MONEY SUPPLY AND CONTROL PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 27. MONEY SUPPLY AND CONTROL

 

A Measuring money Professor John Webb, the banking expert we met in unit 23, continues his interview: What is the money supply? It’s the stock of money and the supply of new money. The currency in circulation – coins and notes that people spend – makes up only a very small part of the money supply. The rest consists of bank deposits. B Changing the money supply The monetary authorities – sometimes the government, but usually the central bank – use monetary policy to try to control the amount of money in circulation, and its growth. This is in order to prevent inflation – the continuous increase in prices, which reduces the amount of things that people can buy. C Monetarism Monetary economists are those who argue that if you control the money supply, you can control inflation. They believe the average levels of prices and wages depend on the   EXERCISES 27.1 Are the following statements true or false? Find reasons for your answers in A and B opposite. 1 Most money exists on paper, in bank accounts, rather than in notes and coins. 2 Banking customers can withdraw time deposits whenever they like. 27.2 Use the words below to make word combinations with ‘money’. Then use the word combinations to complete the sentences. Look at A opposite to help you. broad supply narrow   1 The __________ __________ is the existing stock of money plus newly created money. 2 The smallest or most restrictive measure is __________ __________. 3 __________ __________ is a measure of money that includes savings deposits. 27.3 Find three nouns in B and C opposite that make word combinations with ‘monetary’. Then use the word combinations to complete the sentences below. 1 The __________ __________ are the official agencies that can try to control the quantity of money.

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