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CÂU HỎI ORAL TEST CN1 UNIT 1: ECONOMICS What is the definition of “economics”? Economics is the study (n) of / Economics studies (v) how people choose to use resources the most effectively to produce goods and services in order to best satisfy human demand Who is an economist? An economist is a person who studies economics What is the definition of well-being? Well-being means the satisfaction that people gain from / gained from the consumption of goods & services, the time shared with your relatives, friends, What is productivity? Productivity is the rate at which goods are produced What are resources of a country? A country's resources are the things that it has and can use to increase its wealth, such as coal, oil, or land What are resources of an organization? The resources of an organization are the materials, money, and other things that they have and can use in order to function properly What are types of resources? Resources can be divided into types of natural resources, human resources and capital How are all types of resources? All types of resources are limited / scarce Give some examples for natural resources Natural resources include land, water, wind, solar energy, mineral underground, etc 10 Give some examples for human resources Human resources include labor force, time, talent, inventions, patents, knowledge, experience, etc 11 Why is it necessary to study economics? Because all types of resources are limited, while/ whereas the human demand is unlimited 12 What are main (major) issues studied in economics? They are production, distribution and consumption of goods and services 13 What are two branches/ types of economics? Economics can be divided into microeconomics and macroeconomics 14 What is the economic theory of Adam Smith? It is the Classical School 15 What is the economic theory of Adam Smith about? It says that because of their own interests, people produce goods and wealth that benefit all society 16 Why did Adam Smith believe that the government (the visible hand) should not restrict or interfere in the market? Because the market could regulate itself and could produce wealth at maximum efficiency 17 What is the economic theory of Karl Marx? It is Marxism 18 What is the economic theory of Karl Marx about? Marx believed that owners’ exploitation of labor leads to social unrest and class conflict, so laborers should own and control means of production in order to ensure the social and economic stability 19 Why did Marx suggest that laborers should own and control means of production? Because Marx believed that owners’ exploitation of labor leads to social unrest and class conflict 20 What is the economic theory of Keynes? It is Keynesian School 21 What is the economic theory of Keynes about? The theory of Keynes describes how governments use macroeconomic policies to regulate the economy, ensuring the social and economic stability 22 According to Keynes, what can the government when the economy isn’t growing fast enough? The government can reduce taxes or increase government spending to promote economic growth and reduce unemployment 23 According to Keynes, what can the government when the economy becomes overly active? The government can increase taxes and reduce government spending 24 How can studying economics help people? Studying economics can help people understand human thought and behavior UNIT 2: ECONOMIC SYSTEMS What is a quota? A quota is the limited number or quantity of something which is officially allowed Hạn ngạch số lượng giới hạn số lượng thứ cho phép thức What are types of economic systems/ models? types of economic systems/ models are: market economy, planned economy and mixed economy What is market economy? What is the definition of market economy? Market economy is an economic system in which economic relations are regulated by the law of supply and demand The law of supply and demand explains the interaction between the supply of and demand for a resource, and the effect on its price What is the role of companies in market economy? - Companies can compete freely/ there is free competition among companies in market economy What is the role of the government in market economy? - There is no direct government intervention, but the government influences the economy through its economic policies What is planned economy? What is the definition of planned economy? - Planned economy is an economic system in which all production, distribution and consumption quotas are fixed beforehand by the government (Nền kinh tế kế hoạch hệ thống kinh tế tất hạn ngạch sản xuất, phân phối tiêu dùng phủ ấn định trước.) What is the role of companies in planned economy? - There is no real competition among companies, and private ownership doesn’t exist What is the role of the government in planned economy? - The government controls all the means of production and channels of distribution What is mixed economy? / What is the definition of mixed economy? - It is an economic system in which some goods and services are produced by the government and some by private enterprise 10 What is one of differences between market economy and planned economy? In a market economy, economic relations are regulated by the S & D, but they are determined by the government in a planned economy Hoặc: Companies can compete freely in market economy, but there is no real competition among companies in planned economy 11 What is the economic model of Vietnam? - The market economy under the government’s control/ state control - The market economy under socialism orientation 12 What are its main features? The economy of Vietnam is considered a multi-sector economy (kinh tế nhiều thành phần) 13 What are different economic sectors in Vietnam’s economy? Different sectors such as + state companies + private companies + joint-ventures (liên doanh) + foreign companies UNIT 3: MICROECONOMICS What are important themes of microeconomics? - important themes of microeconomics are: the allocation of scarce resources, the role of prices and the role of markets Why people (consumers, workers and firms) have to make trade-offs? All of resources are scarce, while human demand is unlimited What is the first theme studied in microeconomics? It is the allocation of scare resources What are limited resources of consumers? The limited resources of consumers are their incomes Give an example for trade-offs made by consumers? Consumers may trade off the purchase of more of some goods with the purchase of less of others Or: Another example for a trade-off of consumers may be trading off current consumption for future consumption What does the consumer theory describe? The consumer theory describes how consumers can best make trade-offs based on their limited resources and preferences What are limited resources of workers? Resources of workers are their time and talent, knowledge, working experience, etc Give an example for trade-offs made by workers? They have to decide when to enter the workforce, which job to do, who to work for What are resources of firms? Resources of firms are human resources, financial resources, production capacity, technology, management ability, reputation (trade mark), brands, and so on 10 Give an example for trade-off made by firms? Firms have to decide what to produce, how to produce and for whom to produce 11 What does the theory of the firm describe? The theory of the firm describes how companies can best make trade-offs 12 Who makes decisions on the allocation of resources in the planned economy? The Government fixes all production, distribution and consumption quotas beforehand 13 Why is it true to say producers have little flexibility of choices in the planned economy? Because in the planned economy, firms are told by the government what and how much to produce, and how to produce it 14 What are trade-offs? A trade-off (n): an exchange; esp., a giving up (từ bỏ) of one benefit, advantage, etc in order to gain another regarded as more desirable Trade-offs are exchanges involving people’s choices to maximize their benefits 15 What consumers make trade-offs normally based on? Consumers make trade-offs normally based on their incomes and their preferences 16 What is the major role of prices? All of the trade-offs made by consumers, workers and firms are based on the prices 17 How are prices set in the planned economy? In the planned economy, prices are set by the government 18 How are prices set in the market economy? In the market economy, prices are determined by the interactions of consumers, workers and firms UNIT 4: MACROECONOMICS What are two major macroeconomic policies? They are monetary policy and fiscal policy Who supervises monetary policy? The Central Bank of each country supervises monetary policy What does monetary policy control? It controls the money supply (lượng cung tiền) of a nation Who supervises fiscal policy? The Ministry of Finance supervises fiscal policy What does fiscal policy control? It controls the government’s revenue and spending What are the main objectives of macroeconomic policies? The main objectives of macroeconomic policies are: to promote economic growth, to control inflation and to reduce unemployment rates What is the definition of macroeconomics? - Macroeconomics is the branch of economics that studies overall economic trends within one economy and interactions among different economies in the world What economic trends include? Economic trends include employment levels, economic growth, balance of payments, inflation and so on What does GDP stand for? GDP stands for Gross Domestic Products 10 Why are microeconomics and macroeconomics actually interdependent and complement one another? They are actually interdependent and complement one another because there are many overlapping issues between the two fields 11 What is the definition of “economic trends”? Economic trends refer to changes or developments in economies 12 What is a country's balance of payments? The balance of payments of a country is the difference between the payments it makes to other countries for imports and the payments it receives from other countries for exports over a period of time 13 When is the balance of payments of a country in surplus? It is in surplus when the country exports more than it imports 14 When is the balance of payments of a country in deficit? It is in deficit when the country imports more than it exports 15 What is the money supply? The money supply is the total amount of money in a country's economy at any one time UNIT 5: SUPPLY & DEMAND What is demand? Demand refers to all possible quantities of goods and services that buyers are able and willing to buy at all possible prices What are shift factors of demand? Shift factors of demand are society’s income, prices of other goods, expectations of consumers and tastes What is quantity demanded? Quantity demanded is the specific amount of goods and services that buyers are willing and able to buy at a certain price What is supply? Supply refers to all possible quantities of goods and services that sellers are able and willing to sell at all possible prices What are shift factors of supply? Shift factors of supply are prices of inputs, technology, taxes and suppliers’ expectations What is quantity supplied? Quantity supplied is the specific amount of goods and services that sellers are willing and able to sell at a certain price When is a market in equilibrium? A market is in equilibrium when the quantity demanded is equal to quantity supplied at a certain price How prices of a good influence its quantity demanded? When other things are constant, if price of goods increases, the quantity demanded will decrease and vice versa How prices of a good influence its quantity supplied? When other things are constant, if price of goods increases, the quantity supplied will increase and vice versa 10 What is the definition of shift factors? Shift factors are things other than prices that cause shift of a demand curve or supply curve to the right or to the left 11 What is market price? Market price is the price at which buyers and sellers trade the item in an open market place 12 What does the term “expectation” mean? “Expectation” means strong hope or belief that something will happen 13 What is demand curve? Demand curve is a graphic representation of the relationship between product price and the quantity of the product demanded 14 What is supply curve? Supply curve is a graphic representation of the relationship between product price and the quantity of the product supplied 15 What is market mechanism? Market mechanism is the manner in which consumers and producers can determine the price and the quantity the things produced 16 What factors cause the whole demand curve shift to the right or the left? Shift factors cause the whole demand curve shift to the right or the left 17 If there is an increase in production costs of a good, what will happen to its supply curve? The supply curve will shift to the left./ There will be a decrease in its supply 18 What does the law of demand describe? When other things are constant, if price of goods increases, the quantity demanded will decrease and vice versa 19 What does the law of supply describe? When other things are constant, if price of goods increases, the quantity supplied will increase and vice versa 20 How does a successful advertising campaign of a company influence demand of their goods? A successful advertising campaign of a company causes an increase in demand of their goods Or A successful advertising campaign of a company causes the whole demand curve of their goods shift to the right 21 If the national income increases, what will happen to demand of a good? If national income increases the aggregate demand of a good will increase Or An increase in national incomes will cause the whole demand curve shift to the right 22 If the national income decreases, what will happen to demand of a good? If national income decreases the aggregate demand of a good will decrease Or A decrease in national incomes will cause a shift of the whole demand curve to the left 23 What will happen to demand of a particular good if prices of its substitute goods decrease? If prices of substitute goods of a particular good demand of that particular good will decrease Or This is illustrated in a graph as a shift of the whole demand curve to the left 24 When the government imposes higher tax rates on imported cars, what will happen to the supply of these imported cars? When the government imposes higher tax rates on imported cars, the supply curve of these imported cars will shift to the left 25 How does high technology influence supply of a good or service? High technology can help companies to produce more goods and services, so the aggregate supply will increase Or This is illustrated in a graph as the shift of the whole supply curve to the right UNIT 6: PUBLIC FINANCE Where the government revenues come from? Or: What are sources of the government revenues? - The government revenues mostly come from taxation What are types of funds generated from taxation? They are trust funds and federal funds What are trust funds? Trust funds are the government revenues generated from payroll taxes including social (national) insurance and health insurance / Trust funds are the government revenue coming from payroll taxes What are trust funds used for? Trust funds are used for social security and medicare (Quỹ ủy thác sử dụng cho an sinh xã hội y tế.) What are federal funds? Federal funds are the government revenues generated from income taxes, customs duty, excise tax and so on What are federal funds used for? Federal funds are used for building infrastructure, paying salaries for state employees, running the government body Or: Federal funds are used for the government projects and programs Federal funds are spending funds coming from income taxes, How can the government borrow money? The government borrows more money by issuing and selling bonds or other types of government securities What are ways for the treasury to sell government securities? The treasury can sell government securities directly through its website or indirectly through banks or brokers Who does the government borrow money from? The government borrows money from itself and from the public 10 What is the money that the government borrows from itself called? It is called debts held by federal accounts 11 What is the money that the government borrows from the public called? It is called debts held by the public 12 What is debt held by federal accounts? Debt held by federal accounts is the amount of money that the Treasury borrows from the surplus of trust funds 13 What is debt held by the public? Debt held by the public is the total amount the government owes to all of its creditors in the general public 14 Who are the government’s creditors in the general public? They are domestic investors and international investors 15 Who domestic investors include? Domestic investors include private domestic investors, the central bank and local governments 16 What is individual income tax? Individual income tax is the tax (which is) imposed/ levied on individual incomes 17 What is corporate income tax? Corporate income tax is the tax imposed on corporate incomes 18 What is customs duty? Customs duty is the tax imposed on imports/ imported goods 19 What is excise tax? Excise tax is the tax imposed on specific goods such as alcohol, beer, hotels, restaurants, and so on 20 What are payroll taxes? Payroll taxes are taxes are based on payroll including social insurance and health insurance paid jointly by workers and employers UNIT 7: FISCAL POLICY What is fiscal policy? Fiscal policy is a government policy related to taxation and public spending Chính sách tài khóa sách phủ liên quan đến thuế chi tiêu công What is the main objective of fiscal policy? The main objective of fiscal policy is to maintain economic growth, high employment and low inflation What is expansionary fiscal policy? Fiscal policy is expansionary when taxation is reduced or public spending is increased What is contractionary fiscal policy? Fiscal policy is contractionary when taxation is increased or public spending is reduced 10 Fiscal policy can be expansionary when the economy is not growing fast enough or unemployment is too high 18 Under what circumstances can fiscal policy be contractionary? Fiscal policy can be contractionary when the economy is growing too fast or inflation is high 19 What factors should be considered in making decisions on the fiscal policy? They are the level of economic growth or unemployment likely in the future, political considerations, fiscal policies of other countries and the requirements of the IMF 20 How can deficits be financed? Deficits can be financed by borrowing or printing more money 21 What may happen when deficits are financed by borrowing? The interest rates may rise 22 What may happen when deficits are financed by printing money? Prices and inflation may rise 23 How can the government generate its revenue? The government generates its revenue by collecting taxes and borrowing more money 24 What are the purposes of expansionary fiscal policy? It is used for creating jobs and developing the economy 25 What are the purposes of contractionary fiscal policy? It is used for slowing down the economy and reducing inflation 26 What are the main tools of fiscal policy? They are government spending and taxation 27 Why should the government consider fiscal policies of other countries? Because fiscal policies of other countries may tempt multinational corporations to relocate their subsidiaries by offering them generous tax programs or other governmentcontrolled benefits UNIT 8: TAXATION What is the primary function of taxation? The primary function of taxation is to raise revenue to finance government expenditure What is the function of indirect excise duties? The function of indirect excise duties is to dissuade people from consuming unnecessary goods and services What is the function of income taxes? Income tax is one of the ways in which government can redistribute wealth Why is it said that business profits are generally taxed twice? Business profits are generally taxed twice: companies pay tax on their profit and the shareholders pay income tax on dividends What is the marginal rate? The marginal rate is the tax people pay on any additional income 12 What does national insurance mean? National insurance means a tax on payrolls that pays for sickness benefit, unemployment benefit and old-age pensions How individuals evade tax? Self- employed people and people with part-time jobs don’t declare their incomes to the tax offices How can highly-paid employees reduce their income tax liability? To reduce income tax liability, highly-paid employees receive lots of perks instead of taxable money such as company cars, free health insurance and subsidized lunches What is consumption? Consumption is defined as the use of goods and services by a household 10 What is one of the ways for companies to avoid tax on profits? Companies can bring forward capital expenditure on new factories, machines and so on so that at the end of the year all the profits have been used up 11 Where should multinational companies set up their subsidiaries? Multinational companies should set up their subsidiaries in countries where taxes are low/ tax havens 12 How criminal organizations launder money/ disguise the origin of money from tax inspectors and the police? Criminal organizations tend to pass money through a series of companies in very complicated transactions Các tổ chức tội phạm có xu hướng chuyển tiền qua hàng loạt cơng ty giao dịch phức tạp 13 What is a progressive tax? A progressive tax is the tax levied a higher rate on higher incomes Thuế lũy tiến loại thuế đánh với thuế suất cao thu nhập cao 14 What is a regressive tax? A regressive tax is a tax which is levied on the same tax rates, so that poorer people need to spend a larger percentage of their incomes than the rich/ takes a larger percentage of income from low-income earners than from high-income earners Thuế lũy thoái loại thuế áp dụng với mức thuế suất nhau, người nghèo cần tiêu tỷ lệ thu nhập lớn so với người giàu/ chiếm tỷ lệ phần trăm thu nhập từ người có thu nhập thấp lớn so với người có thu nhập cao 15 What does the term “tax shelter” mean? Tax shelter means delaying the payment of taxes to a later time Cách tránh thuế có nghĩa trì hỗn việc nộp thuế đến thời gian sau 16 What does the term “tax deductible” mean? Tax-deductible means the amount of money subtracted from taxable income or profits Được khấu trừ thuế số tiền trừ khỏi thu nhập lợi nhuận chịu thuế 17 What does the term “tax haven” mean? Tax haven means a country offering very low tax rates to foreign businesses (or) means a country or place where companies enjoy low taxes 18 What does the term “individual income tax” mean? Individual income tax is the tax imposed on wages and salaries of individuals 19 What is a direct tax? 13 A direct tax is a tax which a person or organization pays directly to the government/ to the tax office, for example income tax (or) A direct tax is a tax levied directly on the tax payers, such as income tax Thuế trực thu loại thuế đánh trực tiếp vào đối tượng nộp thuế, vd thuế thu nhập 20 What is an indirect tax? An indirect tax is a tax on certain manufactured goods, imports, etc that is paid indirectly by the consumer because it is included in the price (or) An indirect tax is a tax levied on goods as addition to the market price paid by consumers Thuế gián thu loại thuế đánh vào hàng hóa ngồi giá thị trường mà người tiêu dùng phải trả 21 What is a value-added tax? A value-added tax is a tax collected at each stage of production, excluding the alreadytaxed costs from previous stages (or) VAT is a tax added to the prices of goods or services 22 What is a capital gain tax? A capital gain tax is the tax imposed on profits made by selling assets of a company Thuế thu nhập vốn loại thuế đánh vào lợi nhuận thu từ việc bán tài sản công ty 23 What is a capital transfer tax? A capital transfer tax is the tax imposed on gifts and inheritances over a certain value Thuế chuyển nhượng vốn loại thuế đánh vào quà tặng tài sản thừa kế giá trị định 24 What is a wealth tax? A wealth tax is the annual tax imposed on people’s fortunes/ real assets 25 What does the term “tax evasion” mean? Tax evasion means making false declaration to the tax authorities 26 What does tax avoidance mean? Tax avoidance means reducing the amount of tax you pay to a legal minimum 27 What does the term “perks” mean? Perks mean other benefits rather than taxable money paid / offered by companies for employees 28 What does depreciation mean? Depreciation means reducing the value of a fixed asset by charging it against profits 29 What is a sales tax? A sales tax is a consumption tax imposed by the government on the sale of goods and services 30 What are loopholes in tax laws? Loopholes in tax laws are legal ways of avoiding taxes 31 What is the function of corporate income tax? Corporate income taxes also encourage capital investment with different methods of depreciation accounting Thuế thu nhập doanh nghiệp khuyến khích đầu tư vốn với phương pháp kế tốn khấu hao khác 32 What are double-taxation? 14 Double taxation is a tax principle referring to income taxes paid twice on the same source of income It can occur when income is taxed at both the corporate level and personal level UNIT 10: INSURANCE In what way can losses be predicted before they occur? Through the operation of insurance system, losses can be predicted in advance What is insurance in financial definition? Insurance is a financial arrangement that redistributes the costs of unexpected losses How can an insurance system accomplish the redistribution of the costs of losses? An insurance system accomplishes the redistribution of the costs of losses by collecting a premium payment from every participant in the system What does the insured receive when a loss occurs? The insured receives compensation from the insurer in the event of a loss What does the insured receive when he/ she takes out an insurance policy? The insured receives a promise from the insurer to be compensated in the event of a loss Why are people willing to pay an insurance premium? People are willing to pay an insurance premium to reduce the uncertainty about a loss, and can get compensation if the loss actually occurs What does the insured receive if no loss occurs? If no loss occurs during a year, the insured still has value in forms of the eliminated anxiety about a loss What does the term “premium” mean in insurance? Premium is an amount paid periodically to the insurer by the insured for covering his risk What does the term “compensation” mean in insurance? Compensation is the amount paid by an insurance company to the insured when in the event of a loss 10 What are parties of an insurance policy? - They are the policyholder (the insured) and the insurer 11 What is an insurance policy? Insurance policy is an insurance contract signed between the insured (policyholder) and an insurance company (an insurer) 12 Who is an insurer? An insurer is a company that sells insurance 13 Who is the insured? The insured are people who buy insurance 14 What are main types of insurance basically? 15 Basically, there are main types of insurance of life insurance and non-life insurance 15 What Is Life Insurance? - it’s a policy you buy that pays money to your family if you pass away 16 What Is Non-Life Insurance? - Non-life insurance is any type of insurance other than life insurance 17 Who are beneficiaries in a life insurance policy? The beneficiaries are the people or entities that will receive the death benefit 18 Give examples for non-life insurance - Some common examples of non-life insurance include: Auto insurance, Property insurance, Health insurance, Accident insurance, Travel insurance, etc 19 What are benefits of insurance for the insured? Or: Taking out insurance policies, what benefits can the insured get? - The insured can get benefits in the form of compensations paid by insurers in case of a loss, and reduced anxiety about losses in case of no loss 20 What are benefits of insurance for the insurer? - Insurers can raise big amounts of capital by collecting regular premium payments from many participants 21 What are benefits of insurance for the economy? The insurance system partly helps promote economic growth by transferring money from the insured to borrowers to expand their business, or to increase their production, and so on 22 What does the insured pay to the insurer? - The insured pay to insurance premium the insurer 23 What can the insured get from the insurer in the event of a loss? - The insured can get compensation from the insurer in the event of a loss UNIT 11: MONEY AND ITS FUNCTIONS What is a foreign currency? A foreign currency is the currency used in other countries, and not in your own country What is “money”? Money is the coins or bank notes that you use to buy things, or the sum that you have in a bank account What is the definition of “legal tender”? Legal tender is money, especially a particular coin or banknote, which is officially part of a country's currency at a particular time What is the definition of “denomination”? The denomination of a banknote or coin is its official value 16 What is a medium of exchange? Medium of exchange is anything that is widely accepted as payments for goods and services and settlements of debts Phương tiện trao đổi thứ chấp nhận rộng rãi khoản toán cho hàng hóa dịch vụ tốn khoản nợ What is token money? Token money is a metal or plastic disc, such as a substitute for currency for use in slot machines What are functions of money? They are medium of exchange (means of payment); measure of value (unit of account); store of value and standard of deferred payment Chúng phương tiện trao đổi (phương tiện toán); thước đo giá trị (đơn vị tài khoản); tích trữ giá trị tiêu chuẩn toán chậm How is money used as a medium of exchange? As a medium of exchange, money is used to make payments for goods and services, as well as make settlements of debts What does the settlement of a debt mean? The settlement of a debt is the act of paying back money that you owe 10 What is barter economy? (Nền kinh tế hàng đổi hàng) Barter economy is the economy in which goods and services are traded directly without the use of money 11 What is a measure of value? Measure of value or unit of account is the unit in which prices are quoted and accounts are kept Thước đo giá trị đơn vị tài khoản đơn vị mà giá niêm yết tài khoản lưu giữ 12 Why is it more convenient to use money as a means of payment as well as a unit of account? Because there is no need to exchange one currency for another 13 What is a store of value? As a store of value, money is used to make purchases in the future or money is saved for future use 14 Why isn’t money the best store of value? Because money can reduce its value overtime due to inflation Bởi tiền giảm giá trị theo thời gian lạm phát 15 What are better stores of value? Property (bất động sản) and gold and some other types of investments can function as a store of value better 16 What is a standard of deferred payment? Or unit of account over time? 17 As a standard of deferred payment, money used to make payments for debts in the future 17 What makes the function of money as a standard of deferred payment more important? This function becomes more important because of the expansion of the installment buying 18 If you buy a good on credit, how you make payments for that good? Firstly I have to pay a deposit, then I will make regular payments until the debts are paid off Đầu tiên bạn phải đặt cọc, sau bạn phải toán đặn khoản nợ toán hết 19 What is one of the reasons to explain why medium of exchange is the most important function of money? Because the use of money as a medium of exchange helps promote trade, simplify the trading process/ Or: the use of money as a medium of exchange helps people to save time and energy to trade goods and services with one another Or: money as a medium of exchange has made the exchange of goods and services much simpler, much more efficient 20 What are main types of money, basically? They are commodity money and token money 21 What are examples for commodity money? Examples for commodity money are gold coins and silver coins 22 What are examples for token money? Examples for token money are banknotes and metal coins; checks or plastic cards 23 What is the monetary value or purchasing power of commodity money in comparison with its material value? The monetary value or the purchasing power of commodity money is the same as its material value 24 What is the monetary value or purchasing power of token money in comparison with its material value? The monetary value or the purchasing power of token money greatly exceeds its material value 25 What is one of the advantages of token money in comparison with commodity money? Token money is much safer and more convenient to use in comparison with commodity money 26 What is commodity money? Commodity money is a useful good that serves as a medium of exchange 18 UNIT 12: MONETARY POLICY What is the monetary policy? Monetary policy which controls a nation’s money supply is supervised by each country’s Central Bank What are the objectives (or goals) of monetary policy? The objectives of monetary policy are to promote economic growth and to keep inflation under control What are main tools of monetary policy? The main tools of monetary policy are reserve requirements, discount rates and open market operations What is reserve requirement? Reserve requirement is a certain percentage of deposits that the Central bank requires other banks to keep in reserve Dự trữ bắt buộc tỷ lệ tiền gửi định mà Ngân hàng Trung ương yêu cầu ngân hàng khác phải dự trữ Or The reserve requirement set by the Central bank is the minimum amount of reserves as banks must have What is the role of reserve requirements? The reserve requirements play a central role in how much money banks have to lend out How can the Central bank make changes to the money supply by changing reserve requirements? By changing reserve requirements, the Central bank can increase or decrease the money supply What happens if the Central bank increases the reserve requirement? If the Central increases the reserve requirement, it contracts the money supply; banks have to keep more in reserve so they have less money to lend out What happens if the Central bank reduces the reserve requirement? If the Central bank reduces the reserve requirement, it expands the money supply; banks have to keep less in reserve so they have more money to lend out What is the discount rate? The discount rate is the rate of interest the Central bank charges on loans that it makes to other banks 10 What happens if the central bank increases the discount rate? If the central bank increases the discount rate, it contracts the money supply 11 What happens if the central bank reduces the discount rate? If the central bank reduces the discount rate, it expands the money supply 12 What will happen if the Central banks buy government securities? 19 If the Central banks buy government securities, the money supply will increase 13 What will happen if the Central banks sell government securities? If the Central banks sell government securities, the money supply will decrease 14 What are open market operations? Open market operations refer to the buying and selling of government securities by the Central Bank on the open market 15 What is a deposit? A deposit is a sum of money which is in a bank account or savings account, especially a sum which will be left there for some time 16 How can banks encourage people to borrow and spend more money? Banks can encourage people to borrow and spend more money by offering lower interest rates or easier approvals 17 How can banks restrict people to borrow and spend less money? Banks can restrict people to borrow and spend less money by offering higher interest rates or more difficult approvals 18 Under what circumstance should monetary policy be expansionary? Monetary policy should be expansionary when unemployment is high or economic growth is low 19 Under what circumstance should monetary policy be restrictive? Monetary policy should be restrictive when inflation is too high 20 What is expansionary monetary policy? Monetary policy is expansionary when the Central bank reduces reserve requirements or discount rates or buys more government securities 21 What is restrictive monetary policy? Monetary policy is restrictive when the Central bank increases reserve requirements or discount rates or sells more government securities 22 Who are depositors of a bank? A bank's depositors are the people who have accounts with that bank 23 What are objectives of expansionary monetary policy? The objectives of expansionary monetary policy are to promote economic growth and create more jobs 23 What is the objective of restrictive monetary policy? The objectives of restrictive monetary policy are to reduce inflation 24 What can banks if they are short of reserves? If they are short of reserves, banks can borrow money from their bank (the Central bank) UNIT 14: FOREIGN EXCHANGE MARKET What is foreign exchange market (Forex)? 20 F.E.M is the market in which national currencies are exchanged Based on the operation of the markets, how are financial markets classified? Based on the operation of the markets, financial markets can be divided into OTC markets and organized markets What does OTC stand for? OTC stands for “over the counter” What is an OTC (over-the-counter) market? What are features of an OTC market? An OTC market is the market in which transactions are made throughout the day and via communication instruments such as telephone or computer link Or: An OTC market is the market which hasn’t got fixed hours or a physical meeting place What is an organized market? An organized market is the market with fixed hours (called trading sessions – phiên giao dịch), and a physical place (called trading floors – sàn giao dịch) What is exchange rate? Exchange rate is the rate at which the currency of one country or region can be exchanged for that of another country or region What are different types of transactions in a foreign exchange market? types of transactions in Forex are spot transactions and forward transactions What are spot transactions? Spot transactions are undertaken for an actual exchange of currencies business days (working days) later Các giao dịch chỗ thực để trao đổi tiền tệ thực tế sau ngày làm việc (ngày làm việc) What are forward transactions? Forward transactions involve a delivery date further into the future 10 What is the significance/ purpose of forward transactions? Forward transactions help to protect the value of anticipated flows of foreign currencies from exchange rate volatility 11 What is one of reasons for the developments of the Forex? - The development of world trade Or - The expansion of international capital flows 21 12 What is one of the reasons why London is the largest foreign exchange center in the world? - the large volume of international financial business is generated in London Or - because of London’s geographic location 13 What is international financial business generated in London? International financial business generated in London include insurance, Eurobonds, banking and so on 14 What helps London to trade with many cities in the whole world easily? The geographical location of London enables it to trade with many cities in the world easily (London is situated in Greenwich Mean) 15 What are different types of participants in the foreign exchange market? There are types of participants in Forex: the market maker, dealers, customers and brokers 16 Who is a participant? Participant is a person who takes part in or becomes involved in a particular activity 17 Who is the market maker? The market maker is the central bank of each country 18 What is the role of the market maker in Forex? They establish the market and supervise the market operations by quoting the frame of exchange rates at any time 19 Why market makers have to quote the frame of exchange rates at any time? Because exchange rates (prices of currencies) are influenced by demand and supply of currencies in the international market 20 Who are dealers in Forex? They are banks and some other organizations 21 How dealers participate in Forex? They buy or sell foreign currencies on their own accounts 22 What purposes dealers participate in Forex for? They participate in Forex to make profits based on the differences between buying rates (bid rates) and selling rates (offer rates) 23 Who are customers in Forex? Customers can be multinational corporations, importers and exporters, and individuals 22 24 For what purposes multinational corporations participate in Forex? Multinational corporations have demand of foreign currencies for the acquisition of financial and real assets between parents companies and their subsidiaries 25 For what purposes importers and exporters participate in Forex? Importers and exporters have demand of foreign currencies for making or receiving payments for imports/ exports 26 For what purposes individuals participate in Forex? Individuals may demand foreign currencies for their trips abroad, or for the purpose of saving 27 Who are brokers in Forex? The brokers are specialist companies who act as consultants for both banks and customers 28 How brokers participate in Forex? They give advice/ consultancy on exchange rates for their customers 29 What purposes brokers participate in Forex for? They charge commission for their consultancy 30 What are bid rates (buying rates)? Bid rate (buying rate) is the rate at which the bank will pay you when you go to it to sell a foreign currency What are offer rates/ selling rates? Offer rate/ selling rate is the rate at which the bank sells you a foreign currency 31 What does the term “transaction” mean? A transaction is a piece of business, for example an act of buying or selling something 32 What does the term “volatility” mean? Volatility is the quality or state of being likely to change suddenly, especially by becoming worse: UNIT 15: FINANCIAL MARKET Based on types of financial instruments, how are securities markets classified? - They are classified into equity markets and debt markets What are equity markets? 23 - Equity markets are the markets in which equity instruments (shares) are traded What are equity instruments (công cụ vốn chủ sở hữu)? - Equities are shares of companies What are debt markets? - Debt markets are the markets in which debt instruments (công cụ nợ) are traded What are debt instruments? - Debt instruments can be bonds or mortgages and so on What are short-term debt instruments? - They are instruments with the maturity of less than one year What are long-term debt instruments? - They are instruments with the maturity of more than 10 years What are intermediate-term debt instruments? - They are instruments with the maturity from to 10 years What are benefits for the creditors of a company? - They receive fixed amounts of money including interest and principal payments at regular intervals until the maturity date 10 Can creditors intervene/ interfere in the company’s operations? Why? - No, because the creditors have no right to vote on any issues of the company 11 Why are equity instruments long-term securities? - Because they have no maturity date 12 What are benefits for the shareholders of a company? - They receive dividends paid by the company and the likely rise in prices of shares 13 How can shareholders get back their money? - They can get back their money by selling their shares to someone else in the securities markets 14 Can shareholders intervene/ interfere in the company’s operations? Why? - Yes, because the shareholders have the right to vote on issues important to the firm and to elect its directors 24 15 Based on functions of the markets, how are securities markets classified? Based on functions of the markets, securities markets are classified into primary markets and secondary markets 16 What are primary markets? - Primary markets are the markets in which initial securities are issued and sold to initial buyers by the issuing organizations - Function: Raise new funds for the issuing corporation 17 Who can be initial buyers? - They can be investment banks who underwrite fresh securities 18 Can private investors access to information of the primary markets? Why? - No, they can’t The information in primary markets is confidential and fresh securities are only sold to initial buyers 19 How are primary markets important to issuers? Or: What is the role of primary markets? - Primary markets help issuers (government agencies or corporations) to raise more funds (by issuing fresh securities) 20 What are secondary markets? - They are markets in which previously issued securities are resold, so the securities ownership is transferred to the other investors - Function: Ensure liquidity of financial assets & determine the securities price set on the primary market 21 How are secondary markets important to issuers? Or: What is the role of secondary markets? - Although these markets don’t help issuers to raise more funds, they make securities more liquid and desirable 22 What types of markets are more popular for private investors? Why? - Secondary markets are more popular because they can buy or sell (trade) outstanding securities in secondary markets, but not in primary markets 23 Based on operations of the markets, how are secondary markets classified? - Based on operations of the markets, secondary markets are classified into Exchanges and OTC markets 24 Based on the maturity of financial instruments, how are securities markets classified? 25 - Based on the maturity of financial instruments, securities markets are classified into money markets and capital markets 25 What are money markets? - The money market is a financial market in which people buy and sell short-term loans 26 What are capital markets? - The capital market is the market in which people traded medium and long-term credits and stocks 27 What does the term “maturity” mean? Maturity is the time when an investment or insurance will be paid back 28 What does the term “mortgage” mean? Mortgage is an agreement under which a person borrows money to buy property, esp a house, and the lender may take possession of the property if the borrower fails to repay the money 29 What is financial market? Financial market is a market in which borrowers and lenders trade financial assets 30 What are functions of financial market? Financial market act as financial intermediary between lenders and borrowers, mobilize idle funds, promote consumption & investment, adjust money supply, push up economic growth 31 What is securities market? Securities market is a market in which people deal in stocks and bonds 26 ... demanded? When other things are constant, if price of goods increases, the quantity demanded will decrease and vice versa How prices of a good influence its quantity supplied? When other things are constant,... describe? When other things are constant, if price of goods increases, the quantity demanded will decrease and vice versa 19 What does the law of supply describe? When other things are constant,... behavior UNIT 2: ECONOMIC SYSTEMS What is a quota? A quota is the limited number or quantity of something which is officially allowed Hạn ngạch số lượng giới hạn số lượng thứ cho phép thức What are