B. Reading Comprehension

VIII. Read Тext A.

Text A. Money

Money is indispensable in a society in which commodity exchange takes place. In commodity exchange money plays the role of a universal equivalent, that of commodity expressing the value of all the other commodities.

Gold is the generally accepted money commodity. Because of its natural properties gold is the most convenient substance to carry out the social function of money. It can be easily broken into pieces and melted and «recombined» without any loss of value. It can also be kept safely as it does not become oxidized. In addition it has relatively small volume for its weight while denoting a considerable value.

Money performs a number of functions. First of all, it serves as a measure of value; that is, it is used to measure the value of all other commodities. Each commodity is sold for a certain sum of money, which expresses its value. The value of a commodity in terms of money is called its price.

Money is an ideal unit for expressing the value of all other commodities. What this means is that to measure the value of commodities it is not necessary to have cash. As acts of sale and purchase (i.e. the exchange of commodities for money) are repeated many times, the seller and buyer mentally equate the commodity to a certain amount of money (or gold) corresponding to its value.

When commodities are exchanged with the aid of money, the latter also serves as a means of circulation. To perform this function money has to be real, not ideal. What is important is that anyone receiving these symbols of value must be assured that they will be accepted from him too, when he pays for other commodities. That is why states declare paper money to be legal tender.

Money also serves as a means of accumulation or a way of hoarding treasures. This function stems from the fact that money can buy any commodity. Therefore, money is a universal embodiment of wealth and a means of accumulating it. Taken out of circulation, however, money becomes treasure only if it is gold, or money converted into articles of gold, silver and other precious metals or stones.

Money is not always in the from of cash. Sales and purchases are often made on credit.