Practice Exercise

Surveying
Surveying - Looking at the text quickly to collect background information which will help you understand detailed information easier. When you survey, you look at titles, pictures, headings, sub-headings and the general layout of the text.


First look at the title, then read the introduction, conclusion and the first sentence of each paragraph to answer these questions.

1. What is the topic of this article?
The price of exports and imports
Safe investment options
The money market
2. How many factors are listed in this text?
Eight
Five
Various
3. What is the main idea of this article?
This article is telling us that people can make a profit or a loss on the money market.
This article is telling us that there are five important factors that influence changes on the money market.
This article is telling us that it is quite safe to invest money on the money market.


Money Market Investments

  1. Investing money has always been an important and interesting issue. People spend many hours studying markets to decide where, how and when to invest their money to make the most profit.  The money market is one way of investing money.  It can be described as a safe, short term investment option for people who do not like to take big risks with their money.  Changes on this market will determine whether people make a profit or a loss on their investment, therefore it is really important for investors to be informed about changes on the money market.

  2. Extensive research has been conducted to discover the factors that most influence the changes on the money market. Indications are that there are various key factors which influence the daily changes of the market. This article focuses on some of the most important factors, the reasons why these factors - also referred to as economic indicators - have such a big influence, in what way they influence the market and what the consequences are for investors.

  3. The most important economic indicator of possible changes on the money market, is the consumer himself.  The confidence that the consumer has in his own financial situation and his outlook on the future greatly determines how much he is willing to spend, which in turn influences the economy either positively or negatively.  On the positive side, if the consumer is confident about his own financial situation and the future, he tends to spend more which boosts sales and the economy in general.  Consequently it affects money markets positively. However, if the consumer has a bleak outlook on the future, he may be much more reluctant to buy unnecessary items which affects the economy negatively. This often causes profits on investments to decrease.  The information about the consumer confidence is released in the middle and at the end of each month.

  4. The consumer price index, also known as the CPI, is another important economic indicator of possible changes on the market.  The CPI indicates how much the prices of general, everyday goods and services, such as food, vehicles and transport rise and fall. This information is usually released in the middle of each month. When there is no or a slight downwards trend in the CPI, people tend to spend easier on luxury items.  In other words, a lower CPI may result in an increase in profits on the money market. However, if the index shows an upward trend and this persists for more than two months, consumers tend to feel less confident and they cut down on their expenses.

  5. The third economic indicator is the price of crude oil.  The daily fuel price is directly influenced by the price of crude oil.  An important feature of this indicator is the fact that its price is not stable therefore the price changes are released at various times throughout each day.  When the crude oil price is down, the fuel price is low and consumers have more money to spend on other items but when the fuel price rises, consumers fear inflation and this affects the economy negatively which may result in a decrease in profits on the money market.

  6. The value of the dollar, an economic indicator that prescribes the price of all types of imports and exports, also impacts greatly on the economy.  A lower dollar value will result in items being cheaper abroad, consequently export companies as well as investors can rely on higher profits which will affect the money market positively.  On the other hand, if the value of the dollar is high, the opposite is true.

  7. Finally, on the first Friday of each month an employment report is released in which the rate at which companies are hiring new employees is indicated. This report reflects the unemployment rate – another important economic indicator.   The lower the unemployment rate, the more secure workers feel about their jobs and the more likely they are to spend, which may result in an upward trend on the money market.  This is especially true when a high number of new employees have been hired during any specific month.  On the other hand, a rising unemployment rate, will cause concern regarding job security amongst consumers who will then cut on their general spending.  Money markets usually show a downward trend as a result of this.

  8. In summary, although there are other contributing factors, the most important factors to consider if you decide to invest your money on the money market are the consumer, the CPI, the price of crude oil, the dollar value and the employment report.  Since these factors indicate any possible changes on the market, either positive or negative, they are important to investors.

772 words
83% 2000 wordlist,
14% AWL

Exercise: /5