The School of Domestic and International Tourism 3rd year - part time studies Course

tutor: PhD Dude Roxana-Emanuela 2nd SEMESTER

Unit 13 E-Commerce 177

Unit 14 Depreciation 192

Unit 15 The Stock Market 208

Unit 16 European Central Bank 220

UNIT 13 E-COMMERCE

1. ^ LEAD-IN DISCUSSION
1. Have you ever tried buying something by means of e-commerce?
2. How long do you have to wait for a certain product to be delivered to you once you have ordered it via e-commerce?
3. What payment methods do you know to be used with electronic trade?
4. Are there any risks involved in e-commerce from the buyer's or from the supplier's point of view?

2. ^ READING Projects Aimed at Tracking Consumers' Online Moves

By Gene J. Koprowski: E-Commerce Times 05/16/05
(1) Project Apollo, which is among the largest current projects of its kind, will track with its pilot panel launching later this year the exposure of
individuals to ads on the 'Net, as well as on traditional media. A tracking technology called a Portable People Meter, similar to a mobile phone, has
been adapted for the project.
(2) Marketers have always wanted to track their customers' every move. Now, new scanning technologies linked to the Internet, may enable them
to do so. Earlier this month ratings service Arbitron, Inc. and advertising specialty producer VNU disclosed that they have agreed to deploy during
the next nine months a pilot project to collect multi-media purchase data from consumers. The pilot project, dubbed Project Apollo, will debut with
a panel of more than 6,000 American households. It has been in the works for a year-and-a-half.
(3) "This agreement reflects the continuing progress that our two companies have been making since October, 2004 toward developing and
deploying an innovative national marketing research service based on a portfolio of technologies and other resources from multiple companies,"
said Susan Whiting, president and CEO of Nielsen Media Research, a division of VNU.

Popping Up All Over

(4) Various other advertising agencies and online marketers have also been creating new tracking technologies, though the projects have not been
as high-profile as the Arbitron and VNU deal. An interactive travel agency called usdm.net, for example, monitors consumer exposure to ads "and
can track and measure impressions," said project spokesperson Sara Jackson Zaval . "They can also track consumers behaviorally." Based in
Corpus Christi, Texas, usdm.net, which stands for U.S. Destination Marketing, Inc., also owns its own travel portal, OfficialTravelGuide.com.
(5) Marketers are also measuring consumers' receptivity to marketing messages sent by email, not just their impressions of Web pages.
ExactTarget.com, an e-mail service provider, and WebTrends.com, a maker of tracking technology, partnered recently to enable users to send e-
mail marketing messages and determine, in real-time, "when it was delivered, if it was opened, if the reader clicked on links, and how long they
stayed on a particular Web page," said ExactTarget.com spokesperson Linda Muskin.
Analyzing Behavior
(6) Based on what the consumers did when interacting with the e-mail, the technology tool could also trigger an automatic e-mail response. For
example, if you got an e-mail, clicked through the site, but abandoned a shopping cart, that action could trigger an e-mail with an incentive,
offering you free shipping, suggesting other colors and similar products. "This is all part of data driven marketing," Muskin said.
(7) Other plans in development include an initiative begun by Edmunds.com, Inc., a leading online source for consumers for information about
automobiles. The company is implementing new tracking technology "and will soon be able to analyze the behavior of individuals who look at a
specific ad on our site to see if people who see a specific ad will go to other, related areas of our site compared to people who did not see the ad,"
said Pam Krebs, director of communications strategy at the Santa Monica, Calif.-based firm. "For example, what is the likelihood that someone
who sees a Toyota ad in our new car index pages will go to the Toyota vehicle pages versus someone who never saw the Toyota ad?" she said.
(8) The reason that the technologies are debuting in this niche is that online marketing agencies are being asked to verify that their ads produce
results." We agency people are under increasing pressure to document results to justify programs," said Irv Hamilton, a publicist with the E-
agency, based in Oakland, Calif. "Monitoring technology is expanding quickly and provides us with new tools." Project Apollo, which is among
the largest current projects of its kind, will track with its pilot panel launching later this year the exposure of individuals to ads on the 'Net, as well
as on traditional media.
Awaiting Results
(9) A tracking technology called a Portable People Meter, similar to a mobile phone has been
adapted for the project, and, combined with other, networked technologies, will enable
Nielsen to track every purchase by consumers, both online and offline. "The Project Apollo
pilot panel will provide advertisers what they have been asking for -- a means to magnify the
effectiveness of their marketing," said Steve Morris, president and CEO of Arbitron, Inc.
(10) Some aren't convinced quite yet that the effort will be successful. Dave Stanton, a
spokesman for Knowledge Networks, developer of media measurement technology, said the
Arbitron project will not be pervasive because "Project Apollo can only measure someone's
media activity if they agree to be part of the survey."

2.1. Reading Comprehension

Answer the following questions related to the text:
1.What is the main function of Project Apollo ?
2. What other e-customer tracking initiatives does the text mention besides Project Apollo and which are the particularities of these tracking
technologies?
3. What is the main drawback of Project Apollo, according to skeptical reactions?
4. Find words in the text that have the following meaning. The number of the paragraph where you can find the word is specified in brackets after
each definition:

a. to find something that is usually difficult to find by searching or making inquiries (para 1)
b. a board ( in a car, plane, boat) on which the controls are fixed (para 1)
c. a level on a scale that shows how good, important or popular someone or something is; also
a list that shows which films, television programmes etc. are the most popular (para 2)
d. to make something publicly known, especially after it has been kept secret from the public
(para 2)
e. to organize people or things, especially soldiers and military equipment, so that they are in
the right place and ready to be used (para 2)
f. to buy something, especially something big or expensive (para 2)
g. ( usually in the passive) to give something or someone a humorous name that is indicative
of their character or nature (para 2)
h. to appear publicly for the first time ( about something new and important) (para 2)
i. all the people who live together in one house (para 2)
j. to appear suddenly and unexpectedly (para 4)
k. to become partners in a dance, game or in business (para 5)
l. someone who has been chosen to speak officially for a group, organization or government (para 5)
m. to make something happen very quickly (para 6)
n. something which encourages you to work harder, start new activities (para 6) o. the delivery of goods (para 6)
p. all the people who buy a particular product or use a particular service (para 8) q. convincing (para 10)

3.V-/ LANGUAGE WORK

TEXT 2 E-BUSINESS
Online Consumers Window Shop More than Impulse Buy
adapted from Jack M. Germain
E-Commerce Times 05/02/05 According to a report on Internet shopping habits, online merchants need to shift their focus from why
shoppers abort shopping carts to why they leave web sites without buying. This digital window shopping activity is clearly revealed in sales data
gathered by ScanAlert between June 2004 and March 2005 from retailers such as GSI Commerce, Ritz Camera, Tiger Direct and other online
merchants.
The Internet might be turning into the ultimate window shopping experience for online shoppers. Greater sophistication with browsing is making
consumers more prone to comparing different shopping offers online before actually buying.
Internet shoppers are more prone to visiting 10 or more web sites before returning to a favored location hours or days later to make a purchase.
This new trend of leaving a web site before completing a sale suggests that Internet merchants need to rethink their marketing strategy and web site
design, says the author of an exhaustive study.

Report Strategy
This digital window shopping activity is clearly revealed in sales data gathered by 2005. Titled ScanAlert between June 2004 and March 2005.
Titled "A New Era of Digital Window Shopping: From Shopping Cart Abandonment to Purchase" , it has involved participating companies which
use security firm ScanAlert's Hacker Safe certification, a system that certifies web sites as secure from hackers. It audits e-commerce web sites and
maintains daily remote security sweeps to make sure hackers and other Internet intrusions are locked out. ScanAlert tracks the relationship of sales
from web sites that display the Hacker Safe seal and those that do not. The security firm conducted its study of buying habits by using persistent
cookies to track web visitors. A permanent cookie is a text file containing an expiration date stored on a web site visitor's hard drive until it expires
or until the user deletes it. Buying Habits Changing
Online consumers are no longer rushing to click the shopping cart button on web sites. Instead, they spend days digitally window-shopping before
buying, abandoning shopping carts with an ease that frustrates and often confuses online retailers.
Studies showed that the average time delay between a consumer's first visit to a web site and the first purchase was just over 19 hours. About 35
percent of all tracked shoppers took more than 12 hours to make a buy decision, while 21 percent took more than three days, with 14 percent taking
more than one week to decide where to buy. The abandonment issue and the delay in completing the shopping cart purchase shows behavior that is
radically different from two years ago. Shopping Cart Redesign
The length of time from initial visit to actual purchase varies from site to site depending on customer demographics, brand recognition, the number
of competitors online and average product price. The data suggests that shopping cart abandonment is actually an habitual part of many consumers'
shopping behavior prior to purchasing.
Even more telling, noted the study, is that the shoppers spending the longest time shopping
are also the most concerned about the safety of the sites where they shop. The trust factor can
become both a strong motivator and a strong barrier to completing a sale.
Thus, site designers must make the shopping experience more informative and the sense of
safety more memorable. Otherwise, those who abandon their shopping carts will also abandon
the web site later when it comes to deciding where to buy.
Comparison: a New Factor
According to another report, much of the observed increase in shopping cart abandonment over the past two years results from an increase in
comparison shopping. As consumers learned to use the shopping cart as a comparison shopping tool, they also learned to leave the Web site as a
natural characteristic of electronic window shopping.
The consumer's ability to make product comparisons online is a factor in site abandonment as well. The study shows that the shortest buying delays
involve shopping for the most unique products, while the longest delays occur for more common items.
Web shoppers are now using the Internet as a "catalog of catalogs." This means that web site operators need new web site designs to better
accommodate digital window shopping and to encourage visitors to return.
Changing the Rules
A common thread is present with all the consumer trackings observed by the ScanAlert study. Consumers are using the web tools differently than
merchants planned in designing them. For instance, merchants built trust and security into the concept of the shopping cart. However, consumers
want to see trust in the web site itself. Consumers assess an Internet storefront in much the same way as they view brick and mortar stores. Site
appearance, convenience and service all matter.

Shopping cart use is different as well. At each site, shoppers typically load the same or similar items into the shopping cart as a convenient way to
compare total costs, including shipping charges. The shoppers' intent is not to complete a purchase unless they have returned to the site to buy.
However, price is not the ultimate determiner. ScanAlert's data shows that safety and trust often trump price and availability in the online
consumers' value calculation. 18-Hour Surprise
John Halliburton, e-commerce marketing manager for Martel Brothers Performance, didn't expect to learn that his customers often take 18 hours to
make a purchase from his company's Web site.
In business for 17 years, Martel Brothers Performance sells racing and high-performance parts through both its brick-and-mortar and online stores.
Halliburton uses pay-per-click keyword purchases at the major search engines to acquire new customers and uses a mailing list to market to the
existing customer base.
"Our online business now accounts for about 75 percent of total sales. We learned from the tracking report that the average time to conversion for
our site was about 18 hours. That surprised us," Halliburton told the E-Commerce Times. "We expected much lower, and frankly it raises more
questions than provides answers."
Halliburton is concerned about the implications of the trend report. Prior to the release of the trend report, he was experimenting with loading his
pay-per-click campaigns for certain hours when customers are actively researching and price shopping.
"In the short term, we're testing methods that make it easier for the customer to come back and buy from us after the initial visit. We're also
tweaking our pay-per-click landing pages in an effort to close the sale on the initial visit," Halliburton said.
"It is critical that we nail this. We know the waiting times will vary depending on the cost and complexity of the product, but we'd like to reduce
the average," he said. "I'm fairly certain there isn't a one-size-fits-all solution for us." Another Vendor Reaction
For Kevin Beresford, president and CEO of Shari's Berries, the shopping trend results left him looking for more information. Shari's Berries sells
gourmet chocolate-dipped strawberries in a variety of designs.
Beresford learned from the trend report that the average waiting time for customers to return for a purchase is 15 hours.
"The report certainly piqued my curiosity as it was not what I expected," Beresford told the E-Commerce Times. "I have to dig deeper. I want more
data on how many people are buying on first visit. I need to understand why they come back and why they didn't buy the first time." During peak
buying seasons, 88 percent of Shari's sales volume comes through the Internet. Beresford said he was particularly interested in the report's
implications. He will focus on seeing where changes are needed on the web site. "Knowing how to serve up the information better would increase
our sales. This would very much determine how we do business," he said.

1. Translate or define in English the underlined words or phrases from the text above.

2. Enlarge upon the following issues based on the information from the text:
a. shoppers' habits during the process of electronic buying
b. similarities and differences between electronic and traditional purchases
c. the relevance of the time delay between a customer's initial visit of a web site and the
actual purchase
d. comparison shopping
 e. steps taken by site designers to stimulate electronic purchases
f. Haliburton and Beresford's response to the results of ScanAlert's report.

GRAMMAR STUDY

SENTENCE STRUCTURE Relative

clauses

1. The prize for this competition went to the man who was 40.
2. The prize for this competition went to the man, who was 40.
In the first sentence, there were several men who could have obtained the prize and the winner was the man aged 40. The
information in this relative clause is therefore essential to the meaning of the sentence. Sentence (1) provides an example of a defining
relative clause.
In the second sentence, there was only one man among the competitors and he was the winner. The fact that he was 40 is
additional information and not essential to the meaning. Sentence (2) provides an example of a non-defining relative clause.

Defining relative clauses

a. Commas are not used to separate the relative clause from the rest of the sentence.
b. Introductory who replaces a person
This is the student who did best in the exam.
c. Introductory which replaces a thing:
This is the subject that interests me most.
d. that can be used instead of who or which:
The man that you wanted to talk to has arrived.
It is an aspect that concerns us all.
e. When the relative pronoun is a direct object, it can be omitted:
The painting she wanted has been sold.
f. who and which are never used as object pronouns after superlatives, time expressions or
indefinite pronouns. They are either omitted or replaced by that:
This is the most expensive gift (that) I have ever been given.
I met him on the day (that) he was due to take the plane to Los Angeles.
Choose a destination anywhere (that) you want.
g. The possessive pronoun for both people and things is whose:
He seemed to be a man whose demands were hard to fulfill.
We stayed in a room whose only furniture was a table, two chairs and a bed.
Non-defining relative clauses
a. Commas separate these clauses from the rest of the sentence.
b. that cannot be used to replace who, which, whom.
c. The relative pronoun cannot be omitted.

Temporal clauses

Temporal clauses may prove to be quite restrictive in the range of tenses that can be used for the verbs appearing inside such clauses.

a. When the verb in the main clause is used in the present tense, the verb in the temporal
clause may accept any tense.
b. When the verb in the main clause is used with the future tense, we may encounter different
tenses in the temporal clause:
--- for simultaneity with the main clause, the temporal clause is introduced by when, until, while or as soon as and it contains a verb in the
present tense. We 'll buy a new house when we have enough money. While always takes a verb in the continuous aspect: I'llkeep an eye on the
luggage whileyou're buying the tickets.
--- for anteriority towards the main clause simple present or present perfect must be used in the temporal clause:
I'll lendyou the bike as soon as Ihave hada ride in thepark.
When translating these sentences into Romanian, future tense can be used for the verbs in the temporal clause. The use of future tense in
English temporal clauses is not allowed.
c. When the verb in the main clause is used in one of the past tenses, we may encounter the
following tenses in the temporal clause:
--- past tense for simultaneity
The weather was fine when we started the journey.
--- past perfect to express anteriority:
I was sure he would call me up as soon as he had finished the task.
When the temporal clause is introduced by after or before, its verb can take either past tense or past perfect:
I arrived after he started / he had started.
A considerable period of time passed / had passed before he finally made up his mind to tell the truth.

Causative clauses

Causative clauses are introduced by because, as, since:

I got up very late this morning because it was Sunday and I didn't have to go to work. Since it was Sunday and I didn't have to go to work, I
got up very late this morning. The causative clause can be reduced to other constructions: Not knowing anybody at the party, he left. I was
criticizedfor having behaved so rudely to the stranger. Because of my rude attitude, I was severely reprimanded. I was impatient to finally
meet them again after such a prolonged absence.

Comparative clauses

They may be introduced by as or than: The book is not as interesting

as I thought.
They witnessed such a horrible scene as they had never seen before. They came back home the same time
as I did. He is cleverer than I have expected.

Other types of comparative clauses:

The richer you become, the more competitors you 'll have.
Comparative clauses introduced by as if/ as though use present or future indicative to express a real comparison:
It looks as if the snow is going to melt.

It looks as if he is very successful with this kind of audience.

Past Tense (for simultaneity) and Past Perfect (for anteriority) are used to express an imaginary comparison: She sings/ sang as if she were
Maria Callas. He eats/ ate as if he had been starving for days. Reduced equivalent constructions: He walks as if under hypnosis. He ran as if
panic-stricken.

4.1. Join the following sentences using relative pronouns. Insert commas where
necessary:

a. Madrid is a very fine city to visit. It gets extremely crowded in summer.

b. You lent me a tent. It was damaged in a storm. You heard about the storm on the news.
c. The woman lives next door. She bought a dog. It barks all night.
d. The price of petrol is going up again. It rose only last month.
e. We rented a cottage from a man. He has written a novel. The novel has become a bestseller.
f. I asked you to type some letters for me. The letters are full of careless errors.
g. I told you about a device. The device will be launched next week. It has been produced by a
completely new method.

4.2. In the following sentences, omit the relative pronoun or replace it with that where
possible:

a. The book which you borrowed is long overdue at the library.

b. We stopped at a restaurant which is said to have the highest prices in town.
c. They eventually decided to part with their old car, which had served them for so many
years.
d. You should make sure that the travel agency which you deal with provides you with the
best services.
e. I asked to speak to the manager, who turned out to be a former classmate of mine.

4.3. Complete the blanks with the right tense of the verbs in brackets:
a. I_________________(help) my grandfather in the garden as soon as I________________________________________(have) some
free time.
b. We__________________________(not finish) the meeting until everybody____________________________________(state) their
point of view.
c. He_________________(have to) behave as well as he can when he______________________________________(go) to that job
interview.
d. They___________________(not leave) until they____________________________(finish) fixing the engine.
e. My wife_______________________(be) delighted when she___________________________(hear) the news.
f. My friends________________________(buy) a new car as soon as they____________________________(sell) the old one.
g. Look after the other guests while I _______________________________(see) him off to the station.

4.4. Match the two halves of the sentences:

a. By the time we reach home,

b. The airport will remain closed
c. She arrived earlier
d. Let me know
e. As soon as summer sets in,

1. so that she might have more time on her hands to cope with all activities on her agenda.
2. the beaches will be full of holiday-makers.
3. the film will have already begun.
4. when you are willing to be interviewed by one of our reporters.
5. until further notice.

5. "SJfr' BUSINESS SKILLS

Read the following text:

Internet Companies Look to China

adapted from Verne Kopytoff San Francisco

Chronicle 05/11/05

Major American Web sites have paid varying degrees of attention to China through the years, but they're all focusing intensely on the
country these days. Bo Shao, chairman of Eachnet, said that the potential for e-commerce in China is tremendous and that his company is
well-positioned to thrive. At the same time, he said that competition is intense. China's burgeoning Internet industry is increasingly being
challenged by U.S. competitors including Yahoo, Google and eBay.
This emphasis on China, part of a broad trend by U.S. technology companies, was a major topic of discussion at the recent annual Hua Yan
Science & Technology conference in Santa Clara, California. U.S. and Chinese business leaders, venture capitalists and investment bankers
talk about China's technology industry and what is believed to be its lucrative future.

Potential Growth
At the same time, China holds an array of risks for U.S. companies. Its legal system is in constant flux and some industries may be due for a
shakeout because of an excess of competitors.
Feng Deng, vice president of strategy for Juniper Networks and an organizer of the conference, said that U.S. firms expanding into China
can't expect immediate success. Rather, it could take a U.S. firm years to turn a profit after learning the Chinese way of doing business. "Are
we going to expect a lot of short-term success? My opinion is no," Deng said. "But is it worth to do it? Yes."
China's Internet market is one area of potential growth. Home-born web sites, which make money from online advertising, subscriptions and
fees, have gained a big following. Sina Corp., Sohu.com and Netease.com are China's top web portals. Baidu.com is among the leading
search engines. Shanda Interactive Entertainment is the biggest online gaming company. Alibaba is a force in online auctions.
Morgan Stanley estimates that there were 94 million Internet users in China at the end of 2004. Analysts expect that number to soar in the
coming years as online use spreads from its current base among the 30-and-under generation.

Intense Focus on China

American Internet firms are paying close attention to China's Internet market, but so far, their record is mixed. "They're not doing quite
well," said Charles Zhang, chief executive of Sohu.com, the Beijing-based Web portal. "China isn't their main market, and their strategy is
more U.S.-based and doesn't fit for competing in China."
Major American Web sites have paid varying degrees of attention to China through the years, but they're all focusing intensely on the
country these days. Last year, Yahoo, in Sunnyvale, California, bought 3721 Network Software, a Hong Kong firm that creates search
technology and that has major operations in Beijing. Google, in Mountain View, California, made a minority investment last year in
Baidu.com, the Chinese search engine. It also disclosed this week that it had received the Chinese government's approval to open an office in
China. EBay's management is pouring money into its China subsidiary as its U.S. business slows. The San Jose, California, company bought
the operation, Eachnet, in 2003. Bo Shao, chairman of Eachnet, said that the potential for e-commerce in China is tremendous and that his
company is well-positioned to thrive. At the same time, he said that competition is intense.

Follower Image Fading

"Obviously, it's too early to tell who will be the winner," said Shao, who also helped organize the conference. China has a reputation for
being a follower rather than a leader in technology. But that image is fading now that the nation is becoming a potential innovator in online
gaming and mobile phones. China is the world's leader in the number of mobile-phone users with 334 million at the end of 2004, nearly 90
percent more than in the United States, according to Morgan Stanley.
Paul Hsiao, a venture capitalist with New Enterprise Associates in Menlo Park, California, said that executives in his portfolio companies
now make a point of visiting China to find out what's new in mobile-phone technology. "The first trip of some of our portfolio CEOs is to
China because that's where the early adopters are," he said.

Sky 's the Limit

Organizers have hoped that bringing together Chinese and American business leaders to the
Santa Clara conference has fostered closer ties. Participants were not only from the Internet
industry, but also from semiconductors, wireless technology and software.
In a prelude to the conference, the association held a private summit during the week in
Pebble Beach, California. Some U.S. business leaders also attended, including Jerry Yang,
Yahoo's co-founder, and John Chambers, Cisco Systems chief executive officer.
There was a big presence of China's new breed of executives, whose sky's-the-limit attitudes
are reminiscent of U.S. technology leaders during the dot-com boom.
Hsiao, the venture capitalist, said he attended the summit to hear the latest buzz about technology in China. He was also on the lookout for
potential partners for his portfolio companies and new investment opportunities. Hsiao acknowledged the uncertainties about giving millions
of dollars in venture capital to Chinese firms. Because private enterprise is so new there, it's difficult to know who is a good manager, he
said. "You're more cautious," he said. "You spend more time doing your due diligence."
Accounting scandals involving Chinese companies have exacerbated the fears. So, too, have the Chinese government's frequent changes in
regulations related to foreign investment, among other factors.

Another troubling issue is that parts of China's technology industry may be overheated. Shares of many publicly traded companies have high
valuations, raising the possibility of a stock market retrenchment.

Consolidation Likely
Furthermore, some technology sectors feature a dizzying range of competitors. Some consolidation may be inevitable, executives said. Many
Chinese executives are looking to partner with U.S. companies to distribute their products in the United States or vice versa. For the most
part, Chinese technology companies have avoided expanding directly into the U.S. market. Rather, they prefer to focus on other Asian
nations, where potential growth is greater, and developing nations like Brazil. Lenovo Group, the Beijing computer manufacturer that bought
IBM's personal computer business for US$1.75 billion, is an exception. The acquisition gave the company an immediate beachhead in the
United States and made it the third-largest PC-maker worldwide.
Ying Wu, chief executive of UTStarcom, an Alameda, California maker of telecommunications equipment that has most of its factories in
Asia, didn't see the business relationship between the United States and China as competitive but rather cooperative. "The U.S. has good
technology and financial power," Wu said. "But China has the huge market, much more than the U.S., so I think that the U.S. and China can
benefit from each other."

Task: Translate into Romanian the passage entitled "Sky's the Limit".
Write a summary of the text above in about 250 words.

CASE STUDY
7. TRANSLATION
Comertul electronic
Evoluţia economiei mondiale va fi în mod cert influenţată de comerţul electronic (e-commerce). Acesta va asigura accesul la noi pieţe de
desfacere, devenind un instrument vital în contextul fenomenului de globalizare. Comerţul electronic (e-commerce) desemnează o gamă
largă de servicii suport pentru procesele de afaceri, incluzând poşta electronică schimbată în cadrul organizaţiilor, cataloagele electronice,
sistemele suport pentru comerţul cu mărfuri şi servicii, pentru preluare de comenzi, logistică şi tranzacţii, sistemele de raportare statistică şi
informaţiile atât de necesare managementului.

Avantajele comerţului electronic (e-commerce):

• Creşterea semnificativă a vitezei de comunicare;
• Reducerea stocurilor şi a costurilor legate de procesul de cumpărare;
• Micşorarea virtuală a distanţei dintre furnizori şi clienţi. Practic, imaginaţi-vă ce uşor este să vinzi produse şi servicii la nivel
naţional, beneficiind doar de puterea unui magazin virtual;

• Reducerea costurilor de promovare.

Dezavantaje:
• Gradul de nesiguranţă. In acest moment cumpărătorii români sunt foarte sceptici în privinţa achiziţionării de produse prin
intermediul comerţului electronic şi al Internetului;
• Infrastructura - Internetul a fost conceput ca un mediu deschis, comunitar, bazat pe interacţiune, dar nu neaparat sigur. Sistemele
de securitate se dezvoltă as we speek, pentru a asigura suportul necesar dezvoltării şi răspândirii comerţului electronic;
• Mentalitatea - probabil unul dintre cele mai mari păcate ale unei societăţi. Întotdeauna un serviciu nou este privit cu suspiciune,
iar mentalitatea aparte a unor persoane de a profita ilegal de pe urma comerţului electronic nu este în nici un caz în măsură să
permită acceptarea acestuia ca o formă de comerţ concurenta;
• Nu în ultimul rând, ignoranţa multor persoane, refuzul de a accepta tehnologiile noi şi progresul tehnic, dar şi lipsa unei
infrastructuri de telecomunicaţii adecvate. Costurile aferente unui acces Internet pentru acasă sunt încă nejustificat de ridicate, şi o
piedică probabil mai mare decât cea a mentalităţii.

DEPRECIATION

UNIT 14
3. ^y Lead-In Discussion
a. What do you know, from your accountancy lectures, about depreciation?
b. Are you familiar with any methods of calculating depreciation? What do they consist
of?
4. ^>*^ Reading

Depreciation

According to Ameritrade, "Depreciation is the process by which a company gradually records the loss in value of a fixed asset. The purpose
of recording depreciation as an expense over a period is to spread the initial purchase price of the fixed asset over its useful life. Each time a
company prepares its financial statements, it records a depreciation expense to allocate the loss in value of the machines, equipment or cars it
has purchased. However, unlike other expenses, depreciation expense is a "non-cash" charge. This simply means that no money is actually
paid at the time in which the expense is incurred."
The concept of depreciation is really pretty simple. For example, let's say you purchase a truck for your business. The truck loses value the
minute you drive it out of the dealership. The truck is considered an operational asset in running your business. Each year that you own the
truck, it loses some value, until the truck finally stops running and has no value to the business. Measuring the loss in value of an asset is
known as depreciation. Depreciation is considered an expense and is listed in an income statement under expenses. In addition to vehicles
that may be used in your business, you can depreciate office furniture, office equipment, any buildings you own, and machinery you use to
manufacture products. Land is not considered an expense, nor can it be depreciated. Land does not wear out like vehicles or equipment.
To find the annual depreciation cost for your assets, you need to know the initial cost of the assets. You also need to determine how many
years you think the assets will retain some value for your business. In the case of the truck, it may only have a useful life of ten years before
it wears out and loses all value.
Straight-line depreciation is considered to be the most common method of depreciating assets. To compute the amount of annual depreciation
expense using the straight-line method requires two numbers: the initial cost of the asset and its estimated useful life. For example, you
purchase a truck for $20,000 and expect it to have use in your business for ten years. Using the straight-line method for determining
depreciation, you would divide the initial cost of the truck by its useful life. The $20,000 becomes a depreciation expense that is reported on
your income statement under operation expenses at the end of each year. For tax purposes, some accountants prefer to use other methods of
accelerating depreciation in order to record larger amounts of depreciation in the early years of the asset to reduce tax bills as soon as
possible.
You generally cannot deduct, in one year, the entire cost of property you purchased, either for use in your trade or business or to produce
income, if the property has a useful life substantially beyond the tax year. Instead, you can depreciate it. That is, you can spread the cost over
a number of years, and deduct a part of the cost each year.
The kinds of property that you can depreciate include machinery, equipment, buildings, vehicles, and furniture. You cannot claim
depreciation on property held for personal purposes. If you use property, such as a car, for both business or investment and personal
purposes, only the business or investment use portion may be depreciated.
The simplest and most commonly used, straight line depreciation is calculated by taking the purchase or acquisition price of an asset
subtracted by the salvage value divided by the total productive years the asset can be reasonably expected to benefit the company [called
"useful life" in accounting jargon].
Another way of accounting for depreciation is to use one of the accelerated methods. These include the Sum of the Year's Digits and the
Declining Balance [either 150 or 200%] methods. These accelerated methods are more conservative and, in most cases, accurate. They
assume that an asset loses a majority of its value in the first several years of use.
To calculate depreciation charges using the sum of the year's digits method, take the expected
life of an asset (in years) count back to one and add the figures together. Example:
10 years useful life = 10 + 9 + 8 + 7 + 6 +5 + 4 + 3 + 2 + 1 Sum of the years = 55
In the first year, the asset would be depreciated 10/55 in value [the fraction 10/55 is equal to
18.18%] the first year, 9/55 [16.36%] the second year, 8/55 [14.54%] the third year, and so
on.
The double declining balance depreciation method is like the straight-line method on steroids. To use it, accountants first calculate
depreciation as if they were using the straight line method. They then figure out the total percentage of the asset that is depreciated the first
year and double it. Each subsequent year, that same percentage is multiplied by the remaining balance to be depreciated. At some point, the
value will be lower than the straight-line charge, at which point, the double declining method will be scrapped and straight line used for the
remainder of the asset's life.
In Security Analysis, the classic 1934 edition, Benjamin Graham recommended the investor answer three questions when dealing with the
effects of deprecation on a business:
1. Is depreciation reflected in the earnings statement?
2. Is management using conservative and (as much as possible) accurate depreciation rates? Accounting rules allow assets to be written off
over a considerable time period. Buildings, for example, can be depreciated anywhere from ten to thirty years, resulting in large differences
in charges depending upon the time frame a particular business uses.
3. Are the cost or base to which the depreciation rates applied reasonable accurate? A company may set unrealistic salvage values on its
assets, thus reducing the amount of depreciation charges it must take every year.

2.1 Decide whether the following statements are true or false.

• The kinds of property that you can depreciate do not include machinery and equipment.
• Depreciation is recorded as an expense over a period so as to spread the initial purchase price of the fixed asset over its useful life.
• Land is also considered an expense, and it can be depreciated, since it also wears out.
• The double declining balance depreciation method is completely different from the straight-line method.
• To be able to find the annual depreciation cost for your assets, you need to know the initial cost of the assets.

2.2 Answer the following questions based on the information given in the text:
• What does the straight-line depreciation method consist of?
• Why are accelerated depreciation methods sometimes preferred?
3>^/ LANGUAGE WORK

3.1. Collocate the following terms with "depreciation", then match the resulting terms with the suitable definitions.
1. allocation a. is a provision contained in the Internal Revenue Code that makes excess depreciation taken
on real property subject to income tax upon the sale or disposition of the property.
2. convention b. the process of allocating the cost of a fixed asset over its effective service life in a
systematic and rational manner (depreciation schedule), the value of each depreciable asset is
reduced by its depreciation amount. To match this, the depreciation amounts are added to a
"depreciation reserve" in the long-term liabilities.
3. recapture c. the assigning of the cost of capital expenditures so that revenue is matched with expenses
for items that will last more than one year.
4. reserve d. is the statement, over time, as to the timing and amounts of depreciation of any long-term
asset. It is used for any type of depreciation applicable, i.e., either straight line or accelerated
depreciation.
5. reversal e. is utilized to determine how much depreciation to charge the first year when an item is
bought part way through the year.
6. schedule f. is the reversal of a depreciation amount in the depreciation reserve account.

3.2. Correctly collocate the following terms with "asset(s)", then match the resulting terms with the suitable definitions.
1. availability a. asset recovery by the sponsoring employer through termination of a defined
benefit pension fund and/or of assets in excess of amounts required to pay accrued
benefits of a pension fund.

2. earning power b. the stated condition or availability of an asset for usability. The subject asset is not
available if it is already in use, at capacity, undergoing maintenance, broken, etc.
3.revaluation reserve c. the sale of certain named assets of a corporation, partnership or sole proprietorship.
Usually the seller retains ownership of the cash and cash equivalents (such as
Accounts Receivable) and the liabilities of the entity. Assets sold can be tangible or
intangible.
4. reversion d. a common profitability measure used to determine the profitability of a business by
taking its total earning before taxes and dividing that by total assets.
5. sale e. a general measure of a firm's ability to generate sales in relation to total assets. It
should be used only to compare firms within specific industry groups and in
conjunction with other operating ratios to determine the effective employment of
assets.
6. held for sale f. primarily long-term assets, that an entity wishes to dispose of or liquidate through
sale to others.
7. turnover ratio g. an accounting concept and represents a reassessment of the value of a capital asset
as at a particular date. The reserve is considered a category of the equity of the entity.

3.3. Fill in the gaps in the text below with a suitable word from the box.
amounts earnings salvage off charge reporting
incurred wear and tear asset accelerated

DEPRECIATION is the amount of expense (1)________________against (2)_________ by a company to

write (3)_______the cost of a plant or machine over its useful live, giving consideration to
(4)_____, obsolescence, and (5)__________value. If the expense is assumed to be (6)__________________ in
equal (7)_______in each business period over the life of the asset, the depreciation method
used is straight line (SL). If the expense is assumed to be incurred in decreasing amounts in each business
period over the life of the asset, the method used is said to be
(8)______. Two commonly used variations of the accelerated method of depreciating an
(9)______ are the sum-of-years digits (SYD) and the double-declining balance (DDB)
methods. Frequently, accelerated depreciation is chosen for a business' tax expense but
straight line is chosen for its financial (10)______________purposes.

3.4. Study the various meanings of the phrasal verb "come" then fill in the sentences in the exercise with the appropriate forms
of the verb.
Phrasal Verb Definition Phrasal Verb Definition
come about occur / happen come into + inherit
come across + discover by accident come off + fall off, break off
come across + initially seem or have the come out appear; reveal you
appearance are homosexual
come along progress; come out with + produce and distribute a
accompany product
someone
come along with + progress come over visit someone at their house
come away leave a place with a particular come to regain
consciousness
feeling or impression
come back return come through do what is needed or
expected
come by + get, receive come up to + approach; to equal
come by visit a person at their house come up with + produce or create (an idea, a
plan)
come down with + become sick with come with + include (an accessory)

Practice
1. I..............from the meeting feeling like the presentation was a success.
2. They..................some lost Mayan ruins in the jungle.
3. He................as rather rude, but he isn't.
4. He................with the flu.
5. Microsoft is...............................a new 64-bit operating system next month.
6. How's the research paper..................................?
7. How are you...............................the new project?
8. How did your idea for the book.......................................?
9. What time are you............................?
10. How did you........................that new Mercedes?
11. Don't worry! She faints all the time. She always....................................................after a few minutes.
12. She........................ a great proposal for the new advertising campaign.
13. He................a large sum of money when his aunt died.
14. The handle......................the suitcase when I picked it up.
15. I didn't see the car at first. It....................................of nowhere.
16. Sam finally........................ last month, it must have been a relief for him, although I don't know
how his parents took it.
17. The pictures we took on the trip ........................................great.
18. Melian...................with us to the beach.
19. Why don't you.........................after work for dinner? We deserve some fun!
20. I'll................later this afternoon.
21. Terry really.......................for us in the end.
22. The job offer didn't.....................................her expectations.
23. If you want, you can..............................
24. The computer system doesn't.....................................a printer.

4. *-/ G R A M M A R STUDY A. CLAUSES OF

PURPOSE

Clauses of Purpose are used to express the purpose of an action. That is, they explain why someone does something. They are
introduced with the following words / expressions: to - in order to / so as to (formal) -so that / in order that - in case - for

• to-infinitive (the infinitive of purpose)

e.g.She went shopping to look for some new clothes.

• in order to / so as to + infinitive
e.g.He did a postgraduate course in order/so as to deepen his knowledge of international politics.

In negative sentences we use in order not to /so as not to. We never use the negation alone.

e.g.He wrote the number down in order not to / so as not to forget it.

• so that + can/will (present or future reference)

e.g.Emily has booked a first-class ticket to Albuquerque so that she can travel in comfort.

• so that + could/would (past reference)

e.g.He recorded the game so that he could watch it later on.

Note: in order that has the same structure as so that, only it is not used very often as it is formal.

• with a view to / with the aim of + -ing form

e.g.He did a master's degree with a view to applying for a managerial position when he had finished.

• in case + present tense (present or future reference)

e.g.Why don't you take your credit card just in case you run out of cash?

• in case + past tense (past reference) e.g. She took a sweater

in case it got cold.

• for + noun (when we want to express the purpose of an action) e.g.Grandfather went to the doctor's
for a complete check-up.

• for + -ing form (when we want to express the purpose or function of an item) e.g.People use credit cards for shopping when they do
not want to pay in cash.

Note: Clauses of Purpose will follow the rules of the sequence of tenses:
She's going to do more exercises so that her grammar will improve.
Brad hit him hard on the jaw so that he couldn't speak any more of that racist garbage.

Note: We can express negative purpose by using:

• prevent + noun/pronoun + (from) + -ing form
e.g. She covered the sofa with a sheet to prevent it from getting dirty during her youngest son birthday party.

• so as not to / in order not to + infinitive

e.g. He did whatever she wanted him to do so as not to upset her again.
• so that + can't/won't (present or future reference)
e.g. Please put that vase away so that it won't break with all this fuss going on about the place!

so that + couldn't/wouldn't (past reference)

e.g. They jammed the door electronic mechanism so that the security guards couldn't get in.

• for fear / lest + might / should

e.g. He kept looking over his shoulder for fear he might be followed.

• for fear of sth. / doing sth.

e.g. She stopped listening to loud music for fear of upsetting Aunt Dolly.

• avoid + -ing form

e.g.They set off early in the morning to avoid getting stuck in traffic.

PRACTICE

I. Join the sentences by using the word(s) in brackets.

1. He got the car out of the garage. He wanted to wash it (so that)
2. I always lock the doors and windows. I don't want to be burgled. (avoid)
3. The doctor examined the patient. He wanted to find out what was wrong with him (so as to)
4. I've taken out a loan. I wan to buy a car. (to)
5. We'll take some food with us. We might get hungry on the way. (in case)
6. The old lady put the letters on the bed table. She didn't want to forget to post them. (so as not to)
7. They will take some magazines. They may get bored. (in case)
8. The terrorist leader ordered a quiet retreat. He didn't want to attract the attention of their pursuers. (in order not to)
9. She set her alarm clock for the following morning. She didn't want to oversleep again. (so that)
10. The woman tied the little girl's ribbons tighter. She didn't want her daughter to lose them. (prevent her from)

11. Complete each sentence with two to five words, including the word in bold, in unaltered form.
1. Gloria applied a lot of sunscreen on. She didn't want to get sunburnt.
not Gloria applied a lot of sunscreen..................................................................................................sunburnt.

2. We took a camera along with us. We wanted to take some photographs of the
waterfalls.
that We took a camera......................................................................................................to take some photographs
of the waterfalls.

3. Mark called Jeremy yesterday morning. He wanted some information on that IT

exhibit.
to Mark called Jeremy........................................................................................................for some information on
the IT exhibit.

4. He checked his answering machine. There may have been a message for him from
Julia.
case He checked his answering machine................................................................................................................message for
him from Julia.

5. She put all her jewelry in the hotel safe. She didn't want it to get stolen.
prevent She put all her jewelry in the hotel safe

III. Fill in so, such or such a/an.

1. The party they threw next door last night was____________________________loud that I couldn't sleep.
2. They sell______________lovely things in that curio shop.
3. I bought______________many books on American Cultural Studies that I couldn't carry all of
them .
4. He had put_______________little salt in that sauce that it simply tasted bland.
5. I had_____________bad headache yesterday that I had to leave work and go home to lie
down a bit.
6. It was_____________amusing film that we laughed all the way through.
7. I'm____________hungry that I could eat an elephant!
8. Miriam dresses________________elegantly that everyone jut can't take their eyes off her.
9. They have_______________fashionable furniture in their house that it is often photographed for
 magazines.
She is____________interesting person that I could spend hours talking to her.

B. CLAUSES OF RESULT

Clauses of result are used to express the outcome of an action. Ways of introducing
result clauses include:________________________________________________________________________________________________
so... (that) such... (that) in such a way that in such a way
as to therefore consequently as a result otherwise or else

• s o . . . (that) + result clause

e.g. Twenty people participated at the meeting so we had to bring more chairs in.

• so + adjective/adverb + (that)-clause, with the possibility of omitting that

e.g. She was so fed up with their stupid management system (that) she threatened to resign.
So disgusted were they with the proceedings (that) they walked right out of the meeting. (formal; note also the inversion triggered
by so in front position)

• such + noun / adj. + noun + (that)-clause, with the possibility of omitting that e.g. We were having such a great time that no
one really wanted to go home.
Such was her annoyance that she refused to further cooperate with that team. (formal; note also the inversion triggered by such in
front position)

• in such a way that and in such a way as to with the meaning of 'with the result that'
e.g. The architect had designed the auditorium in such a way that it looked larger than it actually was.
This old city center is signposted in such a way as to confuse most tourists, I don't know what was on their minds!

• therefore, consequently, as a result are adverbials that help to express result: e.g. Sales are dramatically down; therefore here will
be no pay rise this year.

• otherwise and or else are used to express the consequences of not performing an action:
e.g. We'll have to operate some increase in prices or else / otherwise we'll turn in no profit at all.

PRACTICE

I. Rewrite each of the following sentences using the word given in bold.
1. She felt really ill and had to leave earlier. (that)
2. It as a really boring movie and we walked out right in the middle of it. (such)
3. Hurry up, if we don't get there soon there won't be any seats left! (otherwise)
4. Perhaps we should reconvene tomorrow to sort out any remaining difficulties. (in order that)
5. I took the longer way around because I didn't want to get stuck in traffic, it's a nightmare this time of the day. (so as)

II. Finish each sentence in such a way that it is as similar in meaning as possible to the sentence printed before it.
1. Let's remind ourselves of the agenda before we lose sight of the purpose of this
meeting.
In order that.
2. This employee's strength means he's in great demand when long hours are required.
Such.
3. Mark had a strong personality and many of his colleagues were slightly apprehensive
of him.
So.
4. I'll take over the TACO BELL contract, and you'll be in charge of TEXACO, so we
don't step on each other's toes.
So as to.
5. The perpetrators gave false names because they wanted to avoid identification.
For fear...

C. CONCESSION CLAUSES
Concession clauses provide information that contrasts with or opposes the facts in the main clause in an unexpected way. Some of
the words or phrases introducing them bring in known or background information, while some others introduce unexpected contrast.
 I. Position of linking words and phrases
o Concession clauses can come in front position in a sentence or they can come in second. (e.g.: I stayed until the end, although it was a
very boring play. Although it

was a very boring play, I stayed until the end.) Remember to use the conjunction with the right clause in the sentence, function of logical
meaning. o Contrast or opposition is often expressed by starting a second sentence with an adverbial. (e.g.: The weather was terrible.
Nevertheless, we decided to go on with our plans).
o Some adverbials and phrases can come at the end of the second sentence. (e.g.: He saw his ex-girlfriend last night, at a party. They
didn't speak, though.)

II. Introducing background information

Many different patterns and structures are used to express concession:
• although, though, even though + verb phrase
e.g.: Although he knew about her past, he was ready to give her a chance.

• while, whilst (formal) to replace though

e.g.: While I see your point, I still think this is not the best course of action for our pricing policy.
• adj. / adv. + as/though + subject + verb (in emphatic sentences) e.g.: Hard as they tried, the two sides
couldn't agree on a suitable merger.
e.g.: Difficult though it was, they finally managed to come to a final decision on opening a new branch.

• much as + verbs such as like, hate, etc. to express strong feelings

e.g.: Much as the boss hates paying extra hours, he will have to, with all this workload.

• in spite of, despite + noun phrase / -ing form

e.g.: In spite of the price, they decided to purchase a new, state of the art Apple laptop.

• '-ever' compounds to express the idea 'no matter how, what, who, etc.
e.g.: However many times you ask me, I will not do your work for you, I have my own to take care of!

III. Introducing unexpected contrast

• But is the most frequently used word to introduce contrast e.g.: He may be annoying sometimes
but I do love him.

• Another word or phrase is often added to strengthen the contrast

e.g.: I know standards have changed, but even so such scenes shouldn't be included in 12-rated movies.

• A wide range of adverbs and adverbials are used to introduce a second contrast sentence. They might follow a full-stop, a semi-
colon or a dash. (nevertheless, even so, however, all the same, etc.)
e.g.: He was feeling exhausted; nevertheless / all the same, he carried on with the project, as the deadline was the following day.

PRACTICE
1) Rewrite each of the following sentences using the words given. Perform any necessary changes in punctuation.

a. At that time, they didn't have any money, but they were happy. (even)
b. I like my sister's new boyfriend, but I don't trust him yet. (nevertheless)
c. In spite of her inexperience, I think we should take her on our team. (and yet)
d. I know it's economic recession, but our profits surely should be higher than this! (all
the same)
e. Streamlining would be a good idea but it would cause friction between various
departments. (while)

2) Combine each pair of sentences using the linking word given.

a. There has been strong Asian competition. We have secured the order, all the same.
(yet)
b. The future of this branch looks bleak. However, no one is giving up on it. (although)
c. There are many dissenters in the company. At the same time, there are many who
think the same way we do. (despite)
d. He had always been straightforward in his actions. Jean, on the other hand, had not.
 (whereas)
e. I know there is a set of rules to be applied to such a customer complaint situation.
Even so, I think in this case we should be more open to suggestions. (spite)

5. "SJfr' BUSINESS SKILLS

5.1. Look at the quiz below. In pairs, decide on the answers and discuss your choices with your partner.
WHAT SORT OF A NEGOTIATOR ARE YOU?

1. In a negotiation, do you:
A. like to show you are trying to understand the other side's point of
view?
B. show little or no sympathy for the other side's point of view?

2. You know the other side is very keen on closing a deal with you. Do
you:
A. show your willingness to compromise so that an agreement could be
reached?
B. point out that it's important for them to secure an agreement with you?
3. When you detail your objectives to the other side, do you:
A. speak openly and truthfully?
B. withhold facts in order to obtain more concessions?

4. The other side has made an error. Pointing it out to them could
make them look foolish. Do you:
A. ignore it?
B. draw attention to it?

5. Things aren't going the way you would like them to, and the other
side is not so keen on compromising. Do you:
A. try approaching the issue from a different angle?
B. threaten to walk out in a „my way or the highway' style?
6. Do you want your negotiation partner to leave feeling:
A. satisfied?
B. dissatisfied?
More As than Bs More Bs than As
You see negotiations as problem-solving exercises. You You see negotiations as conflict situations. There's only
try to understand the position of your negotiating one tasty pie out there, and you're determined to leave with
partners and set up an atmosphere of trust and mutual co- a fat slice of it. No one's going to cut you from your share!
operation. Your negotiating style is best suited to situations Your negotiation style is probably best equipped for
where your overall goals are radically different from those dealing with situations where your overall goals are
of the other side (negotiations between customers and roughly similar to those of your negotiation partner (e.g.
suppliers). negotiations between management and unions).

5.2. Do you believe that compromising in business could get you more than taking a firm stand? Discuss it with your partner.

Match each product in column A with the correct description in column B and the special features from column C. Now use the
information thus gathered to write product descriptions.
A B C
Warden a laser pointer It keeps cars in showroom condition for a longer
period of time.
Peneng 2500 a personal desktop shredder Their lenses cut out the glare of headlights and
help you drive more easily.
Lasertronic solar powered watches Its sensors can detect anyone
| entering the house perimeter.
Mer specially designed glasses Its compact design makes it ideal for use on one' s
personal desk.
Tissot SunStyle a revolutionary car 1 Its beam is able to point to | polish | charts over 25m away.
Nightvisions a superb pen They last a lifetime and never need recharging.
Deskmate a plug-in burglar alarm It comes with a matching biro
| and fine-liner pen.

Write a catalogue description for a product of your choice. Provide an image, explain what it does and include information on
any special or appealing features.

6. W CASE STUDY
Choose a company, study its balance sheet, and discuss its depreciation expenses for the current year.

7. TRANSLATION
Situarea întreprinderii într-un mediu financiar concurenţial pune problema evaluării şanselor pe care un investitor din afara ei le-ar avea
de a câştiga mai bine decât în oricare alt domeniu de investire. Fiecare dintre aceştia se aşteaptă la o remunerare cât mai bună a capitalurilor
investite în întreprindere, în raport cu alte oportunităţi de investiţii. Remunerarea acestor capitaluri este posibilă pe seama cash-flow-urilor
degajate de activitatea economică a întreprinderii. Dimensiunea acestora va influenţa valoarea de piaţă a întrepriderii, alături de alţi factori ce
trebuie luaţi în considerare, cum ar fi riscurile ce însoţesc investiţia de capital în activele întreprinderii, fiscalitatea aplicabilă veniturilor din
operaţiuni de gestiune şi capital etc. Pornind de la această constatare, economiştii încearcă identificarea unei structuri optimale a capitalurilor
întreprinderii, în vederea minimizării costului procurării lor şi deci a creşterii valorii ei. Trebuie avut în vedere, însă, că pe măsura creşterii
îndatorării întreprinderii, creşte şi riscul ei financiar. Din acest motiv, acţionarii sunt îndreptăţiţi să ceară o rentabilitate mai mare a acţiunilor
lor.
 1.
LEAD-IN DISCUSSION
o

1. What will you need considerably if you are starting a large business?
2. If you should have enough money how should you invest them ?
3. What is the STOCK EXCHANGE dealing with?

TEXT A

READING

Compared with the United States, where about 20 percent of all stock trades are entered from the Internet, the movement in Europe is
still in its infancy. But as the trend gathers pace, American Internet brokers have begun moving into Britain and increasingly are setting their
sights on the Continent as well.
Their arrival poses a challenge for new European on-line trading firms. Analysts expect it to accelerate vast changes in the securities
business that are already under way here as Europe becomes a single market.
Though European investors can already use US on-line brokers to buy shares in the United States, the American companies do not
actively promote this business for fear of annoying European securities regulators. Thus, at the start, the American on-line brokers operating
in Europe, like Schwab, are offering their customers the chance to trade only on individual European exchanges. The long-range goal,
however is to expand the system into a truly global marketplace where investors in any country will be able to trade freely in stockers across
national boundaries. While European Internet usage still lags behind the United States, it is expected to grow rapidly in the next several years
and Europe's single currency will foster the spread of stock trading across national boundaries. The American on-line firms, despite their
aggressive plans , will not have it easy.

(Adapted from New York Times)

TEXT B

GCI Financial Ltd ("GCI") is one of the world's largest online foreign exchange and Share CFD brokers, executing billions of dollars
per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference ("CFDs")
on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 8,000 clients worldwide,
including individual traders, institutions, and money managers.
GCI provides an advanced, secure, and comprehensive online trading system. Client funds are held in a separate account and never
commingled with firm operating capital. In addition, GCI Financial Ltd maintains Net Capital in excess of most minimum regulatory
requirements for securities brokers and futures dealers.
GCI is recommended by top industry participants and has had its market analysis featured in leading publications, including the
Financial Times.

A SHARE:
A share is one of the equal parts into which the share capital of a joint-stock company or a corporation is dividend. The ownership of
shares is either evidenced by certificates or by entries in a computer data-base. Shares are variable-yield securities. TYPES Of
SHARES
Ordinary shares, preferred shares, deferred shares, founder's shares: Preference shares (US: preferred stocks) and ordinary shares
(US: common stocks) are two main types of shares.
PREFERENCE SHARES pay (yield) a fixed rate of interest. Given that preference
shareholders have a prior claim over ordinary shareholders, preference shares attract investors concerned with obtaining a steady
interest rate with a limited risk. Ordinary shareholders take the major risks in a company, because their dividend payment depends on
profits.
DEFERRED SHARES do not participate in profits until the preferred share and ordinary share dividends have been paid.
Founder's shares are issued to the promoters of the Company. Ranking after other shares, they may yield nothing during the early years,
through they may bring huge dividends later. Industrials are the shares of industrial companies. Blue-chips are the shares of particularly
well-known and sound companies.

2.1. Reading Comprehension

a) What will make European markets change more quickly?

b) What are the consequences of the new European on-line trading?
c) What is the goal of the long-range?
d) What is the European Internet usage like, concerning the Stock Market?
2.2. Decide whether the following statements are true or false

a) GCI Financial Ltd is one of the smallest Romanian online exchange.

b) GCI provides a comprehensive online trading system.
c) GCI is the second market maker in "CFD' s" on shares ,indices and futures.
d) CGI is recommended by top industry participants.

3.V-/ LANGUAGE WORK

Match the words with their corresponding definitions:

1.stock trade a) an evidence of debt or property

2.accelerate b) an authorized person to buy and sell securities 3.securities the market
c) moving stocks on d) make smth. happen more quickly
4.to foster e) to help smth. develop
5. stock f) a tangible share of a corporation
6. broker g) a strategy aimed at minimizing or even eliminating investment
7. account executive risk
h) an unsecured bond
8. bond i) a brokerage firm employee who offers advice for

9. bearer securities his clients

j) shares of industrial firms k) a certificate indicating part property of a debt l) documents transferable by

10. bull hand m) the market on which stocks and bonds not yet belonging to the official list may be traded market

11 . debenture n) a spectator who plays a rise

12. industrials
13. hedging

14. over the counter

3.1. Vocabulary exercises

3. Choose from the list bellow and put the words in the right place:
market stocks conducted outperformed
investors' companies average counter
rigorous well-known energy based

The Amex

Considered to be the more aggressive ............................................................... , the Amex is associated in many

...................minds with more volatile, lower yielding ...........................................................................Investors also rightly
associated the Amex with smaller companies than those listed on the NYSE.
According to a study ........................................... for the Amex, the stocks on the American Exchange, on
............. , have ................................... stocks on the NYSE and those traded over the .................................................................... The
listing standards for the American Stock Exchange are similar to but less .......................................................................................than
for the Big Board, and thus allow smaller .................................................... to be listed.
Many investors think of the New York .................................................. Amex as the place for less ............................................... high
technology and ............................... stocks.

4. Choose the right alternative:

1.Stockholders' equity is...........................
a) the number of stocks held by a company's director
b) the net worth of a company
c) the par value of securities
d) the number of proxies 2.Spot market
refers to

a) a very limited sector of the stock market

b) the stocks traded over the counter
 c) dealings transacted in cash
d) dealings for immediate delivery
3. The American "dealer" is more or less counterpart of the British......................................................................
a) broker
b) jobber
c) trustee d)underwriter
4. "Blue Chips" are...
a) highly priced stocks in learning industrial companies
b) stocks in major shipping companies
c) stocks in major steel companies d)collectors' items
5.Preference share are ....
a) the securities on which stockbrokers receive the highest fees
b) securities which come first in the Stock Exchange list
c) securities bringing a rate of individual which is higher than the one yielded by
ordinary shares d)securities which bring a fixed rate of dividend

6.Shares are freely bought and sold ... the Stock Exchange
a) on
b) in
c) over
d) at
7. On stock and commodity exchanges, a call is....
a) an option to sell
b) an option to buy
c) a cancellation of an order on the phonean order placed by phone

4. *-S G R A M M A R STUDY

THE DEFINITE AND THE INDEFINITE ARTICLES

THE DEFINITE ARTICLE "THE"

FORM Articles in English are invariable.

They do not change according to the gender or number of the noun they refer to.

USE
1. to refer to something ,which has already been mentioned
2. when both the speaker and listener know what is being talked about, even if it has not been mentioned before.
3. to refer to objects we regard as unique
4. before superlatives and ordinal numbers
5. with adjectives, to refer to a whole group of people
6. with names of geographical areas and oceans 7.with decades, or groups of
years

THE INDEFINITE ARTICLE "A"/"AN"

FORM
1. The form "a" is used before a word beginning with a consonant (letters that are not vowels), or a vowel with a consonant sound.
2. The form "an" is used before a word beginning with a vowel (a ,e, i, o, u), or words beginning with a mute "h".

THERE IS NO ARTICLE(ZERO ARTICLE):

- with titles and names: President Bush

- with years:2005
- with people's names: Paul
- with professions: engineering
- with the names of languages: English
- with uncountable nouns: milk, rice, sugar
- with names of towns, streets, stations and airports: Victoria Station
- with the names of individual mountains and lakes: Red Lake
- with names of countries: Romania
- with names of meals: dinner
- in some fixed expressions: at work, in prison, on foot, by car

GRAMMAR PRACTICE
1 Insert the right article where is necessary:
How could you forget such. . important event?
What..............generous offer!
It took him half .. ..day to do it.
There is . . mistake in your exercise.
Have you read .. ..newspaper?
After.the lesson he went home.
There are two pencils into.. ..drawer.
........door of ... .house was shut.
2 Correct the mistakes in the sentences bellow:
On whole, prices climbed yesterday, except for copper. For currencies, there is also spot market and
forward market. He has proxy to act on behalf of owner of shares. On gold market, turnover
remained very low. Several million securities were traded on brisk market.

5.^fdJ BUSINESS SKILLS

SPECIMEN DOCUMENT A

CURRICULUM VITAE
NAME: ADDRESS: Andrei Ionescu
5, Magheru Avenue,2nd district, Bucharest
TELEPHONE: E-MAIL:
0212418691
DATE OF BIRTH: MARITAL
IAndrei@Yahoo.co.uk
STATUS: NATIONALITY: 10/06/1982
single
Romanian
EDUCATION AND QUALIFICATION
Prague University Degree in English
Studies 1998-2002
"Sf. Sava" National College 1994-1998

WORK EXPERIENCE
"Cinderella - Toy Company" June 2003 to date
Shipping Assistant

My work involves dealing with foreign clients in person and on the telephone.
I am responsible for advising them on the shipping details of their orders and also take care of all the necessary
paperwork for the dispatch of the goods.

Hotel Grand (Prague) Summers of 2001, 2002

Receptionist

I was in charge of taking bookings and preparing bills. Another of my duties was to deal with English speaking
guests, providing them with information and assistance with any problems.

OTHER INFORMATION

I am proficient in both written and spoken English and have a working knowledge of French.
I completed a one hundred hour computer course covering word processing (MS -Word), spreadsheets (MS-
Excel) and databases (MS-Access ). I have a driving license and I am willing to travel.

INTERESTS AND ACTIVITIES

Home computing, traveling, football, reading books.

REFERENCES
 Available on request.__________________________________________________________________________

1. Apptying for a job

- I would like to apply for the post of [...] advertised in [...]
- With reference to your advertisement in [...] I would like to apply for the post of [...]
- I have seen your advertisement for a [...] in [...] and wish to apply for this post

2. Giving information on education / qualifications

- I graduated from [...] with a degree in [...]
- I have a degree in [...] from [...]
- I completed / took a course in [....] at [...]
- I have successfully completed two years of my degree course in [...] at [...]
- I am currently studying for a Master „s degree in International Trade at [...]
- I am in the third /final year of my degree course in [...] at [...]

3. Describing job responsibilities

- My work involves [...]
- I am responsible for [...]
- I am in charge of [...]
- I deal with [...]
- I take care of [ . ]
- One of my duties is to [...]
- My responsibilities included [ . ]

4. Describing language skills

- I'm proficient/fluent in [ . ]
- I speak/ write[.] fluently/ very well/ quite well
- I have a basic /working/ good/perfect knowledge of [...]
- I have a perfect command of [ . ]
- I am bilingual in [...]

6. CASE STUDY
CASE A- Debate - comment upon the following situation:
Fujitsu's 4th-Qtr Net Income Falls by Half to 49.7 Billion Yen
April 20 (Bloomberg) -- Fujitsu Ltd., a Japanese supplier of computer servers, had a 51 percent decline in fourth-quarter profit after it
took a charge related to taxes and reorganization.
Net income was about 49.7 billion yen ($465 million) in the three months ended March 31. Bloomberg calculated the profit by
subtracting nine-month figures from the full-year preliminary earnings filed to the Tokyo Stock Exchange today. The company had a 100.6
billion yen profit a year earlier.
''It's not a huge surprise, but it's still negative'' for the stock, said Makoto Sakuma, who helps oversee $3.8 billion at Asahi Life Asset
Management Co. in Tokyo. ''Fujitsu sold its unprofitable flat-panel businesses last fiscal year, but the company is still slow in making
changes.''
Tokyo-based Fujitsu is selling its display operations as it focuses on computer network servers and semiconductors. The company two
months ago agreed to sell its liquid-crystal

display unit to Sharp Corp. and its plasma screen business to Hitachi Ltd. It plans to increase chip spending by about 80 percent this business
year.
Sales in the fourth quarter fell to about 1.5 trillion yen from 1.56 trillion yen. Operating profit, or revenue minus the cost of goods sold
and administrative expenses, was 121.9 billion yen, down 23 percent from 158.2 billion yen previously.
In the year ended March 31, net income fell 36 percent to about 32 billion yen, compared with 49.7 billion yen a year earlier and less
than the company's previous forecast of 55 billion yen. Sales were 4.76 trillion yen, almost unchanged from a year ago and 0.8 percent less
than the company's earlier forecast.
The results are preliminary. The company is scheduled to formally report earnings on
April 27.

Case B - Debate - comment upon the following situation:

Tokyo stocks up but gains capped ahead of earnings
TOKYO, April 20 (Reuters) - Tokyo's Nikkei share average closed up 0.21 percent on Wednesday after strong earnings at Intel Corp.
encouraged investors to buy Advantest Corp. and other technology stocks.
 But some investors stayed on the sidelines as Japan's peak earnings season approaches, keeping a lid on the market. Major firms such as
Sony Corp, Canon Inc. and Matsushita Electric Industrial Co. are all reporting their scorecards next week.
"The market was relieved to see the strong results at Intel," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"But it won't be too late to buy stocks after Japanese numbers are out," he added.
The Nikkei rose 22.7 points to 11,088.58, extending Tuesday's 1.16 percent gain. It has so far recouped about a third of losses it logged
on Monday.
The broader TOPIX index put on 0.43 percent to 1,131.53.
Chip-related shares ended higher, although they lost steam towards the end of the session. Advantest, a maker of chip testing devices,
rose 0.1 percent to 7,810 yen.
Tokyo Electron Ltd: climbed 1 percent to 5,750 yen after it said on Tuesday that orders for its chip and liquid crystal display-making
equipment in January-March jumped 16 percent from the previous quarter.

Data as of 20 Apr 2005 10:42 ET. Delayed at least 15 to 20

minutes.

SymbCompanyLastChgChg %N225NIKKEI 225

INDEX11088.58+22.72+0.21%TOPXTOPIX
INDEX1131.53+4.82+0.43%3102.TKANEBO669.00-69.00-9.35%
4689.TYAHOO JAPAN236000.00+3000.00+1.29%6301.T
KOMATSU740.00-4.00-0.54%6305.THITACHI CONST1381.00-1.00-
0.07%6502.TTOSHIBA CORP432.00+7.00+1.65%6752.T
MATSUSHITA E IND1546.00+18.00+1.18%6758.TSONY
CORP3920.00-40.00-1.01%6857.T
ADVANTEST7810.00+10.00+0.13%7741.THOYA
CORP11440.00+120.00+1.06%

Companies mentioned in this article

 7751.T CANON INC 5590.00 +40.00 +0.72%
8035.T TOKYO ELECTRON 5750.00 +60.00 +1.05%
8253.T CREDIT SAISON 3600.00 -90.00 -2.44%
8316.T SMFG 687000.00 -1000.00 -0.15%
9433.T KDDI 499000.00 -3000.00 -0.60%
9437.T NTT DOCOMO 168000.00 +3000.00 +1.82%
INTC.O INTEL CORP 23.35 +0.72 +3.18%
YHOO.O YAHOO! INC 34.66 +1.44 +4.34%

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq and all other quotes delayed by at least 15
minutes.

PRICE

THE STOCK MARKET

PRICE-EARNINGS RATIO

STOCK = the name of the share

PRICE = the price of the share as it stood at the close of business yesterday
CHANGE = this shows how much the closing price of the shared changed in comparison
with the previous day closing price
YIELD = shows how much shareholders can expect to receive as a dividend for every £1 invested(based on the current share price)
PRICE-EARNINGS RATIO = refers to the relationship between the current market price of a share and the profit earned by the
company over the most recent year. HIGH/LOW = these columns shows the highest and the lowest prices for the shares during the
current year.

7. TRANSLATION
OPERATORII LA BURSA DE MĂRFURI ADMINISTRATA DE
B.R.M.

La BURSA ROMANA DE MĂRFURI pot tranzacţiona numai operatorii la bursa. Aceştia sunt: membri bursei şi
traderii. Operatorii la bursă pot tranzacţiona exclusiv cu autorizarea/avizarea C.N.V.M. şi numai prin intermediul brokerilor (Educaţie,
Cursuri) săi angajaţi.
Normele generale privind activitatea operatorilor pe pieţele dezvoltate de bursa de mărfuri sunt stabilite în "Regulamentul privind
operatorii pe pieţele dezvoltate de bursa de mărfuri" al BRM.
Membri bursei (Lista) sunt persoane juridice care deţin dreptul de tranzacţionare la bursă. Dreptul de tranzacţionare este
conferit de deţinerea a cel puţin unui loc de tranzacţionare (echivalentul unui pachet de 20 de acţiuni BRM). Acţionarii BRM (Lista) pot
transmite folosinţa locurilor de tranzacţionare deţinute către alte societăţi comerciale persoane juridice române sau străine care prestează
servicii de brokeraj, agreate de BRM.
Calitatea de membru al bursei poate fi dobândită de:
• acţionării BRM care deţin minimum 20 de acţiuni;
• alte persoane juridice române precum şi societăţi străine, autorizate de C.N.V.M. şi agreate de BRM;
• acţionarii BRM care deţin mai puţin de 20 de acţiuni, prin asociere, conform actului constitutiv al BRM.
Numărul maxim de locuri de tranzacţionare deţinute de un membru al bursei este de 5.
 C.N.V.M. autorizează/avizează ca membru al bursei, conform legislaţiei în vigoare (Legislaţie), urmatoarele entităţi:
• societăţi de brokeraj, pentru tranzacţii pe piaţă la disponibil si cea a instrumentelor financiare derivate;
• societăţi bancare, pentru tranzacţii pe piaţa instrumentelor financiare derivate;
• societăţi de servicii de investiţii financiare (SSIF-uri), pentru tranzacţii pe piaţa instrumentelor financiare derivate;
• societăţi comerciale, exclusiv pentru tranzacţii pe piaţă la disponibil;
• alte entităţi autorizate de C.N.V.M.
Traderii sunt persoane fizice care pot tranzacţiona numai pe piaţa instrumentelor financiare derivate, în urma agreării de către
BRM şi a obţinerii autorizaţiei de trader din partea C.N.V.M..

EUROPEAN CENTRAL BANK

UNIT 16

1. ^ LEAD-IN DISCUSSION

A. Try to describe the following types of banks in terms of their functions or the banking facilities they offer. In what ways is a central bank
different from other types of banks?
a. central bank
b. offshore bank
c. commercial bank (retail bank, joint-stock bank, high street bank)
d. universal bank (financial services company)
e. merchant bank
f. retail banking
g. wholesale banking
h. clearing bank
i. investment bank
j. private bank

2. READING

The Measure of the Maastricht Yardstick

Every now and again, the 18-strong army of men and women who set interest rates for the euro area hold their monthly meeting
not at the European Central Bank (ECB) in Frankfurt, but somewhere else in the single-currency zone. This week was just such an occasion,
with Berlin playing host. Not that it made much difference: rates were held at 2% for the 23rd month in a row, just as America's Federal
Reserve raised interest rates eight times, to 3%. Politicians in the ECB's host country might have hoped that a trip across Germany would
prompt the deflation-biased central bankers to spot what they seemed to have overlooked on their Frankfurt doorstep: a supine German
economy with only 0.6% growth in the past four years and no growth in domestic demand. The country's economy and labour minister had
already cut his growth forecast for the year to 1%, lamenting that the ECB's monetary policy failed to reflect the sorrowful condition of the
euro zone's biggest member. Not surprisingly, as analysts hurriedly revise down their forecasts for growth in the eurozone next year,
governments in its 12 capitals are blaming the ECB for failing to cut interest rates and boost growth - while the ECB has repeatedly called on
finance ministers to carry out economic reforms rather than rely on monetary policy to rescue them.
The tussle between the ECB and governments invariably concludes with a stand-off, with the ECB's putting pressure on eurozone finance
ministers to cut their budgets, and the finance ministers putting pressure on the ECB to cut rates. To some euro-watchers, the ECB talk of
monetary tightening, raising interest rates, rather than loosening despite the potentially damaging surge in the euro, points to the former being
out of touch with the eurozone's hamstrung economies.
The ECB could very well have chosen to listen to the OECD, which, after years of obsession with the supply side of the world
economy, has been showing welcome signs of remembering its Keynesian roots. The Paris-based organisation grew out of the post-Second

World War consensus that, if a 1930s-style depression were to be prevented and with it the danger of protectionism and beggar-my-neighbour
policies (which later included competitive devaluation of national currencies), economic policy had to be carefully managed. In the case of the
US, this approach has gone into overdrive. Keynesian beliefs in varying budgetary policy according to the cycle have given way to 'deficits at
all times'. However, given that the eurozone feels the Stability and Growth Pact as somewhat too restrictive, there might be a case for a more
flexible approach as the structural reforms are not in favour of consumer confidence but are conducive to uncertainty about the future.
If anything, the ECB has seemed keen not to cut rates but to follow the Fed up. And that in the context of a stumbling European
economy. As David Walton, an economist at Goldman Sachs notes, a persistent reading below 50 has, in the past, been a cue for a rate cut. A
clarion call from the ECB's president once again fails to be heard/ come through: „We are certainly not preparing for a rate cut. Not at all'
„Still, one can't help wondering, why not? After all, inflation is benign and the markets expect it to remain so. Consumer prices have risen
only just above the central bank's 2% ceiling in the past year, despite a surge in energy prices. Financial markets see no reason to doubt the
ECB's commitment to price stability: yields on several euro-area governments' ten-year bonds have recently dipped below 3.5%. Households
are expecting more upward pressure on prices, although they are not acting on their doubts. Wage claims have been modest, pay rising by just
1.9% in the past year. Nonetheless, the ECB dare not take its credibility for granted. A rate cut, according to the ECB's president, might
undermine it. Instead, he insists on the need for „continued vigilance'.
Anxious about its credibility and reluctant to cut rates, the bank is more concerned with fighting inflation, which to many economists
looks like fighting the last war, than reducing pressure on the euro or spurring growth. In this sense, a contrast between the ECB's brief of
'price stability' (which it interprets very strictly) with the US Federal Reserve view that 'the goals of monetary policy include the promotion of
sustainable economic growth, full employment, and stable prices' might be of interest.
For Eurocrats, failure to enforce monetary discipline would put the credibility of the ECB as inflation-fighter at stake, reducing
thus the possibility of a rewrite of EU rules. Even now, as the ECB is no longer toying with the idea of an increase in interest rates, it has
certainly been slow to decommission some of its old weapons. It still believes that targeting the supply of money, if only loosely, adds
something to its fight against inflation, over and above targeting inflation directly. It sets a „reference value' (i.e. a target it does little to meet)
of 4.5% for the annual rate of growth, a broad measure of the money supply that includes long-term securities and money-market funds as
well as bank deposits and notes.
Money-market growth has exceeded this reference value continuously since 2001. The ECB fears that this growing pool of
liquidity might eventually be spent on goods, which could push up consumer prices, or property, which might inflate house prices. But this
money could also disappear hence it came, returned to the banks and other financial institutions that created it, in exchange for less liquid
assets.
The ECB's advocates point out, quite reasonably, that at 2% interest rates are extraordinarily low. How much more accommodating
can the bank be? However, the ECB's policy rate alone is not the best gauge of the stimulus it is providing. Robert Barrie, of Credit Suisse
First Boston, uses a rule of thumb that shows that while some countries are in a strong recovery phase and therefore need higher interest rates
to keep inflation at bay, others, especially those with depressed regions and high unemployment, need lower rates in order to stimulate growth
so while policy is loose for some countries it is tight for others - much as one would expect in a 12-member zone. In a vast area with
disparities in economic growth, it is virtually impossible for the European central bank to come up with a one-size-fits-all interest rate. He
compares the ECB rate with the rate of nominal GDP growth. In France and

Italy, the euro area's second and third-biggest members respectively, the money value of GDP is growing faster than the ECB's 2% interest
rate, suggesting that monetary policy is pretty loose. Outside Germany loans to the private sector are growing by more than 10% a year. Inside
Germany, however, lending is falling. The money value of Germany's output grew by only 0.9% in the past year, falling more than a
percentage point short of the nominal interest rate. In no other G7 economy are monetary conditions as tight.
The ECB believes that most of the euro area's woes are not monetary but structural: it prescribes freer markets, not lower interest
rates. Though more liberalisation would be welcome, Kevin Day, also of Goldman Sachs, argues that the euro area still has some room to
grow, even within its rigid frame. In its most recent forecast, the OECD predicted that the euro area would fall short of its full potential by
1.6% this year, with Germany's output gap no less than 2.5%. The OECD has cut its growth forecast for the Eurozone from 1.9 per cent to 1.2
per cent for this year (while the US is expected to chug merrily along at 3.6 per cent per annum). However, these growth outcomes are not
carved in stone, but they are contingent on the effectiveness of macro economic and structural policies and their capacity to adapt to a more
globalised environment.'
According to them, far too much emphasis is placed on 'economic reform' in the European debate these days, and not enough on
macro-economic policy, or the lack of it, in the eurozone. The immediate challenge in Europe would lie in restoring a sustained momentum
for domestic demand. Indeed, more robust domestic demand may also help avert a stalling of economic reforms in a context where their
potential deflationary impact raises apprehensions in many segments of public opinion. In the current context of low underlying inflation, a
high level of unemployment and weak aggregate demand, the case for easing the monetary stance in the euro area looks indeed rather
compelling.
And macro-economic policy is not just about monetary policy. Fiscal policy also plays a vital role when allowed to. If in the US
fiscal policy has by common consent been too expansionary, whereas in Europe it is almost the conventional wisdom that fiscal policy should
be tightened, come what may.
Tightening fiscal policy - eg raising tax rates or cutting government spending - at the wrong time can make matters a lot worse,
and impede the growth needed in the long run to deal with such worries as the level of government debt, the cost of pensions etc.
Fiscal policy ought to be especially relevant to the eurozone, where the 'one size fits all' aspects of monetary policy - a common
interest rate - means that the malign influence of an excessively restrictive monetary policy needs to be offset, not compounded, by fiscal
policy.
Notably, the OECD's afore-mentioned estimates assume that unemployment in the euro area could fall to 8%, from 8.9% now,
without generating inflationary pressures. That may be wishful thinking: in the last boom, wages started picking up as soon as unemployment
fell to 8.5%. On the other hand, painful, if piecemeal, reforms of the labour market, such as the Hartz IV reform in Germany, might have
changed this picture, by making it possible for labour markets to tighten without raising wage pressure.
There has been a consensus within the EU for several years that structural reforms -liberalising labour markets, stimulating
competition and so on - are the key to Europe's future economic success. Member states signed up to the Lisbon Agenda in 2000, promising to
make the EU the world's most dynamic market by 2010. But such changes often have a heavy political price, as mass demonstrations in
Germany against the so-called Hartz labour reforms demonstrated. Much of the change that has occurred has been bottom-up and piecemeal,
rather than part of a co-ordinated eurozone-wide dash for competitiveness. And having surrendered control over monetary policy to the ECB,
national governments are left without the possibility of softening the blow of labour market reform by cutting interest rates. The problem with
lack of growth in the eurozone can be diagnosed as euro-sclerosis, which has to do with lack of demand, which in its turn has to do with high
unemployment. Some euro-watchers believe the period of low growth that seems to be in store is cause for optimism, because it could
increase the likelihood of change. Possible, but not inevitable. Whether or not Europe's job markets tighten depends on demand. Will total
spending be enough to employ all those willing to work at the going rate? Seen from Berlin, the answer lies in Frankfurt.

2.1. Reading Comprehension

a. What is it that EU ministers and economic analysts hold responsible for the poor economic
growth in the euro area? Does the ECB share their position? If not, in what way is it different?
b. Why is the return by the OECD to Keynesian principles put forward as an alternative to be
followed by the ECB?
c. What are the arguments in favour of the ECB cutting interest rates in the existing economic
context?
d. Why is the ECB so keen on maintaining them?
e. The ECB interest rates appear to be surprisingly low. And yet, why the demand for further
cuts?
f. What is the difference between the monetary and fiscal policies as conducted by the ECB
and the Fed?
g. Why has the implementation of structural reforms been inadequate so far?

4^
LANGUAGE WORK 3.1. Match the words given with their definitions and complete the sentences below:
piecemeal supine disparity tussle
decommission contingent accommodating

1 done in an unsystematic and gradual way, by partial measures taken over a period of time
2 a great difference, especially an unfair one
3 willing to fit in with someone's wishes or demands so as to help them., helpful, obliging
4 failing or not willing to act or protest as a result of moral weakness or indolence, indolent, passive
5 withdraw (someone or something (weapons and equipment, nuclear or otherwise)) from service
6 a short struggle, fight or argument typically in order to obtain or achieve something
7 occurring or existing only if certain circumstances are the case; dependent on

a. Under the above mentioned international treaty, the governments undertake to

..........................part of their nuclear armoury.
b. He was always very............................................... to his friends, and always put their comfort before his
own.
c. The people were outraged by the...................................................attitude of the politicians faced with soaring
inflation.
d. Several ministers were forced to step down in the tussle between the government and the
parliament.

e. Unfortunately, reforms have been implemented on a...........................................................................basis.; .

f. Completing the project is .........................................................on public support.
g. The government's measures are intended to make up for the considerable ........................................................................................ of
resources between the two regions.

3.2. Rephrase the sentences below using the definitions in brackets and words from the list below:

over bay overdrive host thumb

a. He has found it more and more difficult to..................................................his creditors...................................(prevent sb/ sth
from approaching or having a bad effect);
b. Athen has already ............................................the Olympic Games. (hold and organize a special event
 (about a country, city, organization, etc.));
c. Other possible repercussions need to be considered ......................................................................................... those we have
already discussed before taking any action. (in addition to sth).;
d. The PR department of the opposition party has ..............................................................lately in the run-up to the next
election. (a state of high or excessive activity);
e. As a .................................., you shouldn't brew this concoction too long. (an approximate and
reasonably accurate method of doing or measuring sth based on practice or experience rather than theory)

3.3. Read the following text and complete the gaps:

a government securities/
government paper 1. government funding spending by borrowing
2. operations by means of which a central bank directly influences the money supply
in an economy, raising it by buying securities, exchanging money for the security, and
b systemic (risk) lowering it by selling securities lowers the money supply. Buying of securities thus
amounts to printing new money while lowering supply of the specific security.

c inflation 3 the practice by a central bank of extending short-term loans secured by government
bonds to financial institutions. These are a means of changing the size of the money
d open market operations supply, extending the monetary base (by extending loans) or contracting it (by calling
in existing loans). The interest rate charged on such loans is also called discount rate.
4 the idea that matters should be handled by the lowest competent authority.
e overheat
According to this principle, the EU may only act (i.e. make laws) where the tasks/
functions in question cannot be performed effectively at the level of individual
countries.
f stagflation g subsidiarity
5 monetary policy that seeks to increase/ reduce the size of the money supply. In
most nations, monetary policy is controlled by either a central bank or a finance
ministry.
h free-floating exchange rate

i nominal exchange rate

j expansionary/ contractionary monetary policy

k fiscal policy

l discount window

m pegged exchange rate

n real exchange rate

o deficit financing p deflation

q spillover

r economic
(speculative)
bubble
 s recession 6 a currency whose exchange rate against other countries can vary against other such
currencies. In fact such exchange rates are likely to be changing almost constantly as
t lender of last resort
quoted by monetary markets and banks around the world.
7. a period of temporary economic decline during which trade and industrial activity
u treasury bonds v
are reduced, generally identified by a fall in GDP in two successive quarters.

reflation
8. the rate at which an organisation can trade the currency of one country for the
currency of another.
9. the rate at which an organisation can trade goods and services of one country for
those of another.

10 the behaviour of governments in raising money to fund current spending and

investment for collective social purposes and for transfer payments to citizens (by
taxation, by borrowing, etc.).
11 an institution willing to extend credit when nobody else will. This is most often
the central bank of a country. The purpose of this loan and lender is to prevent the
collapse of institutions that are experiencing financial difficulty, most often near
collapse.
12. dramatic price rise of shares, commodities, etc. as a
result of increasing speculative purchasing, above the
underlying value or worth. Such a period of increased
speculative purchasing is often followed by one of
speculative selling in which the price falls in a crash.
(stock market crash). This is very often even more
dramatic than the period of rising prices.
13. show marked inflation when increased demand
results in rising prices rather then increased output.
14. an instance of overflowing or spreading into another area.
15. a government bond issued by the Treasury.
16. a general increase in prices and fall in the purchasing value of money.
17. reduction of the general level of prices in an economy.
18. persistent high inflation combined with high unemployment and stagnant
demand in a country's economy (blend of stagnation and inflation).

19. of or relating to a system, especially as opposed to a particular part.

20. bonds or other promissory certificates issued by the government.
21 the value of a currency maintained by the government
in question at a fixed rate relative to the other currency.
22 expand the level of output of (an economy) by
government stimulus, using either fiscal or monetary
policy.

3.5.Fill in the gaps in the following sentences using words from the list below:

contractionary overheat recession systemic stagflation bubble government bonds exchange rate pegged
Treasury bonds spillover

a. With output slowing and inflation stubborn, it is small wonder that the concerns about
...................are back in fashion.
b. The economy may avoid.........................................., but hopes of a quick bounce-back have faded.
c. Just because most bank lending takes place in domestic markets, euro-area banks are not
exposed to other risks as there is a single money market and euro-area ...................................................................................................... are
virtually perfect substitutes and there is a single foreign-exchange market.
d. A..........................risk to the banking system in the EU is from a national central bank is low.
e. Yields on ten-year ................................................are not much more than 4% as a result on investors'
expectations of inflation.
f. The IMF is worried about the..................................................effects in Europe from America's recession.
g. The bursting of the technology.......................................................... could result in a bigger reduction in Europe's
growth than it is expected.
h. Japan's economy is too weak to warrant a .................................................................... monetary or fiscal policies which
could threaten its recovery.
i. In 1983 the Hong Kong dollar was.................................................to the United States dollar.
j. An...............................of 120 Japanese Yen to the Dollar means that ¥120 is worth the same as $1.
k. In 1987 the Treasury had allowed the economy to.......................................................................

4. G R A M M A R STUDY
I. Read the following sentences from the text, identify the determiners and try to explain their use. Can you identify other determiners used in
the text?

„Not that it made much difference: rates were heldat 2% for the 23rd month in a row'
'...a supine German economy with only 0.6% growth in the past four years and no growth in
domestic demand'
'Anxious about its credibility and reluctant to cut rates the bank is more concerned with fighting inflation, which too many economists looks
like fighting the last war' 'Even now, as the ECB is no longer toying with the idea of an increase in interest rates, it has certainly been slow to
decommission some of its old weapons' 'It sets a 'reference value ' (i.e. a target it does little to meet)'
'Though more liberalisation would be welcome, Kevin Day, also of Goldman Sachs, argues that the euro area still has some room to grow'
'According to them, far too much emphasis is placed on 'economic reform' in the European debate these days, and not enough on macro-
economic policy, or the lack of it, in the euro
zone.
Much of the change that has occurred has been bottom-up andpiecemeal, rather than part of a co-ordinated euro zone-wide dash for
competitiveness.

Determiners — general I. All, both,

half
1. As a modifier of nouns/ pronouns, all is followed by the preposition of (optional before nouns and obligatory before pronouns) and a
determiner (definite article, demonstrative or possessive pronoun - e.g. all (of) the students, all (of) those books, all (of) his possessions, etc.).
If before nouns of is optional, before pronouns it cannot be omitted: e.g. all of us. Both the preposition of and the definite article are omitted
when a general meaning is intended: All children love to play. (= all (the) children in the world). This is not interchangeable with All (of) the
children love to play. (specific meaning - e.g. children in this nursery). The is optional when the noun is preceded by a cardinal numeral. (All
(the) fifteen victims were rescued.)
All to mean „every member of a group' is used as a modifier before plural countable nouns (all (of) the copies) and uncountable nouns (all
(of) the equipment). All can also be used as a modifier before singular countable nouns to mean „every part of, the whole of, complete' can
also be used before singular countable nouns denoting things that can be subdivided (all the army/ jury/ tribe, all my chocolate, all this month,
all the journey) or proper names (all (of) London).
*With other singular countable nouns, whole is more natural (this whole business). Whole is interchangeable with the whole of (my whole
winter vacation/ the whole of my winter vacation). With proper names and pronouns, only the whole of can be used, interchangeably with all
of: the whole of France/ all (of) France.
As a modifier of nouns and pronouns, all can also follow them (They care for them all.) or if the noun or pronoun is subject, all can appear in
front of the verb or after the verb be (or after the auxiliary): The customers all received proper attention./ They have all been cared after./
They can all go home. / They are all discontented with the outcome of the events. All meaning „everybody', was encountered in older English
(All is not lost yet.), but it is not normally used in modern English where everyone/ everybody, anyone/ anybody are used instead. (*All/
Everybody stand/ stands to gain a lot./ All/ Anybody wishing to join the expedition should notify us.). However, all is used interchangeably
with everything when it precedes a relative clause: I'll teach you all (that) I know. When followed by a relative clause, all can also mean „the
only thing(s)', „nothing more': Getting the upper hand is all (that) they care about.
All meaning „all the people' can occur on its own in a few expressions: He aimed to gain support from all./ His mismanagement of the
country's economy was to be suffered by all./ His lack of precaution was to be suffered by all. All can also mean whatever, any: He denied all
knowledge.
The structure all + noun/ pronoun can be made into a negative by using not before all: Not all patients received proper treatment.
Occasionally, not precedes the verb: All patients didn't received proper treatment.
The whole is preferred with singular countable concrete nouns (not plural nouns and uncountable ones) as well as many abstract ones: *The
whole bed was covered in feathers./ The whole arena was covered in mud./ The whole village had been flooded in the storm. It's sometimes
impossible to know the whole story. With time expressions (all (the) day/ week/ month/year/ summer except hour and century) and some
abstract nouns, all and the whole are used interchangeably, although the whole is stronger and can also be used with hour and century: All
(the) morning/ The whole morning he has been writing the letter./ All his/ His whole catering business was taken over by a competitor./ He
couldn't suspect that all the time/ the whole time she had been in full possession of the facts. Of after all is possible, although it is less
common. Of is possible after the whole, (it is less common with time expressions): The whole (of the) building was destroyed in the fire
yesterday. Half can occur in the same basic patterns as all, followed by of, determiners (definite article, demonstrative, possessive) and by
uncountable or countable nouns (plural nouns, singular nouns denoting things that can be divided into halves, proper nouns): Half (of) these
allegations are false./ Half (of) the information is inaccurate./ He gave me half a minute to come up with the answer./ Half (of) the population
voted 'no' on the referendum./ Half (of) London was familiar with the latest news. Of is optional with before nouns; however, it must be
expressed before pronouns. (Half (of) the audience/ half of them)
Of is not used before expressions of measurement and quantity and many proper nouns, in front of which half can be used directly: They live
only half a mile from each other./ I'll have half a kilo of apples./ Half'Peru was devastated by the hurricane. With these expressions of
measurement, half a(n) is used interchangeably with a half ( half a kilo/ a half kilo). Both can also appear in the structure with the
preposition of, a determiner (definite article, demonstrative, possessive) and a plural countable noun. Of is optional before nouns, although it
is preferred in American English: Both (of) the bills have been rejected. Both the and possessive determiners can be omitted after both: Both
bills were rejected./ Both parents took her education very seriously.
Both all and every are used to refer to all people or things in general or to all people or things in a group. However, whereas all if only used in
patterns with plural nouns,, every is followed by singular nouns (All those promises were broken./ Every promise was broken.)

II. Some, any, no, none, neither, either, (an)other

Some and any are used to refer to an indefinite or unknown quantities/ number. (There are still some unresolved issues.). Some is thus similar
with the indefinite article a/ an, although the difference is that the indefinite article is used with singular countable nouns, whereas some is
followed by plural countable nouns or uncountable nouns). Some, any and no are used with uncountable nouns and plural countable nouns:
some tea, some books. Some is normally used in positive sentences and in questions in which a positive answer is expected or encouraged
(e.g. in offers and requests): Could you lend me some records?/ Would you like some tea? Any is common in questions where the speaker
doesn't know the answer and in negative sentences or positive ones containing non-assertive words (hardly, never, seldom, rarely, little,
without): There is little to be found out from any future investigations./ Prices have taken a nosedive without any notice./ They failed to get
any support for their project. In if-clauses both some and any can be used: If you require some/ any more details, please call me. Any is more
common after if, which is sometimes implied (if there is/ are any'): Any friends of yours who are interested are free to join us. (It there are any
friends of yours who are interested, they are free to join us.)/ Any wealth he might have had, it was all lost during the recession. / Effective
communication will help smooth over any difficulties in our future cooperation. As a pronoun, any is followed by of, a determiner (definite
article, possessive) and a plural countable or uncountable noun: I don't think any of the secretaries will be here tomorrow. The verb is either
singular (formal style) or plural: Is/ Are any of the secretaries working tomorrow?
Some can be used with singular countable nouns to refer to an unknown person or thing (I need some book to keep the door from opening./
There must be some way to get out of here.), to refer to somebody/ something the speaker the speaker regards as unimportant or thinks little of
(I won't have you marry some penniless upstart or other.). Mostly in American English, some followed by singular countable nouns refers to
objects that the speaker admires and shows his/ her enthusiasm about (That's some job you've landed!). Followed by a number, some can
suggest an approximate number or a high, impressive one: There's some 30,000 people attending the rally. Some can also be used to convey
ironically the opposite idea: Some reassurance/ compliment that is!
Any can also occur both in positive sentences and negative ones when it refers to an unspecified person or thing: I would take on any job that
would be offered to me ((it doesn't matter which)/ I wouldn't take on just any job that would be offered to me!

The negative with not ...a/any can be alternatively formed with no, which is more emphatic and slightly more formal (There are no prospects
of promotion is this job.) No is however required at the beginning of sentences where not any cannot be used: No seats are available without a
reservation. No can be used with both singular and plural nouns (countable nouns are usually plural unless their meaning makes a singular
noun necessary): There is no message/ are no messages for you but He has got no wife/ children. (more natural than *no wives/ child). No is
preferred when the meaning is emphatic: He's no engineer, but he knows how to fix a car. (He is not an engineer at all.)
No is used with a noun or an -ing form to mean „not a(n)/ any', the structures being equivalent with structures with verb used with not (which
is used to make an expression or a clause negative), although the former are more emphatic: There is no reply./ There isn't a reply.
Before a noun (plural countable or uncountable) preceded by determiners or before a pronoun, not any (or no at the beginning of the sentence)
is replaced by none of: None of these paintings will be sold./ None of this furniture will be moved. With a plural noun or pronoun, the verb
can be either singular in a formal style or plural in colloquial speech: None of those houses is/ are for rent.
None of is replaced by neither of when referring to two people, things: Neither of these projects would be feasible. These constructions allow
both a singular verb (formal style) and a plural verb (informal style): Neither of my sisters live/ lives in this city. Neither can also occur
before a singular noun with the same meaning: Neither time is convenient./ Neither letter is stamped.
Either can be used in the same structure as neither (either of followed by determiner and plural noun) in both positive and negative
sentences with a difference in meaning. In negative sentences, the meaning of either followed by a negative verb is identical with that of
neither followed by a positive verb: The police doesn't suspect either of them./ The police suspects neither of them. In a negative sentence,
the verb following either can be both singular and plural: I don't think that either of them is/ are guilty. In positive sentences, either can be
used in the same structures as neither, but with a different meaning: Either of the applicants is suitable for the job.
Like neither, either can be used with a singular noun to mean „one or the other': Either bus will take you there. Sometimes either is
synonymous with each in certain expressions (on either side, at either end): There are trees on either side of the street.
As a determiner, other has another (singular) and other (plural) as indefinite and the (or possessive) other (singular) and the other (plural)
as definite. The other (both singular and plural) can be used in contrast with this/ these: This book is still available; the other book is not.
Another can be used both with the meaning „alternative' and with the meaning „additional/ similar': There must be another side to this far-
fetched story./ Would you like to hear another story?/ Would you like another helping?/ There must be another way of solving the problem.
Another with the meaning „additional' can also be followed by plural nouns preceded by few or cardinal numeral: He asked for another few/
three days to finish the work.

III. Each, every

Each can refer to two people or things, although unlike both, it considers them separately, rather than together: It can be used with singular
nouns or it can be followed by of, determiner and plural countable nouns: Each side of the street is lined with trees./ Each of the children
received a present.
Like all/ both, each can precede the verb or follow an auxiliary or the verb be. In this case, the subject and the verb are plural: The brothers
have each received a part of the family estate.

If the noun is object, each can appear after the noun: He sent his nephews/ them each a present.
When each is used with a singular subject, the pronouns or possessives that may appear in the clause may be in the singular (more formal) or
in the plural (less formal): Each of them made his/ her/ their choice.
Every is normally used to refer to three or more things or people: Every candidate received a copy of the exam paper.
Unlike every, each can be used as a pronoun, although each one/ each of them are more common informally (the following verb is normally
singular): Each (one/ of them) has a complaints about the management of this crisis. It follows that if each (one) can be followed by of, only
every one can be followed by of (when used with a plural noun) (every can be used only with a singular noun): Each (one)/Every one/ *Every
of the cars is blue. When referring to more than two people or things, both every and each can be used interchangeably and in many cases
with little difference in meaning. The business is growing more prosperous every/ each year./ Every/Each time there are discontents, she tries
to find a middle way./ Each/ every time she studies Shakespeare, she finds out something new. Each is however is preferred when the people
or things in a group are considered separately, individually, one by one, and the reference is to a definite and usually limited group, whereas
every is preferred when they are considered as a whole, together, as a group (it is similar to all): Every competitor received gifts at the end./
Every job/ marriage has ups and downs.// Each job that was offered to him made him feel more self-confident.
Unlike each, every can be modified by almost, nearly, practically, without exception and can be followed by single: They received with
reservations almost every project put forward./ They rejected every single suggestion made. Every, unlike each can be preceded by not: Not
every/ *each argument ends in agreement.
Unlike each, every can be used with a few uncountable nouns (encouragement, assistance) as an emphatic way of saying „all possible': They
gave us every assistance in completing the project.
Unlike each, every can be used time periods with cardinal/ ordinal numerals and other to express the frequency of an event: They hold a
conference every four months/ every fourth month./ I go to the library every other week. (every second week)

IV. Quantifiers - much, little, few

Much (used with uncountable nouns) and many (used with plural countable nouns) are not normally used in positive sentences in everyday
speech, a lot of, plenty of , lots of/ loads of (informally) (plural countable and uncountable), a great/ good deal of, a great/ small amount of
(uncountable nouns), a (great/ large) number of (countable nouns) being used instead: They used a lot of strategies to reach their objective./
Loads of people turned out for the rally to voice their discontents. Much and many are restricted to questions and negative sentences: There
isn't much cause to doubt his statement./ There aren't many hotels in this area. / Have you used many stand-ins in the film? A lot of, lots of,
plenty of can be used with both countable and uncountable nouns. The verb can be both singular and plural, depending on the noun they
determine: There have been a lot of pressures on the government to provide safeguards. / There is plenty of leg room in this car.
Much and many can however occur in positive statements in a formal style: Much had better be left unsaid./ Many shareholders voted for a
change of management./ Many a day have I regretted not having gone to school/ Many inquiries have already been made in this matter. Many
is also used in positive sentences with time expressions (I wondered many times how you were doing in your new job.)

Much and many can also occur in positive sentences in combinations like as much/ many as or when modified by much and far: I could
spend as much time as I like visiting galleries./ There are far too many obstacles to achieving the goal./ There is much too much bad blood
between the two parties for a compromise to be reached.
A lot of can be modified by quite/ rather: I've had rather a lot of problems with this computer.
(A) few
A few and few are used with plural countable nouns. A few has a positive meaning, indicating 'some', 'a number of things or people. It can
refer to a small number, but also to quite a lot: There are (only/ just) a few seats left.(a small number, not many, hardly any) / There are quite
afew/agood few objections to your plan. (quite a lot)
Few has a negative meaning, indicating 'hardly any', 'almost none' (it is often used after
very). In everyday speech, not.....................................many, hardly any, only a few are preferred: There are few
criteria member countries have a difficulty in fulfilling/ There aren't many/ are hardly any criteria member countries have difficulty in
fulfilling.
(A) little is used with uncountable nouns. A little has a positive meaning, indicating 'some', 'a (small) quantity: A little/a bit of patience would
never hurt anyone.
Little has a negative meaning, indicating 'hardly any', 'almost none', 'not enough' (it is often
used after very). in everyday speech, not.................................................much, hardly any, only a little are preferred:
There is little scope for adjustment./ There's not much scope for adjustment. It is often used in negative expressions (little point/ use/ sense):
They took very little equipment with them.

4.1. Complete the following sentences using all, both, half, whole, inserting additional
words where necessary:
a. Successive British governments of ........................................... major parties have been intent on resisting the
'deepening' strategy favoured by the French.;
b. For .............. the hopes of the die-hard anti-Europeans that the eurozone will break up, the
general feeling is that the process is 'irreversible'.;
c. The common ground in ................................ three countries is the continuing and depressing absence of
consumer spending.;
d. Greater co-operation and harmonisation in certain fields of taxation, and the active use of
fiscal policy to back up monetary policy is to meet common conditions of inadequate demand
or threatening inflation across.................................the area.;
e. The IMF, World Bank and the GATT, which evolved into the WTO were.........................................................................designed to
make the world economy run more smoothly in order to avoid a 1930s-style depression. ;
f. The argument of the anti-globalisers was that despite ............................................................. the talk of creating a social
Europe, monetary union was used as a means of spreading neo-liberal ideas and big business values across the continent. ;
g. The logic of having............................the country working flat out while.........................................is pensioned off early and
then forgotten escapes me. ;
h. It is important to stress that....................................regions of the world economy need to get to a balanced
situation. ;
i. Finally, closer integration has meant........................................century of war has been followed by...........................................century
of peace.;
j. But perhaps .....................that the most important central banker in Europe had in mind is the self-
levitating growth that certain central bankers have believed in for decades against ..............................................................................................
evidence.
4.2. Complete the following sentences with some, any, no, none, neither, either, other,
using additional words as necessary:
a professionals think that Europe could lag behind other regions, while others think there
is still plenty of scope for good news from the region. ;
b............the main EU member states, Germany and France, are currently facing the future with
much apparent political or economic self-confidence;
c. Supply-side policies are................................substitute for inadequate macro-economic policies; d.........................................................the
French want the rest of Europe to think they are sceptical about a united Europe.;
e............ignorant euro-watcher might not believe the period of low growth which seems to be in
store is cause for great concern.;
f. Might..............of the central bank's board members adhere to a more nationalist than European
line on interest rates when they report to the new headquarters in Frankfurt?;
g. The structural sclerosis explanation is by no means irrelevant, but it ignores the..........................................................................another
explanation, the policy sclerosis imposed by Maastricht on the European Central Bank.;
h. The ECB cannot succeed over.....................................length of time with one monetary policy and 12 fiscal
policies. ;
i. It is not sure if lower interest rates might provide.................................................economic stimulation. ;
j. A lower euro could help exporters, but it wouldn't address Italy's competitive position with
.......parts of Europe. ;
k. It is not clear how Italy, or...................................other euro-zone country, could withdraw if it wished to do
so. ;
l. The Fed's surprise half-point rate cut announced Wednesday has put the European Central
Bank under strong pressure to accelerate its own plans for........................................................credit easing, economists say. ;
m. At stage they will have to correct and when they do that will probably be associated with some further movement in the dollar." ;
n. And having surrendered control over monetary policy to the ECB, national governments
are left without ........................ possibility of softening the blow of labour market reform by cutting
interest rates;
o. Today, winning a referendum on such a thorny issue may prove.................................................................easy feat. ; p. The big
European countries were doing spectacularly better than a decade before so .................................................................................. political
misgivings harboured by the Eurosceptics were trumped by economic arguments. ;
q............political side stands an equal chance of winning the upcoming elections.
r. If the BIS prognostications are realised, and the euro strengthened against the dollar, there
would be hardly .......................... good news for the eurozone, with its fledgling economic recovery
dependent on exports and weak domestic demand.

4.3. Complete the sentences below with every or each also introducing additional words
where necessary:
a. But in a world where almost......................................economic development is exaggerated, panic sets in and
many commentators have shifted their positions from excessive optimism about the eurozone (when it was in the making) to deep pessimism.;
b............these theorists makes some strong arguments in favour of unification.;
c............ attempt the leading members have to made to make amendments to the Constitution
has failed.;
d............candidate in the presidential elections has agreed to give up his favourite tax cuts and
expenditures.

4.4. Complete the sentences below using much, many, (a) little, (a) few, plenty, a number
(of), introducing additional words where required:
a............. the major economies may have been in, or teetering on the brink of recession but
investors were, as usual, looking forward to better times.;

b. For............of the past decade European markets have been valued at between 5 and 7 per cent
higher than the US. ;
c. There is still ....................... scope for banks and insurance companies to gain from carrying out
restructuring and rationalisation programmes. ;
d............. economists think placing monetary union before political union is putting the cart
before the horse.;
e. The agreement was that.............................governments using the euro would allow its budget.
f. The ECB is in the unenviable position of being a central bank representing a single currency
but 12 different countries, with very......................................coherent policy message for it to act on. ;
g............., if any, think that the euro will stop being the legal currency of.............................................................Europe;
h. Unfortunately for France, the Bundesbank has retained quite...........................................................control over the European
Central Bank's till. ;
i. There is ...............talk about Britain taking over the leadership of Europe, ...........................................................which sits oddly
with a £5bn a month visible trade deficit.;
j. If one looks at just..........................the events of the past week further justification is not necessary.;
k. The problem for the ECB is that neither the politicians nor the voters have........................................................................stomach for
painful reform. ;
l. Not..............politicians have lost elections promising voters the soft option.

Read the following text and discuss the questions below:

Collectively, members of the Executive Board of the ECB have only 6 votes in the Governing Council, out of a total of 18 (a number that will
rise as other countries join EMU), a minority position similar to that of Bundesbank prior to 1992. However, Germany has only one financial

BUSINESS SKILLS

centre where the major money market participants are located and all foreign exchange operations take place. These factors strengthened the
centre, despite the fact that discount quotas and operations were administered by the Landeszentralbanken. In the US, the Federal Open
Market Committee (FOMC) has functions similar to those of the ECB Governing Council: it sets monetary objectives and formulates
guidelines for the main policy instrument - open market operations - to be undertaken through the Federal Reserve Bank of New York. FOMC
meetings, held every five or six weeks, attended by the 12 presidents of the regional Federal Reserve Banks and the 7 members of the Board
of Governors. The latter are nominated ny the President of the US, subject to confirmation by the US Senate. Only 5 out of the 12 Federal
Reserve Bank presidents have the right to vote at any one meeting, however and thus the majority lies with the Board. The central position of
the Board is further underlined by the attribution to it alone of two important policy instruments: discount rate exchanges and variations in
reserve requirements. the Board of Governors retains its dominant influence both on decisions and on implementation of policy, which is not
difficult to supervise closely as it is done in one place, New York. The difference in the strength of the centre between the Fed and the ECN
lies not only in the numbers of their decision-making organs, but in its superior back-up in terms of analysis and information. In the US, the
presidents of the Federal Reserve District Banks are elected from among local shareholders, that is mostly commercial banks of the region.
They are chose for their manageral experience rather than for their grasp of macroeconomic issues. As a result, even the district presidents
whi have a right to vote on the Board hesitate to take a strong decision. In Europe, on the contrary, some of the presidents of the NBCs have a
strong background in macroeconomic management and may have to take more difficult monetary policy decisions than some members of the
Executive Board. It follows that monetary policy is implemented by the NBCs, while the ECB will not be an unquestioned authority: it will
have to accept a number of national central banks from the euro zone as its equal. As most important decisions are prepared by committees
recruited from the staffs of NBCs, and recruitment are on a temporary, it is not always clear whether the ECB staff will retain their loyalty to
their home NBC or they will develop the esprit de corps that proves crucial when the institution is under
pressure.

Task: In what ways are the structures of the ESCBs and the Federal Reserve System different?; b. What decision-making organ wield a
dominant influence in ESCBs? What about the Federal Reserve System? What are the reason for that ?
Discuss the changes induced in the decision-making structure in the context of European integration and enlargement. Would this require
reforming? In what ways?

6. CASE STUDY
The National Commercial Bank is an Albanian bank majority-owned by Kentabank of Istanbul. The bank has plenty of deposits but chooses
to keep the money in treasury bill rather than make any loans. The bank is 's decision is motivated by the experience of other banks in a
similar position, namely that of former communist banks, most with a history bad loans. One such bank, Fefal Bank of Albania, has made
2,000 small credits and as a result it has 70 outstanding claims in the courts. Of these, it has won a single case, and even in this case the
collateral proved impossible to sell.
The Savings Bank of Albania currently has 83% of the country's deposits, but it made bad industrial loans which have been hived off into a
resolution trust. Its deposits are invested in treasury bills, of which it owns 85% of the issues outstanding.
In the meantime, the capital-hungry entreprises are robbed of a source of finance, while the banks, stuck with a tiny net return (National
Commercial Bank only 2%), fail to help commerce and to become effective economic actors.
Banks in central-eastern Europe are yet facing a new reality, represented by the upcoming privatisation. Ceska Sporitelna, a Czech savings
bank, bought by Erste Bank of Austria, was similarly encumbered by bad industrial credit. On buying it, Erste Bank was allowed to keep the
loans it liked and to reclassify the rest. These were to be dealt with by the government's bad loan bank, Konsolidacni Banka. However, the
bank remains with a lending problem: the few good Czech companies can demand such cheap borrowing that it is not worth lending to them.
As for retail and small businesses, the high risk of lending makes it difficult for the loan officers to make loan decisions.
If the deficiencies in the restructuring of the financial sectors is mainly to blame for this situation, it is the respective governments that is to
pay the cost for the soft lending and for the failure to close companies. In the case of the Czech government, the cost is estimated to be no less
than 9% of GDP. The bill includes the cost of guaranteeing all the bad loans of the bank above mentioned and also those of another insolvent
bank before that was sold to a rival, as well as the cost of dressing up a bank for privatisation, which is scheduled for some time this year. It
follows that the bad loans were replaced on the banks' balance sheet by treasury
bills.
In Europe, economic and monetary union makes interlinking between EU banks more stringent makes the situations of EU banks, particularly
the fair-sized ones, more important than before. It one such bank runs into difficulty, there is the possibility of this posing a systemic risk to
the European banking system.
However, the national central bank alone, looking at the domestic market would not be able to judge whether the failure of the bank poses this
risk across the euro area. In this situation, should the national central bank bear sole responsible for recapitalising the bank? Is there a
possibility that national bank supervision may worsen the situation of the bank in question, for instance increase the risk of bank failure?

TRANSLATION

Inspirată de progresele timpurii făcute în „încheierea pieţei unice' în cadrul programului „1992', în 1998 Uniunea Europeană l-a însărcinat pe
preşedintele de atunci al Comisiei Europene, Jaques Delors cu elaborarea programului pentru realizarea uniunii economice şi monetare.
Încurajat de creşterea economică rapidă de la sfârşitul anilor 1980 şi începutul anilor 1990, UE a acţionat rapid pentru a ratifica aşa-numitul
„Plan Delors', semnând Tratatul de la Maastricht în 1991 şi stabilind termenul limită de 1999 pentru începutul uniunii monetare europene.
Recesiunea crescândă din Europa şi tensiunile ce nu mai puteau fi ţinute în frâu din interiorul Sistemului Monetar European în urma
reunificării Germaniei în 1999 au desumflat rapid optimismul care cuprinsese sumitul de la Maatsricht. Semnele de îngrijorare din partea
Franţei în legătura cu faptul că independenţa proiectată iniţial a noii bănci centrale europene ar putea da politicii monetare viitoare o tendinţă
deflationistă a fost dublată de rezistenţa electoratului german faţă de ideea renunţării la marca germană. Entuziasmul faţă de uniunea monetară
a atins limita de jos la jumatatea anilor 1990, pe masură ce recesiunea, fluctuaţiile monetare dramatice şi costurile sociale de pregătire a
finanţelor publice naţionale în vederea aderării au avut preţul lor.
Deşi la o distanţă de mulţi ani după ce Planul Delors a aşezat UE pe drumul spre uniunea monetară opiniile rămân încă împărţite, se
înterevede faptul că reconstrucţia unui cadru pentru o uniune monetară a fost posibil numai în jurul uniunii monetare europene, în care o
bancă centrală europeană independentă, dură urma să reprezinte obiectivul anti-inflaţionist. Şi în ciuda rezervelor de ordin economic, uniunea
monetară nu este doar un simplu calcul al costurilor şi beneficiilor economice. Pentru Uniunea Europeană, integrarea europeană a fost
intotdeaună un mijloc de a raliza unificarea politică, iar nu un scop în sine. Angajamentul statelor membre
faţă de idealul uniunii politice înseamnna că uniunea monetară europeană trebuie privită ca o
parte a unui angajament mai general faţă de o Europă paşnică, unită.