The discount rate is the interest rate that the Central Bank charges when commercial banks want to borrow money. When inflation threatens, a discount rate increase dampens economic activity because then banks charge higher interest rates to borrowers. On the other hand, a discount rate decrease is designed to stimulate business activity.
One should remember that monetary policy differs from fiscal policy, which refers to taxation, government spending and borrowing.
Ex. 1 Memorize these words.
adjust приспосабливать, регулировать
amount величина, количество, сумма
charge назначать, запрашивать (цену)
convertible конвертируемый, обратимый
decrease уменьшать(ся); сокращение, спад
deterioration ухудшение, износ, амортизация
discount rate учётная ставка, учётный процент
encourage поощрять, стимулировать
exchange rate валютный курс, обменный курс
increase увеличивать, расти; рост, увеличение
intend намереваться, предназначать(ся)
interest rate процентная ставка, ссудный процент
implement выполнять, осуществлять
level уровень
neutral нейтральный
objective цель
output продукция, выпуск, выработка
ratio соотношение, пропорция, коэффициент
recession рецессия, экономический спад
reduce сокращать, уменьшать
reserve requirements резервные требования
slow медленный; замедлять
spend (spent) тратить, расходовать
tight тугой, тесный; жёсткая (политика)
trade торговля; торговать, обменивать
unemployment безработица
Ex. 2 Match up the words from A and B.
A economic interest national inflationary open money combat government major reserve encourage convertible into
B supply rates period output spendings role requirements bonds
market cash activity unemployment
Ex. 3 Define parts of speech.
economic, macroeconomics, investment, expansionary, rapidly, commercial, significant, threaten.
Ex. 4 Find pairs of synonyms in A and B.
A) aim businesses way proportion
have fall major combat
B) method ratio objective hold
companies fight important drop
Ex. 5Find pairs of antonyms in A and B.
A) excess increase rapidly spendings bought more borrow expansionary
B) slowly contractionary shortage lend
decrease savings sold less
Ex. 6 Change the sentences into a negation, a yes-no and a wh-question.
1. Monetary policywas first used in the 1950s.
2. The Central Bankplays a major role in the implementation of
monetary policy.
3. Bankshavetohold a proportion of their assets as a reserve.
Ex. 7 Answer the following questions.
1. What is monetary policy used for?
2. Who plays a major role in the implementation of monetary policy?
3. What are the 3 main aspects of monetary policy?
4. What is the objective of the expansionary policy?
5. What is the objective of the contractionary policy?
6. What happens with the money supply when the Central Bank sells
government bonds?
7. Why do commercial banks have to hold a proportion of their asset
as a reserve?
8. How can the Central Bank stimulate business activity using the
discount rate?