced by these
products. These sellers suffer from marketing myopia.
Smart marketers look beyond the attributes of the products and services
they sell. By orchestrating several services and products, they create brand
experiences for consumers. For example, you don’t just visit Walt Disney
World Resort; you immerse yourself and your family in a world of wonder,
a world where dreams come true and things still work the way they should.
“Let the magic begin!” says Disney.
Consumers usually face a broad array of products and services that
might satisfy a given need. They form expectations about the value and
satisfaction that various market offerings will deliver and buy accordingly.
Satisfied customers buy again and tell others about their good experiences.
Dissatisfied customers often switch to competitors and disparage the
product to others.
Marketers must be careful to set the right level of expectations. If
they set expectations too low, they may satisfy those who buy but fail to
attract enough buyers. If they set expectations too high, buyers will be
disappointed. Customer value and customer satisfaction are key building
blocks for developing and managing customer relationships.
Marketing occurs when people decide to satisfy their needs and wants
through exchange relationships. Exchange is the act of obtaining a desired
object from someone by offering something in return. In the broadest
sense, the marketer tries to bring about a response to some market offering.
The response may be more than simply buying or trading products and
services. A political candidate, for instance, wants votes; a church wants
membership; an orchestra wants an audience; and a social action group
wants idea acceptance.
Marketing consists of actions taken to create, maintain, and grow
desirable exchange relationships with target audiences involving a product,
service, idea, or other object. Companies want to build strong relationships
by consistently delivering superior customer value.

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ASSIGNMENTS

A. Answer the questions.

1. What are the five key steps of the marketing process?

2. What is the difference between human needs and wants?
3. What do market offerings include?
4. What is marketing myopia?
5. What term refers to the difference between what a customer gets
from a product, and what they have to give in order to get it?
6. What is known as the extent to which a product's perceived
performance matches a buyer's expectations?
7. How are customer value and customer satisfaction linked?

B. Suggest the Russian equivalents for

• to create superior customer value;
• customer equity;
• to go to great lengths to do something;
• marketing myopia;
• to face a broad array of products and services;
• to set the right level of expectations.

C. Find words or phrases in the text that fit these meanings

• a state of extreme poverty;
• a stemless plant cultivated in the tropics for its large edible rootstock;
• a nonalcoholic, flavored, carbonated beverage, usually commercially
prepared and sold in bottles or cans;
• the corporate executive responsible for the operations of the
firm; reports to a board of directors; may appoint other managers
(including a president);
• not having physical substance or intrinsic productive value;
• something that exists as a particular and discrete unit;
• the functions and activities involved in the selling of commodities
directly to consumers;
• to arrange or control the elements of, as to achieve a desired overall
effect.
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D. Pronounce the following words
• myopia;
• to conduct;
• array.

Part 4. Making the most of MOOCs. Watch the video ‘Understanding

the rules of the game: a story about chocolate’ and answer the
questions below.
• What are the two dominant chocolate brands in the USA Darren
Dahl talked about?
• What were the founders of these two companies?
• Which of the two had dominant market share?
• What business models did the two companies have?
• What is product placement?
• Why is it important for businesses to understand the environment?

Part 5. Sum up the following texts. Make a list of word partnerships

with the terms ‘brand’ and ‘customer’, and translate them into
Russian.
A. A brand’s value proposition is the set
of benefits or values it promises to deliver to
consumers to satisfy their needs. Facebook
helps you “connect and share with the people
in your life,” whereas Twitter’s Vine app gives
you “the best way to see and share life in
motion” through “short, beautiful, looping videos in a simple and fun way
for your friends and family to see.” Such value propositions differentiate one
brand from another. They answer the customer’s question: “Why should I
buy your brand rather than a competitor’s?” Companies must design strong
value propositions that give them the greatest advantage in their target
markets.
B. There are five alternative concepts under which organizations
design and carry out their marketing strategies: the production, product,
selling, marketing, and societal marketing concepts. The production
concept holds that consumers will favor products that are available and
highly affordable. Therefore, management should focus on improving
production and distribution efficiency.
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 The product concept holds that consumers will favor products that
offer the most in quality, performance, and innovative features. Under
this concept, marketing strategy focuses on making continuous product
improvements.
Many companies follow the selling concept, which holds that consumers
will not buy enough of the firm’s products unless it undertakes a large-scale
selling and promotion effort. Such aggressive selling focuses on creating
sales transactions rather than on building long-term, profitable customer
relationships. The aim often is to sell what the company makes rather than
to make what the market wants. It assumes that customers who are coaxed
into buying the product will like it. Or, if they don’t like it, they will possibly
forget their disappointment and buy it again later.
The marketing concept holds that achieving organizational goals
depends on knowing the needs and wants of target markets and delivering
the desired satisfaction better than competitors do. The job is not to find
the right customers for your product but to find the right products for your
customers.
The societal marketing concept holds that a company should make
marketing decisions not only by considering consumers’ wants, the
company's requirements, but also society’s long-term interests.
C. Customer relationship management is the overall process of building
and maintaining profitable customer relationships by delivering superior
customer value and satisfaction. It deals with all aspects of acquiring,
engaging, and growing customers. The key to building lasting customer
relationships is to create superior customer value and satisfaction. Satisfied
customers are more likely to be loyal customers and give the company a
larger share of their business.
A customer buys from the firm that offers the highest customer-
perceived value – the customer’s evaluation of the difference between
all the benefits and all the costs of a market offering relative to those of
competing offers. Importantly, customers often do not judge values and
costs “accurately” or “objectively.” They act on perceived value.
Customer satisfaction depends on the product’s perceived performance
relative to a buyer’s expectations. If the product’s performance falls short
of expectations, the customer is dissatisfied. If performance exceeds
expectations, the customer is highly satisfied or delighted. Delighted
customers not only make repeat purchases but also become willing
marketing partners and “customer evangelists” who spread the word about
their good experiences to others.

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 Most studies show that higher levels of customer satisfaction lead
to greater customer loyalty, which in turn results in better company
performance.

Part 6. Read the text and explain the terms ‘position’ and ‘positioning’.
Market Differentiation and Positioning
A product’s position is the place it occupies relative to competitors’
products in consumers’ minds. Marketers want to develop unique market
positions for their products. If a product is perceived to be exactly like
others on the market, consumers would have no reason to buy it.
Positioning is arranging for a product to occupy a clear, distinctive,
and desirable place relative to competing products in the minds of target
consumers. Marketers plan positions that distinguish their products from
competing brands and give them the greatest advantage in their target
markets.
Audi promises “Truth in Engineering”;
Subaru is “Confidence in Motion.” Coke is
all about “open happiness”; Pepsi says “live
for now.” Such simple statements form the
backbone of a product’s marketing strategy.
A company can offer greater customer
value by either charging lower prices than
competitors or offering more benefits to
justify higher prices.
But if the company
promises greater value, it must then deliver that greater
value. Once the company has chosen a desired position,
it must take strong steps to deliver and communicate
that position to target consumers.

Part 7. Insert the missing prepositions. Sum up the text.

Marketing mix
The marketing mix is the set … tactical marketing tools that the firm
blends to produce the response it wants … the target market. The marketing
mix consists … everything the firm can do to engage consumers and deliver

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customer value. The many possibilities can be collected … four groups of
variables – the four Ps (Product, Price, Place, Promotion).
Product means the goods-and-services combination the company
offers … the target market. Thus, a Ford Escape consists … nuts and bolts,
spark plugs, pistons, headlights, and thousands … other parts. Ford offers
several Escape models and dozens … optional features. The car comes fully
serviced and … a comprehensive warranty that is … much a part … the
product … the tailpipe.
Price is the amount … money customers must pay to obtain the
product. For example, Ford calculates suggested retail prices that its dealers
might charge … each Escape. But Ford dealers rarely charge the full sticker
price. Instead, they negotiate the price … each customer, offering discounts,
trade-in allowances, and credit terms. These actions adjust prices … the
current competitive and economic situations and bring them … line … the
buyer’s perception … the car’s value.
Place includes company activities that make the product available …
target consumers. Ford partners … a large body … independently owned
dealerships that sell the company’s many different models. Ford selects
its dealers carefully and strongly supports them. The dealers keep an
inventory … Ford automobiles, demonstrate them … potential buyers,
negotiate prices, close sales, and service the cars … the sale.
Promotion refers … activities that communicate the merits … the
product and persuade target customers to buy it. Ford spends nearly
$ 2.6 billion each year … U.S. advertising to tell consumers … the company
and its many products. Dealership salespeople assist potential buyers and
persuade them that Ford is the best car … them. Ford and its dealers offer
special promotions – sales, cash rebates, and low financing rates – as added
purchase incentives. And Ford’s Facebook, Twitter, YouTube, Instagram,
and other social media platforms engage consumers … the brand and …
other brand fans.

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SWOT ANALYSIS

Part 8. Making the most of MOOCs. Watch the video ‘3 tools for the
dynamic game’ and sum it up. Complete the sentences. Choose
a company and carry out a SWOT analysis or conduct a SWOT
analysis of Moscow State Linguistic University.
Managing the marketing function begins with a complete analysis of
the company’s situation. The marketer should conduct a SWOT analysis, by
which it evaluates the company’s overall:
1) _____ (S),
2) _____ (W),
3) _____ (O),
4) _____ (T).
5) _____ include internal capabilities, resources, and positive
situational factors that may help the company serve its customers
and achieve its objectives.
6) _____ include internal limitations and negative situational factors
that may interfere with the company’s performance.
7) _____ are favorable factors or trends in the external environment
that the company may be able to exploit to its advantage.
8) _____ are unfavorable external factors or trends that may present
challenges to performance.

Part 9. Read the text and insert the missing articles where necessary.
… mission statement is … statement of … organization’s purpose – what
it wants to accomplish in … larger environment. … clear mission statement
acts as … “invisible hand” that guides people in … organization.
Forging … sound mission begins with … following questions: What
is our business? Who is … customer? What do … consumers value? What
should our business be?
Some companies define their missions myopically in product
or technology terms (“We make and sell … furniture” or “We are …
chemical-processing firm”). But … mission statements should be market
oriented and defined in terms of satisfying … basic customer needs. For
example, … social scrapbooking site Pinterest doesn’t define itself as just
… online place to post … pictures. Its mission is to give … people … social
media platform for collecting, organizing, and sharing … things they love.

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Part 10. Translate into English.
Products and services fall into two broad classes based on the types
of consumers who use them: consumer products and industrial products.
Broadly defined, products also include other marketable entities such as
experiences, organizations, persons, places, and ideas.
Consumer products are products and services bought by final consumers
for personal consumption. Consumer products include convenience
products, shopping products, specialty products, and unsought products.
Convenience products are consumer products and services that
customers usually buy frequently, immediately, and with minimal
comparison and buying effort. Examples include laundry detergent, candy,
magazines, and fast food.
Shopping products are less frequently purchased consumer products
and services that customers compare carefully on suitability, quality, price,
and style. Examples include furniture, clothing, major appliances, and hotel
services.
Specialty products are consumer products and services with unique
characteristics or brand identifications for which a significant group
of buyers is willing to make a special purchase effort. Examples include
specific brands of cars, high-priced photography equipment, designer
clothes, gourmet foods, and the services of medical or legal specialists.
Unsought products are consumer products that the consumer either
does not know about or knows about but does not normally consider
buying. Most major new innovations are unsought until the consumer
becomes aware of them through advertising. Classic examples of known
but unsought products and services are life insurance, preplanned funeral
services, and blood donations to the Red Cross.
Industrial products are those products purchased for further processing
or for use in conducting a business. If a consumer buys a lawn mower for
use around home, the lawn mower is a consumer product. If the same
consumer buys the same lawn mower for use in a landscaping business, the
lawn mower is an industrial product.
The three groups of industrial products and services are materials and
parts, capital items, and supplies and services. Materials and parts include
raw materials as well as manufactured materials and parts. Raw materials
consist of farm products (wheat, cotton, livestock, fruits, vegetables) and
natural products (fish, lumber, crude petroleum, iron ore). Manufactured

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materials and parts consist of component materials (iron, yarn, cement,
wires) and component parts (small motors, tires, castings).
Capital items are industrial products that aid in the buyer’s production
or operations, including installations and accessory equipment. Installations
consist of major purchases such as buildings (factories, offices) and fixed
equipment (generators, drill presses, large computer systems, elevators).
Accessory equipment includes portable factory equipment and tools (hand
tools, lift trucks) and office equipment (computers, fax machines, desks).
The final group of industrial products is supplies and services. Supplies
include operating supplies (lubricants, coal, paper, pencils) and repair and
maintenance items (paint, nails, brooms). Supplies are the convenience
products of the industrial field because they are usually purchased with a
minimum of effort or comparison. Business services include maintenance
and repair services (window cleaning, computer repair) and business
advisory services (legal, management consulting, advertising).
Part 11. Watch the video ‘Product levels: Considerations for defining
your product’ and insert the missing words in the text.
Product planners need to think about products and services on three
levels. Each level adds more customer value. The most basic level is 1) __,
which addresses the question: What is the buyer really buying? When
designing products, marketers must first define the core, problem-solving
benefits or services that consumers seek. A woman buying lipstick buys
more than lip color. Charles Revson of Revlon saw this early: “In the factory,
we make cosmetics; in the store, we sell hope.”
At the second level, product planners must turn the core benefit into an
2) __. They need to develop product and service features, a design, a quality
level, a brand name, and packaging. For example, the iPad is an 3) __. Its
name, parts, styling, operating system, features, packaging, and other
attributes have all been carefully combined to deliver the core customer
value of staying connected.
Finally, product planners must build an 4) __ around 5) __ and 6) __ by
offering additional consumer services and benefits. The iPad is more than
just a digital device. It provides consumers with a complete connectivity
solution. Thus, when consumers buy an iPad, Apple and its resellers also
might give buyers a warranty on parts and workmanship, quick repair
services when needed, and Web and mobile sites to use if they have problems
or questions. Apple also provides access to a huge assortment of apps and

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accessories, along with an iCloud service that integrates buyers’ photos,
music, documents, apps, calendars, contacts, and other content across all
of their devices from any location.

Part 12. Read the text and write a 10-sentence summary of it.
Do the assignments below.

What is a Product?
We define a product as anything that can be offered to a
market for attention, acquisition, use, or consumption that might
satisfy a want or need. Products include more than just tangible
objects, such as cars, computers, or mobile phones. Broadly defined,
products also include services, events, persons, places, organizations, and
ideas or a mixture of these. An Apple iPhone and a Caffé Mocha at Starbucks
are products. But so are a trip to Las Vegas, your Pinterest page, and advice
from your family doctor.
Services are a form of product that consists of activities, benefits, or
satisfactions offered for sale that are essentially intangible and do not result
in the ownership of anything. Examples include banking, hotel, airline
travel, retail, wireless communication, and home-repair services.
Products are a key element in the overall market offering. Marketing
mix planning begins with building an offering that brings value to target
customers. This offering becomes the basis on which the company builds
profitable customer relationships.
A company’s market offering often includes both tangible goods and
services. At one extreme, the market offer may consist of a pure tangible
good, such as soap, toothpaste, or salt; no services accompany the product.
At the other extreme are pure services, for which the market offer consists
primarily of a service. Examples include a doctor’s exam and financial
services. Between these two extremes, however, many goods-and-services
combinations are possible.
Today, as products and services become more commoditized, many
companies are moving to a new level in creating value for their customers.
To differentiate their offers, beyond simply making products and delivering
services, they are creating and managing customer experiences with their
brands or companies.
Experiences have always been an important part of marketing for
some companies. Nike has long declared, “It’s not so much the shoes but

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where they take you.” Today, however, all kinds of firms are recasting their
traditional goods and services to create experiences. For example, newly
redesigned Verizon Wireless Smart Stores don’t just sell phones. They
create lifestyle experiences that encourage customers to visit more often,
hang around, and experience the wonders of mobile technology.
ASSIGNMENT
A. Find verbs in the text that fit these meanings
• to make something commercial;
• to distinguish, to perceive the difference between;
• to form, fashion or arrange again.
B. Give examples of the most famous slogans.

Part 13. Read the text and sum it up. Say what these numbers refer
to in the text: 2; 5.6; 9; 23; 250,000.
Branding
A brand is a name, term, sign, symbol, or design or a combination of
these that identifies the maker or seller of a product or service. Consumers
view a brand as an important part of a product, and branding can add
value to a consumer’s purchase. Customers attach meanings to brands and
develop brand relationships.
Branding has become so strong that today hardly anything goes
unbranded. Salt is packaged in branded containers, common nuts and bolts
are packaged with a distributor’s label, and automobile parts bear brand
names that differ from those of the automakers.
Brand names help consumers identify products that might benefit
them. Brands also say something about product quality and consistency –
buyers who always buy the same brand know that they will get the same
features, benefits, and quality each time they buy. The seller’s brand name
and trademark1 provide legal protection for unique product features that
otherwise might be copied by competitors.

1
A trademark is any name, symbol, figure, letter, word, or mark adopted and
used by a manufacturer or merchant to distinguish a product or products from
the ones manufactured or sold by others: a trademark must be registered with a
government patent office to assure its exclusive use by its owner.
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 Branding helps the seller to segment markets. For example, rather than
offering just one general product to all consumers, Toyota can offer the
different Lexus, Toyota, and Scion brands, each with numerous subbrands –
such as Avalon, Camry, Corolla, Prius, Yaris, Tundra, and Land Cruiser.
Labeling
Labels range from simple tags
attached to products to complex
graphics that are part of the packaging.
The label identifies the product or
brand. It might also describe several
things about the product – who made
it, where it was made, when it was
made, its contents, how it is to be used,
and how to use it safely. Finally, the
label might help to promote the brand
and engage customers.
Labels and brand logos (their
graphic representation) can support the
brand’s positioning and add personality
to the brand. Consider the feelings evoked by the logos of companies such
as CocaCola, Google, Twitter, Apple, and Nike.
Logos must be redesigned from time to time. For example, brands
ranging from Yahoo!, eBay, and Southwest Airlines to Pizza Hut and
Hershey have successfully adapted their logos to keep them contemporary
and to meet the needs of new interactive media such as the Web and mobile
apps and browsers.
Product line
A product line is a group of products that
are closely related because they function in a
similar manner, are sold to the same customer
groups, are marketed through the same types
of outlets, or fall within given price ranges. For
example, Nike produces several lines of athletic
shoes and apparel, and Marriott offers several
lines of hotels.

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 The major product line decision involves product line length – the
number of items in the product line. The line is too short if the manager
can increase profits by adding items; the line is too long if the manager can
increase profits by dropping items. Managers need to analyze their product
lines periodically to assess each item’s sales and profits and understand how
each item contributes to the line’s overall performance.
A company can expand its product line in two ways: by line filling or
line stretching. Product line filling involves adding more items within the
present range of the line. Product line stretching occurs when a company
lengthens its product line beyond its current range. The company can
stretch its line downward, upward, or both ways. A company may add low-
end products because it finds faster growth taking place in the low-end
segments. Sometimes, companies stretch upward to add prestige to their
current products.
An organization with several product lines has a product mix. A product
mix consists of all the product lines and items that a particular seller offers
for sale. For example, The Clorox Company is best known for its CLOROX
bleach. But, in fact, Clorox is a $ 5.6 billion firm that makes and markets a
full product mix consisting of dozens of familiar lines and brands. Clorox
divides its overall product mix into five major lines: Cleaning, Household,
Lifestyle, Professional, and International. Each product line consists of
many brands and items.
A company’s product mix has four important dimensions: width,
length, depth, and consistency.
Product mix width refers to the number of product lines the company
carries. For example, GE manufactures as many as 250,000 items across
a broad range of categories, from lightbulbs to medical equipment, jet
engines, and diesel locomotives. Product mix length refers to the total
number of items a company carries within its product lines. For example, in
the given diagram of Hindustan Uni Lever product mix (see picture above),
there are 23 products, hence, the length of product mix is 23 (ranging from
Lux to Bru).
Product mix depth refers to the total number of versions offered for
each product in the line. Each variety comes in a number of product forms,
formulations, scents, and sizes. For example, Close-up, brand of HUL is
available in three formations and in three sizes. Hence, the depth of Close-
up brand is 3*3 = 9.

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 Finally, the consistency of the product mix refers to how closely
related the various product lines are in end use, production requirements,
distribution channels, or some other aspect. The Clorox Company’s product
lines are consistent insofar as they are primarily consumer products and go
through the same distribution channels. The lines are less consistent insofar
as they perform different functions for buyers.
Part 14. Read the text and give examples of successful and
disastrous brand names.
A good name can add greatly to a product’s success.
However, finding the best brand name is a difficult task. It
begins with a careful review of the product and its benefits,
the target market, and proposed marketing strategies.
After that, naming a brand becomes part science, part art,
and a measure of instinct. Think about such unfortunate
brand names as Isis Pharmaceuticals and even Isis Chocolates, Diet Ayds
(candy), GrexIt (software), Choco Kiddo Balls, Breast Munchies, Megapussi
Juusto Snacks, Batmilk yogurt, Crunky Ball Nude, Vegetarian Swallow Balls,
Pee Cola, Golden Gaytime (ice-lollies), Shitto (gravy), Terror (juice), Wack
Off (insect repellent), Spermies (candy), Fart bar and Fresh Cemen Dip.
Desirable qualities for a brand name include the following:
1) It should suggest something about the product’s benefits and
qualities: Beautyrest, Slimfast, Snapchat, Pinterest.
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 2) It should be easy to pronounce, recognize, and remember:
iPad, Tide, Jelly Belly, Twitter, JetBlue.
3) The brand name should be distinctive: Panera, Swiffer, Zappos,
Nest.
4) It should be extendable – Amazon.com began as an online
bookseller but chose a name that would allow expansion into
other categories.
5) The name should translate easily into foreign languages. The
official name of Microsoft’s Bing search engine in China is bi ying,
which literally means “very certain to respond” in Chinese.
6) It should be capable of registration and legal protection. A brand
name cannot be registered if it infringes on existing brand
names.
Choosing a new brand name is hard work. After a decade of choosing
quirky names (Yahoo!, Google, Syfy) or trademark-proof made-up names
(Novartis, Aventis, Accenture), today’s style is to build brands around
names that have real meaning.
For example, names like Silk (soy milk), Method (home products),
Smartwater (beverages), and Snapchat (photo messaging app) are simple
and make intuitive sense. But with trademark applications soaring,
available new names can be hard to find.
Try it yourself. Pick a product and see if you can come up with a
better name for it. How about Moonshot? Tickle? Vanilla? Treehugger?
Simplicity? Mindbender? Google them and you’ll find that they are already
taken.
Once chosen, the brand name must be protected. Many firms try
to build a brand name that will eventually become identified with the
product category. Brand names such as Kleenex, JELL–O, BAND–AID,
Scotch Tape, Velcro, Formica, Magic Marker, Post-it Notes, and Ziploc
have succeeded in this way. However, their very success may threaten the
company’s rights to the name. Many originally protected brand names –
such as cellophane, aspirin, nylon, kerosene, linoleum, yo-yo, trampoline,
escalator, thermos, and shredded wheat – are now generic names that any
seller can use.
To protect their brands, marketers present them carefully using the
word brand and the registered trademark symbol, as in “BAND–AID®
Brand Adhesive Bandages.”

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Part 15. Read the text and be ready to explain the term ‘promotion
mix’. What are its five promotion tools? Translate the text
into Russian.
A company’s total promotion mix consists of the specific blend of
advertising, public relations, personal selling, sales promotion, and direct
marketing tools that the company uses to engage consumers, persuasively
communicate customer value, and build customer relationships.
The five major promotion tools are defined as follows:
1. Advertising is any paid form of nonpersonal presentation
and promotion of ideas, goods, or services by an identified sponsor.
Advertising can reach masses of geographically dispersed buyers at a low
cost per exposure, and it enables the seller to repeat a message many times.
Advertising is also very expressive; it allows the company to dramatize its
products through the artful use of visuals, print, sound, and color. Although
it reaches many people quickly, mass-media advertising is impersonal
and lacks the direct persuasiveness of company salespeople. In addition,
advertising can be very costly. Although some advertising forms – such as
newspaper, radio, or online advertising – can be done on smaller budgets,
other forms, such as network TV advertising, require very large budgets.
2. Sales promotion refers to short-term incentives to encourage the
purchase or sale of a product or service. Sales promotion includes a wide
assortment of tools – coupons, contests, discounts, premiums, and others –
all of which have many unique qualities. They attract consumer attention,
engage consumers, offer strong incentives to purchase, and can be used to
dramatize product offers and boost sagging sales. Sales promotions invite
and reward quick response.
3. Personal selling includes personal customer interactions by the
firm’s sales force for the purpose of engaging customers, making sales, and
building customer relationships. Personal selling is the most effective tool
at certain stages of the buying process, particularly in building up buyers’
preferences, convictions, and actions.
4. Public relations (PR) is building good relations with the company’s
various publics by obtaining favorable publicity, building up a good corporate
image, and handling or heading off unfavorable rumors, stories, and events.
Public relations is very believable – news stories, features, sponsorships, and
events seem more real and believable to readers than ads do.
5. Direct and digital marketing is defined as engaging directly with
carefully targeted individual consumers and customer communities to both

223
obtain an immediate response and build lasting customer relationships. The
many forms of direct and digital marketing – from direct mail, catalogs,
and telephone marketing to online, mobile, and social media – all share
some distinctive characteristics. Direct marketing is more targeted. It is
immediate and personalized: Messages can be prepared quickly – even in
real time – and tailored to appeal to individual consumers or brand groups.
Direct marketing is interactive. It allows a dialogue between the marketing
team and the consumer, and messages can be altered depending on the
consumer’s response.

Part 16. Render the text into Russian.

Just Don’t call it Advertising: it’s Content Marketing
In the good old days, life seemed so simple for advertisers. When a
brand needed an advertising campaign, everybody knew what that meant.
The brand team and ad agency came up with a creative strategy, developed
a media plan, produced and placed a set of TV commercials and magazine
or newspaper ads, and maybe issued a press release to stir up some news.
But in these digital times, the old practice of placing “advertisements” in
well-defined “media” within the tidy framework of a carefully managed
“advertising campaign” just doesn’t work anymore.
Instead, the lines are rapidly blurring between traditional advertising
and new digital content. To be relevant, today’s brand messages must be
social, mobile, interactively engaging, and multi-platformed.
The new digital landscape has called into question the very definition
of advertising. “What Is Advertising Anyway?” asks one provocative
headline. Call it whatever you want, admonishes another, but “Just Don’t
Call It Advertising.” Instead, according to many marketers these days, it’s
“content marketing,” creating and distributing a broad mix of compelling
content that engages customers, builds relationships with and among
them, and moves them to action. To feed today’s digital and social media
machinery and to sustain “always-on” consumer conversations, brands
need a constant supply of fresh content across a breadth of traditional and
digital platforms.
Many advertisers and marketers now view themselves more broadly as
content marketing managers who create, inspire, share, and curate marketing
content – both their own content and that created by consumers and others.

224
Rather than using traditional media breakdowns, they subscribe to a new
framework that builds on how and by whom marketing content is created,
controlled, and distributed. The new classification identifies four major
types of media: paid, owned, earned, and shared (POES): Paid media –
promotional channels paid for by the marketer, including traditional media
(such as TV, radio, print, or outdoor) and online and digital media (paid
search ads, mobile ads, email marketing, or Web and social media display
ads and sponsored content).
Owned media – promotional channels owned and controlled by the
company, including company Web sites, corporate blogs, owned social
media sites, proprietary brand communities, sales forces, and events.
Earned media – PR media channels, such as television, newspapers,
blogs, online video sites, and other media not directly paid for or controlled
by the marketer but that incorporate the content because of viewer, reader,
or user interest.
Shared media – media shared by consumers with other consumers,
such as social media, blogs, mobile media, and viral channels as well as
traditional word of mouth.
Today’s shifting and sometimes chaotic marketing communications
environment calls for more than simply creating and placing ads in
well-defined and controlled media spaces. Rather, today’s marketing
communicators must be marketing content strategists, creators, connectors,
and catalysts who manage brand conversations with and among customers
and help those conversations catch fire across a fluid mix of channels. That’s
a tall order, but with today’s new thinking, anything is POES-ible!

Part 17. Read the text and insert the missing terms from the table
below.

comparative advertising persuasive advertising

reminder advertising informative advertising

… is used heavily when introducing a new product category. In this

case, the objective is to build primary demand. Thus, early producers of
HDTVs first had to inform consumers of the image quality and size benefits
of the new product.
… becomes more important as competition increases. Here, the
company’s objective is to build selective demand. For example, once HDTVs
225
became established, Samsung began trying to persuade consumers that its
brand offered the best quality for their money. Such advertising wants to
engage customers and create brand community.
Some … has become … (or attack advertising), in which a company
directly or indirectly compares its brand with one or more other brands.
You see examples of … in almost every product category, ranging from
sports drinks and fast food to car rentals, credit cards, and wireless phone
services. Microsoft has run several recent ad campaigns featuring head-on
comparisons with competitors Google and Apple. Its “Bing It On” campaign
directly challenged users to make side-by-side comparisons of Microsoft’s
Bing search engine results to Google search results without knowing which
results were from which search engine. Similarly, ads for Microsoft’s Surface
tablets directly challenge Apple’s laptops.
Advertisers should use … with caution. All too often, such ads invite
competitor responses, resulting in an advertising war that neither competitor
can win. Upset competitors might also take more drastic action, such as
filing complaints with the self-regulatory National Advertising Division
of the Council of Better Business Bureaus or even filing false-advertising
lawsuits.
… is important for mature products; it helps to maintain customer
relationships and keep consumers thinking about the product. Expensive
Coca-Cola television ads primarily build and maintain the Coca-Cola
brand relationship rather than inform consumers or persuade them to buy
it in the short run.

Part 18. Texts for Rendering into English.

Text 1
Сильнее Google и быстрее Ferrari:
как Lego стал самым влиятельным брендом
Как вы думаете, какой из брендов оказался наиболее влиятель-
ным в мире в этом году? Сложно представить, что это производитель
детских игрушек.
Однако это так. Самым влиятельным брендом в мире в этом
году стал датский производитель игрушек Lego, следует из рейтинга,
составленного консалтинговым агентством Brand Finance.
В рейтинге стоимости брендов Lego занимает только 196-ю
строчку, однако в рейтинге влиятельности он оставил позади Google,

226
Nike, Disney и многие другие всемирно известные бренды. При со-
ставлении рейтинга самых влиятельных брендов оценивается попу-
лярность и известность бренда, репутация компании и лояльность
потребителей.
Удивлены? Надо отметить, что Lego не впервые за свою историю
становится самым влиятельным брендом.
Lego уже занимал первую строчку рейтинга самых влиятельных
брендов в 2015 году, а в 2016 году он занял второе место в рейтинге,
уступив только Disney.
Сейчас сложно поверить, что датская компания в 2004 году была
близка к банкротству: ее долг превысил 800 млн долларов. Даже пред-
седатель совета директоров Lego Brand Group Йорген Виг Кнудсторп
тогда признал поражение.
Диверсификация.
«Мы стоим на горящей земле, у нас закончились средства и ско-
рее всего мы не выживем», – говорил он тогда коллегам. А в 2016 году
компания Lego отчиталась о рекордной выручке в 5,9 млрд долларов
и чистой прибыли в 1,5 млрд. Некоторые эксперты назвали реструк-
туризацию Lego одной из самых удачных.
Как это возрождение стало возможным?
Компания отказалась от стремления к диверсификации –
в 2005 году компания избавилась от тематических парков Legoland,
на которые Lego ранее тратила немалые деньги.
Компания больше внимания уделила своему главному направле-
нию работы – изготовлению игрушек. Конструкторы Lego любят не
только дети, представители старших поколений также неравнодуш-
ны к ним. Поэтому-то Lego и удалось продать 75 млн конструкторов
в 2016 году. Да, компания не отказалась полностью от диверсифика-
ции, но новые направления деятельности Lego теперь тесно связаны с
основным. В 2014 году мультфильм «Лего. Фильм» заработал 470 млн
долларов. Тремя годами позже «Лего Фильм: Бэтмен» – спин-офф
мультфильма «Лего. Фильм» – принес компании 312 млн долларов.
Также Lego сегодня выпускает видеоигры и мобильные приложения.
Как отмечают эксперты Brand Finance, одной из самых сильных
сторон Lego является то, что компания, создавая новую продукцию,
учитывает не только интересы детей, но и их родителей.
Также компания не создает отдельно игрушки для девочек и маль-
чиков – таким образом, вся ее продукция рассчитана на максимально
широкую аудиторию.

227
 «Они дают свободу для творчества детям, а взрослым дают воз-
можность поностальгировать», – говорится в докладе Brand Finance.
В прошлом году компания вышла на рынок Китая, открыв там
новую фабрику, что позволило ей удешевить производство и конку-
рировать с производителями, продающими более дешевые игрушки.
Однако у компании в этом году не только хорошие новости.
В сентябре Lego сообщила о сокращении 1400 рабочих мест по всему
миру – после того, как данные за первое полугодие показали сокра-
щение доходов на 5 % и выручки – на 3 %. Кнудсторп объяснил такую
динамику тем, что после пяти лет быстрого роста все процессы в ком-
пании усложнились и требуется перезагрузка.
«Мы построим менее сложную организацию, она будет меньше,
чем сейчас. Это поможет нам упросить существующую бизнес-модель
с тем, чтобы наша продукция стала доступна для большего количе-
ства детей», - заявил Кнудсторп.
Не исключено, однако, что выход нового эпизода «Звездные
войны» будет способствовать росту продаж продукции Lego, посвя-
щенной героям этой киносаги. Интересно, что с 2012 года правами на
франшизу «Звездных войн» владеет Disney.
Компания Lego до сих пор находится под контролем семьи, кото-
рая придумала конструкторы еще в 1950-е годы.
(www.bbc.com/russian/news-42510777)
Text 2
Нейромаркетинг, или Как завладеть мозгом покупателя
Были ли у вас такие моменты, когда вы приходили домой и по-
нимали, что купили совершенно не нужную или не подходящую вам
вещь, поддавшись сиюминутным эмоциям: внезапному подъему
настроения, грусти, страху быть не таким, как все, усталости, потреб-
ности в общении и т. д.?
Вы можете не осознавать этого, но маркетологи давно научились
затрагивать наши эмоции и воздействовать на них. Они скрупулезно
отыскивают наши болевые точки и нажимают на них поочередно, ис-
следуя, где сильнее болит, – и все для того, чтобы заставить нас боль-
ше покупать.
Маркетологи копнули еще глубже и добрались до той части наше-
го существа, которая недоступна нам самим – наше подсознание. Они
научились выявлять естественные процессы, происходящие в нашем
228
мозге под воздействием разных факторов, и использовать получен-
ные знания в маркетинговых целях.
Термин «нейромаркетинг» представляет собой слияние слов
«нейробиология» (наука об устройстве, функционировании и разви-
тии нервной системы) и «маркетинг».
Эйл Смидтс (Ale Smidts), автор термина, считает, что нейромарке-
тинг позволяет «лучше понять потребителя и его реакцию на марке-
тинговые раздражители путем прямого измерения процессов в моз-
гу» и повысить «эффективность методов маркетинга, изучая реакцию
мозга».
Нейромаркетинг позволяет определить отношение потребителя
к продукции еще до того, как он сам его осознал, и даже больше – вли-
ять на него. В этом заключается главное отличие нейромаркетинга от
традиционного маркетинга, – он не требует сбора и анализа данных
о субъективных предпочтениях покупателя.
В нейромаркетинге используется множество методов, позволяю-
щих выявить подсознательное отношение потребителя к продукции /
дизайну / рекламе и их составным элементам. Вот некоторые из них.
Наблюдение за сердечно-сосудистой системой человека (измере-
ние частоты сердечных сокращений, давления и тонуса сосудов).
Измерение электрического сопротивления кожи (для выявления
повышенного потоотделения).
Регистрация сокращения мышц лица
Айтрекинг (регистрация направления взгляда, размера зрачка
и длительности задержки взгляда). Айтрекинг позволяет определить
степень концентрации человека на том или ином объекте и измене-
ние его эмоционального состояния.
Анализ вызванных потенциалов (анализ реакции мозга на те или
иные раздражители).
Но большее значение имеют методы, предоставляющие информа-
цию о функциональных состояниях головного мозга: ЭЭГ и фМРТ.
ЭЭГ – метод, позволяющий регистрировать ритмы мозговой
активности, меняющиеся в зависимости от изменений состояния чело-
века (эмоций, уровня концентрации внимания, бодрствования / сна).
фМРТ – аппарат, позволяющий проследить за изменениями дея-
тельности глубинных мозговых структур (а не только коры), которые
отвечают за эмоциональные проявления.

229
 Нейромаркетинг в действии
Теория теорией, но как же нейромаркетинг используется на прак-
тике? К нему обращаются при создании продукции или рекламной
кампании – он помогает определить, какой именно дизайн, цвет, вкус
продукта привлечет внимание покупателя и окажет на него большее
воздействие.
Чаще всего компании обращаются за услугами в нейромаркетин-
говые лаборатории, – одной из самых известных является Consumer
neuroscience, лаборатория от компании Nielsen.
Услуги по нейромаркетингу, предоставляемые компанией
Consumer neuroscience: фМРТ, айтрекинг, ЭЭГ, анализ изменения
голоса и движений, регистрация сокращения мышц лица, частоты
сердцебиения, дыхания, электрического сопротивления кожи, а так-
же скрытое тестирование. Картинка взята с посадочной страницы
сайта компании.
Но в редких случаях компания создает свою собственную лабо-
раторию. Внутренняя лаборатория есть у Coca Cola, где систематиче-
ски проводятся исследования на основе методов нейровизуализации.
Эти исследования помогают понять, какие рекламные видеоролики
или даже отдельные кадры окажут наибольшее влияние на людей.
Нейромаркетинг в разработке дизайна
Интересным примером использования нейромаркетинга в ди-
зайне является исследование от Frito Lay, компании, выпускающей
чипсы Lays. Оно показало, что использование натуральных и мато-
вых цветов, а также фотографий полезных для здоровья продуктов не
мотивируют к покупке. Поэтому компания стала использовать бле-
стящую упаковку ярких цветов с изображением жареных чипсов.
Исследование показало, что изображение натурального картофе-
ля на упаковке Lays не вызывает такого аппетита у покупателей, как
изображение зажаренных в масле чипсов.
Успешно применила нейромаркетинг и компания Campbell’s
с целью повышения продаж супа. В исследовании участвовало более
1500 человек: им демонстрировали разные варианты упаковки супа
Campbell’s и измеряли биометрические данные: влажность кожи,
сердцебиение, дыхание и т. д.
Результатом исследования стали изменения в дизайне: для каж-
дой разновидности супа был выбран свой цвет и изображение на

230
этикетке, был немного уменьшен размер банок, а также красный ло-
готип. Также из комплекта убрали ложку, – выяснилось, что мозг на
нее никак не реагирует.

Нейромаркетинг в рекламе
Нейромаркетинг применялся для рекламной кампании Mercedes-
Benz Daimler, в которой передняя часть автомобиля имитировала че-
ловеческие лица. Выяснилось, что эта реклама задействовала центр
удовольствия мозга испытуемых, и ее эффективность подтвердилась
повышением продаж компании на 12 % в первом квартале.
Компания Frito Lay тоже проводила анализ рекламы и при-
шла к выводу, что 30-секундная реклама более эффективна, чем
60-секундная.
Нейромаркетинг в кино
Используется нейромаркетинг и в киноиндустрии: проследить за
реакцией человека на развитие сюжета фильма, спецэффекты и вари-
анты концовок с помощью него не представляется сложным. Известен
случай о проведении нейромаркетингового исследования над филь-
мом «Хороший, плохой, злой», результаты которого показали, что все
зрители реагировали на фильм достаточно шаблонно. Поэтому этот
метод нейромаркетинга используется некоторыми продюсерами для
выбора наиболее привлекательной концовки фильма.
Интересное исследование провела компания Innerscope Research:
она показала трейлеры 40 фильмов более чем 1000 человек и измери-
ла их частоту сердечных сокращений, изменения дыхания, движения
глаз и степень потливости. Самые сильные реакции были вызваны
популярными блокбастерами, особенно фильмом «Пираты Кариб-
ского моря 3», – неудивительно, что фильм собрал $ 90 млн за первый
уикенд показов.
Как же знание нейробиологических и физических процессов,
происходящих в организме человека, позволяет маркетологам влиять

231
на людей? Благодаря воздействию на органы чувств: слух, зрение,
обоняние, вкус. Данное явление также называют «сенсорным марке-
тингом».
Согласно «Википедии», сенсорный маркетинг – тип маркетинга,
основной задачей которого является воздействие на чувства покупа-
телей (сенсорика) и их эмоциональное состояние, с целью увеличе-
ния продаж.
Самое значительное влияние маркетологи оказывают на нас че-
рез зрение, и не случайно: ведь большинство людей – визуалы. Поэто-
му работа над дизайном и грамотное цветовое решение логотипа ком-
пании, упаковки, сайта очень важно для успешного брендинга.
Например, для логотипа эффективно использовать яркие цвета
(красный, желтый, зеленый), а доказательством этому является успех
таких компаний, как Lays (использует в логотипе красный, желтый,
белый цвет), McDonalds (красный, желтый, белый, зеленый), Pringles
(красный, желтый) и т.д. Эти цвета мгновенно привлекают к себе вни-
мание, особенно красный и желтый.
Как сказал Николас Коро на «Российском Форуме Маркетинга
2016», «красный цвет – единственный цвет, который не переворачи-
вается в хрусталике, а значит опережает другие цвета и их восприятие,
вносится в мозг локомотивом и
кричит «Эгегей, я здесь!».
Это самый заметный, кри-
чащий цвет, гарантирующий
привлечение внимания. Са-
мым доказательным примером
эффективности его использо-
вания можно привести ком-
панию Coca Cola. На рекламу
компании Coca Cola трудно не обратить внимание, впрочем, как и на
все, что она создает.
Маркетинг «Кока-Колы» вообще поражает: он настолько хорош,
что люди выбирают этот напиток вопреки своим вкусовым предпо-
чтениям. Результат нейромаркетингового исследования показал, что
испытуемые предпочли бы купить именно «Кока Колу», хотя по вкусу
им больше нравился напиток «Пепси». И, возможно, использование
красного цвета тоже сыграло в этом свою роль.
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 Не все успешные компании используют яркие цвета, – при выбо-
ре цветового решения необходимо ориентироваться и на тип деятель-
ности компании: так, холодный голубой цвет эффективно использо-
вать компаниям, желающим подчеркнуть свой профессионализм (на-
пример, консалтинговым агентствам), а металлический цвет успешно
применяется брендами, выпускающими электронику (самый удачный
пример – Apple Inc.).
Другой способ визуального влияния – использование компанией
дизайна упаковок и логотипов, схожего с дизайном более известных
компаний. Это делается для того, чтобы вызвать у любителей попу-
лярной продукции подсознательное желание приобрести продукт.
Приведу примеры из личных наблюдений.

Недавно появилась серия продуктов от марки «Чудо» совмест-

но с PepsiCo – «Чудо детки». Ничего не напоминает? Сиреневый фон
и надпись белого цвета. Где-то мы это уже видели…
А еще бросается в глаза практически повсеместное использова-
ние буквы «М» с логотипа «Макдональдса» на ларьках с шаурмой,
и не только.
Почему? Почему эта буква оказалась на ларьке с шаурмой? Есть
вероятность, что наличие этой буквы в названии привлечет любите-
лей «Макдональдса» к этим ларькам. Эта буква, врезавшись в их под-
сознание, может послужить им своеобразным знаком, как бы наме-
кающим, – «здесь вкусно кормят».
Эффективным мотиватором к покупкам является фоновая му-
зыка в магазинах: легкая, приятная, необременяющая, но ритмичная
и достаточно динамичная, – она как бы побуждает к покупкам. Причем
в разных магазинах используется разная музыка: в магазинах одежды
– это музыка с модных подиумов, в детских магазинах – музыка для

233
детей, в супермаркетах – спокойная, ненавязчивая музыка, в массаж-
ных салонах – звуки природы и т. д.
Другой пример влияния на решение о покупке через слух –
ТВ- и радиореклама. Особенно хорошо врезаются в память рифмо-
ванные строчки: «Чистота – чисто Тайд!», «Gillette – лучше для муж-
чины нет», «Мезим – для желудка незаменим»; а также другие замыс-
ловатые рекламные слоганы.
Методы нейромаркетинга позволяют отслеживать реакцию моз-
га на разные вкусовые ощущения и использовать полученные данные
для улучшения вкуса пищи.
С одной стороны, это позволяет создавать удивительные кули-
нарные шедевры и улучшить вкус и качество продуктов. Но, с дру-
гой стороны, это может привести к использованию в пище веществ,
вызывающих привыкание (в качестве печального примера можно
привести глутамат натрия).
Unilever совместно с Neuroconsult провел нейромаркетинговое
исследование, чтобы узнать, что на самом деле думают потребители
о их популярном эскимо. Результаты исследования оправдали ожида-
ния компании: оказалось, что мороженное вызывало у испытуемых
гораздо большее удовольствие, чем шоколад и йогурт.
Воздействие на обоняние покупателей с целью продаж называ-
ется аромамаркетингом. В продуктовых магазинах, кафе, ресторанах
используются ароматы, повышающие аппетит (например, аромат
свежей выпечки, кофе, фруктов). В обувных магазинах применяется
аромат кожи, в спа-салонах – освежающие запахи леса, моря, цветов.
Все эти ароматы вдохновляют на покупки.
Другим способом влияния на потребителей является воздействие
на них через осязание. Самый простой пример – разработка прият-
ной на ощупь упаковки. На решение о покупке может также влиять
мягкость и шелковистость тканей, одежды, постельных принадлеж-
ностей, но это уже вопрос качества, а не маркетинга.
(texterra.ru/blog/neyromarketing-ili-kak-zavladet-mozgom-pokupatelya.html)

Part 19. Discussion. Comment on the following quotes.

1. A brand for a company is like a reputation for a person. You earn
reputation by trying to do hard things well. (Jeff Bezos)
2. The keys to brand success are self-definition, transparency,
authenticity and accountability. (Simon Mainwaring)

234
3. Think about what people are doing on Facebook today. They’re
keeping up with their friends and family, but they're also building
an image and identity for themselves, which in a sense is their
brand. They’re connecting with the audience that they want to
connect to. It's almost a disadvantage if you’re not on it now. (Mark
Zuckerberg
4. Intellectual property has the shelf life of a banana. (Bill Gates)

235
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236
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Видеоматериалы / Интернет-ресурсы

Образовательный портал The Great Courses.

URL: www.thegreatcourses.com
Образовательный сайт Floating University. URL: floatinguniversity.com
Лекция A. Edmans «Социальная ответственноcть бизнеса». URL:
www.youtube.com/watch?v=Z5KZhm19EO0
Интервью с Philippa Foster Back. URL: www.youtube.com/watch?
v=dSMwIkqsrWY
Онлайн-курс МООС Университета Британской Колумбии «Введение
в теорию маркетинга».
URL: www.edx.org/course/introduction-marketing- ubcx-busmktg1x
Образовательный сайт о современной фундаментальной науке.
URL: postnauka.ru
Образовательный сайт, посвященный финансам и бизнесу.
URL: www.investopedia.com
Образовательный сайт The Balance www.thebalance.com
Программа RT «Обзор Макса Кайзера».
URL: www.rt.com/shows/keiser-report/
Новостной канал Russia Today. URL: russian.rt.com/
Международный общественный информационный канал ВВС.
URL: bbc.com
Агентство интернет-маркетинга «Текстерра». URL: texterra.ru
Интернет-портал «Все Новостройки». URL: vsenovostroyki.ru
Аналитический портал для трейдеров Utmagazine.
URL: utmagazine.ru
Российское агентство международной информации «РИА Новости».
URL: ria.ru

237
 Учебное издание

Е. С. Кудинова
INTRODUCTION TO ECONOMICS
Учебное пособие
по английскому языку для студентов V курса, обучающихся
по специальности «Перевод и переводоведение»
по направлению подготовки
«Лингвистическое обеспечение военной деятельности»

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