government. Government purchases of goods and services account for about 21

per cent of GNP. The fourth category is net exports of goods and services,

about 1% of GNP.

Another way of determining GNP is the earnings-and-cost approach. This

method accounts for alt the money received for the production of goods and

services, it mea-sures receipts. Figuring gross national product by

counting what people receive requires calculating what the entire country

earns for the goods it makes and the services it performs. Included in

earnings are such things as business profits, wages and salaries, and

taxes' the government receives for its services. Also counted are interest

on deposits, money received as rent, and any other forms of income.

Business and government planners, investors, and consumers make decisions

based on their expectations of future economic performance. To help predict

expansion or contraction of the economy, government economists identified a

number of indicators. They fall into three categories: leading, coincident,

and lagging. Leading economic indicators rise or fall just before a major

change in economic activity. Coincident economic indicators change at about

the same time that shifts occur in general economic activity. Lagging

economic indicators rise or fall after a change in economic activity.

Following and interpreting all economic indicators is time-consuming. The

US Commerce Department, therefore, lists a composite index, or single

number, for each of the three sets of indicators. These composite indexes

are an average of all the indicators in each category.

№ 12 The rights of a customer and the responsibilities of a supplier.

When you buy something from a shop, you are making a contract. But you

want to make sure if this contract means that it's up to the shop to deal

with your complaints if the goods are not satisfactory. The first thing

that comes to your mind is that the goods must not be broken or damaged and

must work properly. The second thing that you find important is that the

goods must be as described - whether on the pack or by the salesman. It

makes you understand the third principle: The goods should be fit for their

purpose. This means the purpose for which most people buy those particular

goods. If you wanted something for a special purpose, you must have said

exactly what for.

Many people think that complaining about faulty goods or bad service is

never easy. Most of them dislike making a fuss. However, when you are

shopping, it is important to know your rights. You are quite sure that if

the shop sells you faulty goods, it has broken its side of the bargain. And

that is absolutely right. In this situation customer have the right to

return the goods and have a complete refund.

At that time if the good is broken and it was your fault than seller

shouldn’t return your money to you. That’ll be his right.

№8. Income and Spending.

Income is the money a person receives in exchange for work or property.

There are five basic types of income:

1. Employee compensation is the income earned by working for others. It

includes wages and fringe benefits such as health and accident insurance.

2. Proprietor compensation is the income that self-employed people earn.

3. Corporation profit is the income corporations have left after paying

all the expenses.

4. Interest is the money received by people and corporations for

depositing their money in savings account or lending it to others.

5. Rent is income from allowing others to use one's property temporarily.

The total income is the sum of 5 basic types.

One other type of income is a transfer payment - money one person or group

gives to another, though the receiver has not provided a specific good or

service. For example it can be gifts, inheritances, and aid to the poor are

three examples of transfer payments.

Now lets speak about work people. By the type of work people do workers

fall into one of four broad categories.

1. White collar workers are people who do jobs in offices, for example as

secretaries, teachers, and insurance agents.

2. Blue collar workers are people who do jobs in factories or outdoors.

3. Service workers provide services to other individuals or businesses.

4. Farmworkers are people who work on their own farms or those of others.

In the market system a person's income is determined by how the market

values that person's resources and skills.

People do a big mistake when they say that income is same as wealth.

Wealth is any resource that can be used to produce income. An individual's

possessions, such as a house, a car, or a stereo, are part of that person's

wealth. Each of these could be sold to produce income.

Now if we want to understand it we have to consider two women who receive

an income of $25,000 a year. One earns all of her income working at a bank.

The other receives her $25,000 income from dividends on stock worth

$250,000. The second woman is much wealthier than the first women.

At the end of my presentation I have to say that spending becomes income

for someone else.

№9. Making a personal budget.

When you live in loneliness you understand that something should be done

with your unlimited wants and limited resources. You should use your income

as effectively as possible. Choices must be made concerning spending and

saving. You never know whether you can afford another outing, or a disco,

or a concert. Than you come to the conclusion that you must develop a

useful personal budget. And if you want to do it you should keep track of

your actual income and expenses for a month, and, of course, at first you

have to clear out what should be recorded.

Money resources may include allowance, part-time jobs, babysitting,

errands, interest on savings. You must list all sources of income. And it

means that if somebody presented you with a sum of money on an account with

a bank, so you can rely on interest on savings and allowance have to be

included.

Than you should record how much you spend for food, entertainment,

clothing, college supplies, personal care, transportation, and

miscellaneous items. You wonder in which category you spend the most, the

least. You think that you should decide what changes to make in the budget

if you want to reduce your expenses.

You have to understand that there is some difference between fixed,

optional and flexible expenses. Fixed expenses are set in advance and must

be paid regularly (e.g. rent payments, tuition, higher purchase

installments). Flexible expenses are necessary but change with

circumstances (food, clothing, college supplies). Optional expenses vary

and are not always necessary (entertainment, personal care).

Thus you can compare your income and expenses. And of course you

understand if you want to live expenses should not be higher than income.

№10. The value of college education.

Every year millions of students graduate from high school. The decisions

they make will affect the rest of their lives. Some will choose to go to

college; some will want to get full-time jobs; others will decide to obtain

technical job training. In every case, economic reasoning will help

students make better choices.

Everybody decide to consider the costs and trade-offs connected with a

decision to go to college. And the main questions in this situation: Is a

college education worth the expense in terms of immediate and future

personal growth and economic well-being?

The opportunity costs of going to college involve a loss of income and a

loss of practical job experience while attending college. Lets consider two

mans: The Education Level of the first one is less than 12 years and his

Projected Lifetime Earnings is $850.000; The Education Level of the

second one is 5 years college and his Projected Lifetime Earnings is

$1.500.000. We see a big difference between them.

The trade-offs involved in going to college include using time and money

now to gain greater advantages in the future. But somebody think that if

you could invest $ 30.000 now, for instance, forego a college education,

and with your investment returns still have the same lifetime earning power

as a college. It’s of course can be true bat where do you get $30.000 if

you don’t have education. Besides nobody give you a job if you haven’t got

education and knowledge. And I am sure that my further education is worth

the time and money involved.

№ 14 Annual report of a company.

Just as teachers send out report cards to the Dean’s office each term,

corporations issue annual reports summarizing the progress made last year.

Stockholders and potential investors use the annual report to evaluate the

performance of corporation.

The annual report is a message to the stockholders-the owners-of a

corporation from the corporate management. The report tells the

stockholders the company’s financial status at the end of the fiscal year

and what the management sees for the future. Also, the annual report

fulfils a legal requirement. The Securities and Exchange Commission a

federal agency in the USA requires corporations to publish financial

information about their firm. With such information, investors can make

educated decisions.

Annual reports of company generally are divided into two sections. The

first section contains a letter to the stockholders from the chief

executive officer of a company. Accompanying this letter summarising the

company’s performance is a chart of financial highlights. Also frequently

included in the first section is an overview of the company’s organization.

The second section includes statistics on the company’s performance. Most

of the information appears in charts and graphs.

For example, the balance sheet is a chart that includes the assets (items

of value the company owns) and it’s liabilities (debts or claims against

the assets of the company). The balance sheet represents the financial

picture of the firm at the instant in time. The income statement shows the

profit or loss of the company for the year. This chart reports the income

the company received from sales, interest, and other sources. The operating

costs – salaries, advertising, maintenance – deducted from income total the

profit or loss. The statement of stockholders’ investment, or equity

includes information on the company’s stock such as number of shares

outstanding and issued.

Various parts of the annual report can be used to determine whether a

company is profitable. In addition to reporting on this current year, most

companies include in their annual reports comparisons of the current year

and the prior year’s financial information. Also important to stockholders

and investors is the company’s return on sales. For example, if a firm sold

$1 mln. worth of its products and its profit was $100,000; return on sales

would be 10%.

So we can say that annual reports help us to understand financial status

of the firm in the end of the fiscal year and to make educated decisions-

invest in company our capital or not.

№15. Money: history, functions and forms.

Today we buy bread, clothes with money in a shop. These are goods: we

exchange our money for goods which others sell to us. Today we travel on a

train or bus. or maintain a banking account, and we pay the charge or fee.

These are services: we exchange our money for the services which others

provide for us.

In a primitive community people obtain goods and services by barter. Trade

by barter is the earliest form of trade, when people offer goods in

exchange for what they want, that is they swap goods for other goods.

As primitive communities develop into more advanced societies people

realize they need some commodity they can use in exchange for anything,

some commodity that does not decay and remains valuable, some commodity

with the help of which people can measure the value of one thing against

the value of another thing. Such commodity is money. Thus money is a

necessary part of any civilized society, ft serves as:(1) medium of

exchange; (2) a store of wealth; (3) a measure of value.

Money means coins, banknotes and cash in the bank account. We use it to

make payments. Nowadays we know that the units of money must have certain

qualities to be successful. They must be:

1. Standard. They must all be of the same kind.

2. Durable. They must be strong and long-lasting, so that they are a store

of value and do not wear out easily.

3. Scarce. They must be difficult to come by to keep their value.

4. Acceptable. They must be accepted as a medium of exchange in a.

5. Portable. They must be easy to carry.

6. Divisible. It must be possible to divide the units of money of large

value into smaller values.

In the past many things were used as the medium of exchange — corn, furs,

rice, tobacco, salt tea, rum — there is no end to them. In time people

realized that metals were superior to the commodities previously mentioned.

The Ancient Britons and Greek used iron, the Romans used copper but

gradually silver and gold replaced them.

The advent of coinage is a step forward because coins are free from most

of the disadvantages of earlier forms of money. The first coins are

credited to China around about 1.000. B.C.

After coins came notes. The hardest problem for anyone with money then was

to find somewhere safe to keep it. Gold and silversmiths had safes, because

their trade was traffic in coin and bullion, and they needed somewhere

secure to keep their stocks.

So it came about in the seventeenth century that goldsmiths took theses

deposits for safe keeping. They issued a receipt. More and more people come

to hold these receipts and they began to circulate for value among

merchants. They come to be trusted and become usual in payment, as easier,

lighter and quicker to handle than a lot of coin.

In the beginning people had to pay a fee for having money kept safe. Then

goldsmith understood that some of his receipts were always out, circulating

in the hands of the merchants. So the goldsmith always had some cash in

hand, and he started to lend this out. This was the beginning of banks.

№16. The Bank of England.

c) keeps accounts for overseas central banks

The first and most important function of a central bank is to advise the

government on the making of the country's financial policy and then help to

carry it out which means carefully monitoring the money supply. Its

business at first was to receive money on deposit, discount approved bills

of exchange and lend against satisfactory security. At first this lending

was nearly all to the government, and gradually the Bank came to perform

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