4. A nation’s balance of payments.

A balance of payments (BOP) is the all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, and financial capital, as well as financial transfers. Aftrer calculatin all of the entries in its balancr of payments, a nation has either in its balance of payments, a nation has aither 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, that is the previous savings. 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 and having an immediate mpact is by reducing imports. This can be accomplished by imposing tariffs (taxes), quotas (import restrictions), or both. If successful, the cost of imports rises in the local market, and the imported goods are comparatively more expensive to the consumer than locally made goods. When a quota is imposed, the quantity previously imported and paid for is reduced. In either case, 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 specified amount of money with them when they travel abrpad.

Capital for investments abroad can be restricted by requiring government approval for any new foreign investmentsIf these measures are insufficient, a country may devalue its currency. This immediately makes imports mor expensive and exports more competitive, since the importing country can now pay fo the first country’s imports with less of their currency than previously. In time, these advantages are eliminated. A nation must at all times combine devaluation with other effective measures to balance its economy, resulting in a reasonable level of employ ment and low rate of inflation.

6. 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.