4. A nation’s balance of payments.

A balance of payments is а record of complex transactions.

These transactions include payments for the country's exports and imports of goods, services, and financial capital. After calculation all of the entries in its balance of payments a nation has either a net inflow or a net outflow of money.

The nation’s reserves may be compared to an individual’s savings. For a nation, they are maintained in holdings of gold and official deposits in foreign currencies. A deficit in the balance of payments can be accommodated by drawings on (removing some of) the reserves. But if a nation’s balance of payments continues in deficit for some time, then the reserves will be insufficient to cover further withdrawals, and additional measures must be taken.

The most direct means of correcting a deficit in the balance of payments is reduction of imports. This can be accomplished by imposing tariffs, quotas (import restrictions), or both. The net effect is the reduction of the nation’s outflow of money. Other measures may limit invisible trade expenditures. For example, citizens may be prohibited from taking more than a certain amount of money with them when they travel abroad.

Capital for investments abroad can be restricted by requiring government approval for any new foreign investments.

If these measures are insufficient, a country may devalue its currency. A nation must at all times combine devaluation with other effective measures to balance its economy, resulting in a reasonable level of employ meant and low rate of inflation.

5. Documents needed in international trade and incoterms.

An import/export transaction usually requires a lot of complicated documentation.

They are:

• Bill of Lading

• Sea Waybill

• Shipping Note

• Dangerous Goods Note

• Air Waybill

• Certificate of Insurance

Methods of payment may be by cash, on open account, by irrevocable letter of credit or by bill of exchange.

Trade between countries within a free trade area and within the European Union is simpler, firms pay for goods by cheque and use their own transport to deliver goods and no special documentation is required.

Incoterms identify the additional costs, over and above the cost of goods, that the seller will invoice the buyer in international sales contract. They define who is responsible for arranging and paying for transportation, documentation, customs clearance and transport insurance

There are 13 different Incoterms that can be divided into 4 different groups: an E Term, the F Term, the C Term and the D term.

In the E terms group the buyer collects the goods at the seller's own place of business - and arranges insurance to the goods in transit.

In the F terms group, the seller delivers the goods to a carrier appointed by the buyer in the seller's country. The buyer arranges insurance.

In the C terms group the seller arranges and pays for the transportation of the goods, but not for customs duties and taxes.

In the D terms group, the seller pays all the costs involved in transporting the goods, including insurance.