Directions:

Read the following four texts. Answer the questions below each text by choosing A, B, C or D. Mark your answers on ANSWER SHEET 1. （40 points）

Text 3

Banking is about money; and no other familiar commodity arouses such excesses of passion and dislike. Nor is there any other about which more nonsense is talked. The type of thing that comes to mind is not what is normally called economics, which is inexact rather than nonsensical, and only in the same way as all sciences are at the point where they try to predict people's behaviour and its consequences. Indeed most social sciences and, for example, medicine could probably be described in the same way.

However, it is common to hear assertions of the kind "if you were left alone on a desert island a few seed potatoes would be more use to you than a million pounds" as though this proved something important about money except the undeniable fact that it would not be much use to anyone in a situation where very few of us are at all likely to find ourselves. Money in fact is a token, or symbolic object, exchangeable on demand by its holders for goods and services. Its use for these purposes is universal except within a small number of primitive agricultural communities.

Money and the price mechanism, i.e., the changes in prices expressed in money terms of different goods and services, are the means by which all modern societies regulate demand and supply for these things. Especially important are the relative changes in price of different goods and services compared with each other. To take random examples: the price of house-building has over the past five years risen a good deal faster than that of domestic appliances like refrigerators, but slower than that of motor insurance or French Impressionist paintings. This fact has complex implications for students of the industry, trade unionism, town planning, insurance companies, fine-art auctions, and politics. Unpacking these implications is what economics is about, but their implications for bankers are quite different.

In general, in modern industrialised societies, prices of services or goods produced in a context requiring a high service-content (e.g. a meal in a restaurant) are likely to rise in price more rapidly than goods capable of mass-production on a large scale. It is also a characteristic of highly developed economies that the number of workers employed in service industries tends to rise and that of workers employed in manufacturing to fall. The discomfort this truth causes has been an important source of tension in western political life for many years and is likely to remain so for many more.