7. Trade restrioctions: tariffs, subsidies, quotas and cartels, How trade restrictions affect international trade.

Many nations impose limits on trade. There are four main types of trade restrcitions: tariffs, subsidies, quotas and cartels. The tariff is a tax placed on imported goods. Tariffs are of two kinds - revenue and protective. A revenue tariff raises money for the government. For this reason, revenue tariffs are generally low so that consumers will continue to purchase the taxed goods. However, protective tariff taxes an imported goods so that the price becomes as high as, or higher than the similar domestic manufactured product. Protective tariffs make imported products more expensive and encourage people to buy goods produced in their own country.

A subsidy can be thought of as a tariff in reverse. Instead of taxing the foreign product, the government gives a subsidy to the industry that is suffering from foregin competition.

A nation also can limit the amount of goods that can be imported into the country. It's called a quota. Usually, quotas are imposed when tariffs and subsidies have failed to protect domestic industries from foreign competition.

Sometimes a group of companies or countrie band together to restrict competition. It's called a cartel. the members of the cartel agree to limit the supply and control the price of a particular good. Members meet regularly to decide how much to sell and how much to charge for their product.

but it's best for nation to use tariffs, because they provide domestic job protection and aid industrial development. Also tariffs are important to the national defense.

8. Barter in International Trade. (?)

In today’s complex economic world, neither individuals nor nations are self-sufficient. Nations have utilized different economic resources; people have developed different skills. This is the foundation of world commerce and economic activity. As a result, international finance and banking have evolved. For example, the United States is a major purchaser of coffee, yet it does not have the climate to grow any of his own. Consequently, the United States must bring coffee into a country from countries (such as Brazil, Colombia, and Guatemala) that grow coffee efficiently. On the other hand, the United States has large industrial plants capable of producing an assortment of goods, such as chemicals and aeroplanes, which can be sold to nations that need them. If nations counter traded, such as one automobile for 10,000 bags of coffee, foreign trade would be extremely cumbersome and limited. But instead of barter, which is the trade of goods without an exchange of money, the United States receives money in payment for what it sells. It pays for Brazilian coffee with dollars, which Brazil can use to obtain in exchange for payment wool from Australia, which in turn can buy textiles from Great Britain, which can then buy tobacco from the United States.

9. Insurance: functions, classification. Lloyds Underwriters.

Some weeks ago a lorry carrying Harper & Grant’s goods was hi-jacked on the road. Now there is a further development of this which concerns the insurance. To be on the safe side, every firm insures itself against loss or damage to its property. Harper & Grant’s insurance brokers had arranged a blanket insurance with a syndicate of Lloyds underwriters. Blanket insurance means insurance which covers everything, a comprehensive policy. Lloyds is a huge insurance organization in London, grouped in syndicates. The underwriters employ a firm of adjusters to assess or value the loss or damage. The sum they give will not usually be as much as the full insured value of the goods or property. They will take into account, among other things, the depreciated value: for example, the value of the lorry has gone down, depreciated, because it is two years old. Harper & Grant have to make a statement at the end of an accounting period (say once a month or once a quarter) of the total value of goods. When the lorry was found, so to speak, abandoned, with its spoiled load of office furniture, the adjusters came in. However, in this case the lorry is a write-off, a total wreck and impossible to repair. But this does not concern Harper & Grant, because the lorry belonged to Andersons, the transport company from whom they hire vehicles. But the load of office furniture does concern them. They have already had to replace the load, which was wanted urgently in Scotland.

When a company, or a person, takes out an insurance policy it is, to say the least, an all-risks policy, that is, it insures the goods or property against almost anything that could happen. But most insurance companies put in some exceptions, like outbreak of war or Act of God (something out of ordinary which cannot be considered a normal risk). When an accident or robbery takes place the injured party puts in a claim to the insurance company. If the insurance company agrees to pay it is said to meet the claim. Notice, first you take out a policy, then you put in a claim, and the insurance company, you hope, agrees to meet the claim.