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Maturitní otázky – odborná angličtina
1. Market
Market = the exchange of activities among individual economic subjects through an
exchange of goods. Sellers meet buyers to exchange their products and services by means of
money.
Market functions = to asnwer the basic questions: what, how and for whom to produce
Market areas = local → regioanl → national → international market
Types of markets:
- market of products and services
- markets of factors of production (land, capital goods, labour markets,…)
- financial markets (money market, capital market, exchange market,…)
Market agents:
- individuals and households
- firms
- government
Market elements:
- supply
- demand
- market price
- competition
2. The law of supply and demand
Supply = the amount of goods offered for sale on the market
Demand = the quantity of goods that people are willing to purchase
Market = the place where supply and demand meet
The price of a product = influenced by the law of supply and demand and their interaction
= if the market becomes saturated the consumers can choose the best and cheapest products =
the price goes down in order to stimulate sales X if there is a shortage of the goods the price
goes up (the demand is higher than supply)
Equilibrium level = supply equals demand, usually doesn’t last long, helps to achieve the
balance in the economy
Supply and demand:
- aggregate supply and demand
- market supply and demand
- individual
3. Competition
Competition = contest in the market by legal means
i.e. – some producers outprice the others by lowering the production costs, some rely on
higher quality, some offer unaparallelled service and sales promotion
Types of competition:
- competition across the market = between supply and demand
- competition on the demand side
- competition on the supply side
- price competition
- non-price competition
Impact of competition = positive aspects: quality and technical improvements,…
negative aspects: considerable funds are wasted, environment,…
4. Money – functions of money
Money = everything that serves as a universally accepted medium of exchange or means of
payment, is considered as a special commodity
Functions of money:
- medium of exchange
- a store of value – can be kept for spending at a later date, should be deposited with
some financial institution (also in the form of securities, bonds and shares)
- a unit of account = a measure of value
5. Evolution of money
1. the barter system = direct exchange of goods
2. commodity money – goods = cattle, skulls, feathers, shells, salt, spices, wine,
elephant tusks, tobacco, etc.
3. precious metals = especially gold and silver – were in limited supply, counterfeiting
was extremely difficult, were portable, durable, divisible
4. paper money = developed from paper receipts that goldsmiths gave their clients,
could be exchanged for precious metals, money was backed by gold
5. fiat money = money is given denomination by the government, is not backed by gold
Bank notes and coins made of various metals became legal tender. Paper money is well
protected from counterfeiting by means of water marks, security threads, microprinting in the
design, use of reflective materials, etc.
6. Money supply
All movements of the money supply are important indicators of inflation, economic activity,
and growth. The government intentionally regulates the money supply to influence ath above
mentioned phenomena for the sake of economic prosperity.
The money supply consists of different types of money:
1. transaction money – used for the exchange of goods and services, consists of notes
and coins and also bank money – money deposited with the banks in current
accounts, where payment can be made by a money transfer
2. near money – this type of money needs some time to be turned into transaction
money, e.g. term deposits in thrift institutions or credits (according to central banks)
which represent all debts of domestic non-financial sectors such as mortgages, bonds,
and the like.
7. Interest
Interest = money earned on deposits or paid on loans
Deposits = long-term deposits often pay higher interest than short-term deposits
Loans = people who borrow money from the bank must pay the price of the borrowing
money = the principal plus the interest
Interest rate = expresses the percentage of the borrowed sum
Money should be always deposited with some type of a financial institution otherwise it loses
its value (inflation, etc.)
8. Exchange rate
Exchange rate = expresses the price paid for a foreign currency
appreciation = economy is doing well - the market price tends to rise
depriciation = economy is not doing well – the price decreases
- this is effected automatically by market forces, exchange rates can fluctuate every day,
governement can intervene by selling the currency in question ( in the countries with the
floating exchange rates)
revaluation = increase in the price of a currency, positive for creditors, negative for exporters
devaluation = decrease in the price of a currency, positive for exports and the inflow of
foreign capital
(in the countries with fixed exchange rates – rates are pegged to one or more foreign
currencies = currency basket)
undervaluation = lower official exchange rate set by the government
overvaluation = higher official exchange rate set by the government
9. Monetary policy
Monetary policy is connected to the value and cost of money in the economy. The main goal
of any central bank is to protect the currency by stabilising prices and limiting inflation.
- tight money policy = money supply is reduced and investments are limited
- easy money policy = money is easily available, investments are encouraged
Instruments of monetary policy = help to regulate the money supply in a country
- interest rates, loan terms, minimum reserve requirements, discount rates, open
market operations with government securities
Hot money = speculative financial capital, deposited on a short term basis, focused on
expected revaluation
10. Payment instruments
cash = notes and coins
payment card = electronic means of payment – debit cards, credit cards
cheque = a written order for money
travellers´ cheque = useful when travelling, can be turned into cash or used for payments
direct debit = money is transferred from one account to another
11. Banking system
Bank = an institution specializing in the money business, it buys money and sells it for profit
Banking system = big banks have branches in nearly all towns, there are a few basic types of
banks:
1. Central Bank:
- supervises and helps other banks, „Lender of the Last Resort“
- Czech National Bank, Bank of England, Federal Reserve System
- determines the discount interest rates, imposes rules on the minimum bank reserves, issues
the currency, controls the exchange rates, manages foreign exchange reserves
2. Commercial Banks:
- accept deposits and invest them
- provide loans and a wide range of bank products, handle accounts
3. Savings Banks: (thrift institutions)
- keep customers‘ savings, make personal loans, arrange residential mortgages
4. Investment Banks:
- trade in securities, provide consultancy services and also bank products
5. Specialized banks:
- export and import banks, mortgage banks, development banks, guarantee banks,
credit unions, building societes,…
12. Bank’s financial resources
Liabilities = deposits accepted from clients
Assets = loans granted to clients
Margin = the difference between the interest received on loans and paid on deposits
Other financial resources:
- trading in securities and foreign currencies (bank engage brokers)
- central bank – „Lender of the Last Resort“ – banks can borrow money there
- issuing new shares and selling them to public
- issuing bonds = form of a debt for the bank
- bank products
13. Bank products
Bank products = services offered in various areas of bank activities
- opening and maintenance of current and deposit accounts, foreign currency accounts,
etc.
- loans, overdrafts, mortgages
- facilitating payments – payment cards, money transfers, direct debits, standing orders,
cheques, bills of exchange, discounting bills, etc.
- exchanging foreign currencies
- investment banking services
- consultancy services
- bank guarantees, factoring, fortaiting
- safe custody services
- derivatives (options, forwards, swaps)
- insurance services, pension schemes, Certificates of Deposits, etc.
14. Bank accounts
Deposit accounts (savings accounts, also pass-book accounts) = suitable for saving money
- long-term deposits earn higher interest than short-term deposits
- if you wish to withdraw money you have to give a notice to the bank
Current accounts (checking accounts) = money can be used at any time = „at call“
- accounts are credited by people’s deposits, salaries and other sorts of income
- accounts are debited when payments from these accounts are made
-
money transfer: money is transfered from one account into another on the basis of a
money order
direct debit: for regular payments like electricity, gas or rent – a standing order must
be issued (can be also done by making out a cheque)
balance: money left in the account
statement of account: registers all money transactions
15. Loans, overrdrafts, mortgages, applying for a loan
Bank overdraft = a form of credit up to an agreed limit (credit line or credit limit) which
can be obtained with a current account, interest on the sum overdrawn has to be paid
Loans = money lent to a borrower by a lender. The borrower must repay his loan – principal
plus the interest on the sum borrowed
Types of loans according to:
way of repayment:
- time loan – repayable in full only on the maturity date
- term loan – repayable in instalments
maturity :
- long-term loans – 10 – 30 years
- medium-term loans – 5 – 6 years
- short-term loans – 6 – 36 months
purpose of a loan:
- personal loans – for personal consumption
- commercial loans – granted to business organizations
security:
- unsecured loans – without any security, may result in a bad debt
- secured loans – secured by collateral (e.g.: machinery, equipment, inventory,..)
Credit rating, creditworthiness = income, track record and reputation of a customer / firm
are carefully considered before a loan is granted. A company must present its financial
statements (the balance sheet and the profit and loss account) and business plans. Then the
credit line, collateral, interest rate, collateral and instalments are fixed.
Mortgage = a type of a secured, usually a long-term loan, the collateral is usually the house
or flat itself
16. Interest rates on loans
Discount rate = banks can borrow money from the Central Bank at a discount rate
Borrowing rate = rate at which banks get their own resources
Lending rate = charged to the clients who fix loans with the banks
Prime rate (base rate) = offered to the best customers
Fixed interest rates = do not change before the maturity date
Flexible rates = are adjusted in agreed periods before the maturity of a loan
Capped rate = guarantees a maximum variable rate (limited by a ceiling)
17. Payment cards
Cash cards (debit cards):
-
allow their holders to withdraw cash at any time from ATMs both in their own country
or abroad
- also can be used for payments – the payments are made by electronic transfers - the
debit authorization must be signed according to the specimen signature
Credit cards:
- can be used as cash cards
- clients do not have to open a current account with these cards, there is only a credit
line agreed with a bank
- every month the holders are sent a statement with the outstanding balance which must
be cleared by a certain date
18. Trends in banking
Telephone banking = a special telephone line is needed, payments can be made 24 hours a
day
GSM banking = used with the mobile phones, done by SMS
Wap banking = access to the internet by a mobile phone
Desktop and Home banking = aa special software is needed, people can make transactions
and control their accounts on-line day and night
Internet banking = no special software is needed, can be done on any computer with an
access to the internet, at any place in the world
Payment cards = payments or reservations can be done
Bank derivatives = swaps, options and forwards
19. Inflation
Inflation:
- rise in the general price level
- reduction of the purchasing power of the currency
- growth of the money supply
- rise in nominal wages
Measuring inflation = inflation rate = the speed at which prices increase year by year
CPI = Consumer Price Index, GNP deflator and PPI = Producer Price Index are used for
measuring inflation
CPI = compares prices of a typical consumer basket in a current year
Types of inflation:
- balanced (anticipated) inflation – prices increase at nearly the same rate as wages
- unbalanced (non-anticipated) inflation – harfmul to the economy
- moderate, creeping inflation – 2 - 10% a year, people keep savings in the banks
- galloping inflation – 20 - 200% a year, people withdraw money, buy estates,…
- hyperinflation – often after wars and revolutions
20. Unemployment
Unemployment = is expressed by the unemployment rate, people who are unemployed
get the unemployment benefits
Types of unemployment:
1) natural unemployment:
- frictional = people quit their old jobs and look for new ones (frictioanl unemployment)
- structural = non-qualified people (teenagers, older people) or highly skilled people
- seasonal = people are required only in certain periods of the year (agriculture,…)
2) cyclical unemployment = the difference between the natural unemployment and the
actual unemployment rate = rises above natural level, often after wars or in times of
recession
21. Economic growth, measuring a country’s prosperity
Economic growth = a growing standard of living = businesses are prospering, incomes, profit
and wages are rising, people have more goods and services to consume
The economic growth can be achieved by:
- productivity of labour
- improvement of management
- investment in research and development
- full use of factors of production – land, labour, capital
- high-quality education
- mobility of the labour force
- stable political environment, respect for the law
Measuring a country’s prosperity:
Gross National Product = the value of all goods and services produced by the citizens of a
country within one year
- is used for comparison of the standards of living in different countries
- real GNP is measured in constant prices related to a base year
Gross Domestic Product = the result of the production of all firms within the territory of
some country, both domestic and foreign
22. Fiscal policy, National budget
Fiscal policy = government activities aimed at regulating the economic development with the
help of fiscal instruments
- government can regulate inflation, unemployment, secure public services, formulate
legal framework, etc.
Instruments of fiscal policy:
- revenues and expenditure of the national budget = taxes, government expenditure,
transfers
National budget = a budget for a given year contains planned expenditure and anticipated
revenues, can be balanced or show a surplus or deficit
Revenue side = taxes and duties
Expenditure = public goods, transfers (social programmes), public debt, state administration,
etc.
23. Taxes
Taxes = the basic fiscal instrument, the most important part of the revenue of the national
budget
Classification of taxes:
1) depending on income: proportional, progressive or degressive
2) direct taxes: imposed directly on individuals and firms (income, property or
corporation taxes)
3) indirect taxes: imposed on goods and services (VAT, consumption tax, etc.)
Increasing or decreasing of taxes can influence:
- the business cycles of an economy (aggregate demand)
- investment policy (taxes on profit of organizations)
- growth of certain sectors of industry
24. International trade, Balance of payments
International trade = exchange of goods, services and capital over the country’s boarder,
includes imports and exports
- if a country participates in the international trade, it takes part in the international
division of labour
Benefits: wider choice to consumers, increase in technical parametres, productivity of labour,
lower production costs, increase in GDP
Balance of payments = review of all flows of money in and out of an economy in a certain
period, usually a year
credit side = transactions that bring currency into a country
debits = money outflows
positive balance = surplus = more money flows into a country than out of it
negative balance = deficit = more money flows out of a country
Main components of the balance of payments:
- the balance of trade (the visible balance) = exports and imports of visible goods
- the invisible balance = invisible imports and exports (tourism, transport, banking,
insurance, and other services)
- capital inflow or outflow recorded in the capital account
25. European Union
EU = family of democratic European countries, commited to working together for peace and
prosperity. It was founded after WW II to protect and cooperate.
- 1957: Belgium, France, Germany, Italy, Luxembourgh, Netherlands
- 1973: Great Britain, Ireland, Denmark
- 1981: Greece
- 1986: Spain, Portugal
- 1990: former Easter Germany
- 1995: Austria, Finland, Sweden
- 2002: Euro
- 2004: the Czech Republic joined the EU together with Cyprus, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia
Now the EU embraces 25 countries and 450 million people. Euro is used by 12 countries. It
fights crime, discrimination, protects human rights and environment.