1. International trade: Export and import.

There are clear benefits to being open to international trade: trade allows people to produce what they produce best and to consume the great variety of goods and services produced around the world. The key macroeconomics variables that describe an interaction in world markets are exports, imports, the trade balance, and exchange rates.The main difference between domestic and international trade is the use of foreign currencies to pay for the goods and services crossing international borders.When nations export (sell goods and services to other countries) more than they import (buy goods and services from other countries), they are said to have a favorable balance of trade. When they import more than they export, a unfavorable balance of trade exists. Nations try to maintain a favorable balance of trade, which assures them of the means to buy necessary imports. Some nations, such as Great Britain in the nineteenth century, based their entire economy on the concept of importing raw materials, processing them into manufactured goods, and then exporting the finished goods. 2. International trade: investments. Whenever a country imports or exports goods and services, there is a resulting flow of funds: money returns to the exporting nation, and money flows out of the importing nation. Trade and investment is a two-way street, and with a minimum of trade barriers, international trade and investment usually makes everyone better off. Investments can have a crucial impact on a nations balance of payments. When a investment is made, capital enters a country, enabling it to import manufactured materials to build a new manufacturing plant and to pay workers to build it. Once the plant is operative, it provides both jobs and taxes for the host country and, in time, produces new manufactured goods for export. in this way, investment acts as a catalyst in economic growth for the developing countries throughout the world. In subsequent years, an investment should yield a profit. Dividends, sums of money paid to shareholders of a corporation out of earnings, can them be remitted to the investing country. From the perspective of the balance of payments, in the year the investment is made, the host country credits income to its balance of payments, and the investing country records a debit. This is reserved in the following years. The dividends then represent an expense for the host and income for the investing country. 7. The world trade organization. European financial sector. Th World Trade Organization came into being in 1995. The WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War. So the multilateral trading system that was originally set up under GATT is already 50 years old. The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on average by 6% annually. GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth. The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. The agreement was reached on telecommunications services, with 69 governments agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information.The organization: The WTOs overriding objective is to help trade flow smoothly, freely, fairly, and predictably. It does by: Administering trade agreements Acting as a forum for trade negotiations Settling trade disputes.Assisting developing countries in trade policy issues, through technical assistance and training programmes. Cooperating with other international organizations The WTO has more than 130 members, accounting for 90% of world trade. Over 30 others are negotiating membership. Decisions are made by the entire membership and typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTO predecessor, GATT

The Foreign Exchange Markets, where people buy and sell foreign currency, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, 30 times larger than the combined volume of all US equity markets. Currencies are traded in pairs, for example Euro/US Dollar or US Dollar/Japanese Yen. Foreign money held by a government to support its own currency. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign into their domestic currency. The other 95% is trading for profit, or speculation. For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors". Today, more than 85% of all daily transactions involves trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. Forex trading begins each day in Sydney, and moves around the blobe as the business day begin in each financial center, first to Tokyo, London, and New York,. It's a 24-hour market, and investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. The Forex market is considered an over the counter (OTC) or interbank market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. 9. Countertrade Countertrade means exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money. A monetary valuation can however be used in counter trade for accounting purposes. Countertrade also occurs when countries lack sufficient hard currency, or when other types of market trade are impossible. For example Coburn Tool corporation, an American manufacturer of large and small machine tools and parts, gears, valves, and bearings, was a major supplier to industries and companies world-wide. Because of the ride of the U.S. dollar on exchange market and serious financial crises in many of the countries in which Coburn did business, sales, particularly to Latin America, began to decline. A major market for Coburns products had until recently been Brazil. For instance, in 1980 sales to thet countrys industries were $640000, but by 1983 sales had declined to just $183000. This serious problem seemed to have little solution because of Brazils chronic credit problems and lack of foreign exchange. In the fall 1984, however, a unique proposition was received at Coburns head office from a Brazilian commodities broker, Companhia Internacional de Comercio (CIC). CICs offer was essentially this: in exchange for US $400000 in assorted gears, Coburn would receive the equivalent in Brazizilan shoes, which it could sell in the American market. Well, thats is a good example of countertrade, when because of the lack of currency, one company offered other to exchange gears for shoes. Role of countertrade in the world market. In any real economy, bartering occurs all the time, even if it is not the main means to acquire goods and services. The volume of countertrade is growing. In 1972, it was estimated that countertrade was used by business and governments in 15 countries; in 1979, 27 countries; by the start of 1990s, around 100 countries. A large part of countertrade has involved sales of military equipment (weaponry, vehicles and installations). More than 80 countries nowadays regularly use or require countertrade exchanges. Officials of the General Agreement on Tariffs and Trade (GATT) organization claimed that countertrade accounts for around 5% of the world trade. The British Department of Trade and Industry has suggested 15%, while some scholars even believe it to be closer to 30%.

8. Forex.

10. Types of businesses. The basic economic institution in different economics systems is the business, Businesses determine much of how the economy operates. Businesses produce goods and services, and they come in every shape and size. Although the vast majority of the worlds companies are small, in many countries the economy

is dominated by large firms. Large business differ from small ones in a wide variety of ways. In many countries there are nationalized companies belonging to the state, as well as private companies. A private company might be a small firm with just one owner or a very large firm with thousands of shareholders ownig he firm. Main types of business in nowadays economic world are sole proprietorships, partnerships, public and private limited companies (corporations in the USA), and cooperatives. Starting a business requires more than natural resources, labor, and capital. An entrepreneur must organize these resources. Many entrepreneurs start their own business as sole proprietorships. A sole proprietorship is a one owner business. The advantages of sole proprietorships (they are easy to organize, decisions can be made quickly, owners receive all profits, etc.) explain why so many people start business and try to run them alone. However, a sole proprietor sometimes encounters difficult problems in starting a business. One person has limited resources to start and operate a business. The owner has only personal savings and funds that can be borrowed. Because capital is lacking, most sole proprietors begin small and fail. Even those that succeed often stay small. A sole proprietorship also must deal with the problem of unlimited liability. According to the law, the owner and the business are one and the same. If the business fails, the owner must pay the debts. The personal property of the owner, such as a home or a car, can be taken to pay the debts of the business. No limit is placed on the amount the owner can lose. High profits can make an owner wealthy, but high losses can ruin an individual. To increase their chances of success entrepreneurs often choose partnership is an association of two or more people in order to run a business. Partners generally contribute equal capital, have equal authority in management, and share profits or losses. In many countries, lawyers, doctors and accountants are not allowed to form companies, but only partnerships with unlimited liability for debts which should make them act responsibly. A partnership has many of the characteristics of the sole proprietorship. Partnerships are easy to organize, decisions can be made quickly, profits are shared with only a few people, and the owners are responsible for success or failure of the business. Like proprietorships, partnerships are not free of problems. Liability is still unlimited. Like sole proprietors, partners are responsible for the debts of the business, Liability then can actually be greater in a partnership than in a sole proprietorship, since each partner is responsible for all the business debts. Partnerships also have limits life. If one partner dies, the business must be dissolved. Consequently, the majority of businesses are limited companies (US corporations), in which investors are only liable for the amount of capital that have invested. If a limited company goes bankrupt, its; assets do not cover the debts, they remain unpaid (i.e. creditors do not get their money back). Often one person does not have enough money to start a business. Combining the resources of a number of people and forming a corporation is a way to raise the large amount of money needed. A corporation is a business, that although owned by one or more investors, legally has the rights and duties of an individual. Corporations have the right to buy, sell, and own property. Corporations may make legal contracts, hire and fire workers, set prices, and be sued, fined and taxed. A business must obtain a charter of incorporation from the state legislature to be legally recognized as a corporation. Corporations have some advantages over sole proprietorships and partnerships. First, a corporation has limited liability. Thus if the corporation goes bankrupt or is sued, the stockholders lose only the value of their stock. The stockholders, who are the corporations owners, cannot be held personally responsible for any money the corporation owes. Second, corporations have the ability to raise very large amounts of money. They use this money to change models, replace obsolete equipment, and build new factories. Corporations can raise money by selling bonds, as well as stocks. Third, a corporation has an unlimited life. That is the corporation continues to function despite death, transfer, or changes in ownership, management, or labor. The work of sole proprietor or partners can end abruptly in such circumstances. This stability attracts small investors. The fourth advantage of corporation is the ease of ownership transfer. Selling a small business may be difficult; selling shares of stock is relatively easy. The investor also has an advantage. 13. The work in the Account Department. Debtors. Collecting bad debts is one of the most difficult affairs in the work of the Accounts Department. Retail business is usually done on a cash basis, & wholesale business is done on credit, given for 30 days. Any company prefer to receive long credit from its suppliers. For each sale an invoice is sent to the customer. Its the list of the goods delivered & amount owed. At the end of the month each customer is sent an account, showing the total amount due.

Sometimes debtors cannot repay a credit, for example, in case of bankrupt of the company or dishonesty the people, running it. Accounts not paid in time are called overdue accounts. In very difficult cases a firm employs a professional debt collector. No company wants to get a reputation for being a bad payer, because it will be difficult to get supplies on credit. There are special agencies, which provide information about the financial situation of any company, so the suppliers can judge a credit risk. 15. Types of securities. Security a certificate attesting credit, the ownership of stocks and bonds, or the right to ownership connected with tradable derivatives. In Britain stock is used to refer to all kinds of securities, including government bonds. The word equity or equities is also used to describe stocks and shares. The places where the stocks and shares of listed or quoted companies are bought and sold are called stock markets or stock exchanges. Shares are certificates representing part ownership of the company. Ownership in a company is divided among stakeholders or shareholders. The original shareholders are the people who started the business, but now they have sold shares of the profits to outsiders. By selling these entitlements to share in the profits, the business has been able to raise new funds. For public companies the shares or stocks can be resold on the stock exchange to anyone prepared to pay the going price. Even the largest company occasionally needs to issue additional new shares to raise money for especially large projects. To buy into the company, a shareholder must purchase shares on the stock exchange. As reward for this initial outlay, shareholders earn return in two ways. First, the company makes regular dividend payments, paying out to shareholders that part of the profit that the company does not willing to reinvest into business. Second, the shareholders may take capital gains (or losses). (For example, if you buy company X shares for 600 euro each and then everyone decides its profits and dividends will be unexpectedly high, you may be able to resell the shares for 650 euro, making a capital gain of 50 eur per share on the transaction. If the company suffers a loss or goes bankrupt then the shareholders can lose only the money they originally spent buying shares. There are common or ordinary shares, and preference shares or preferred stock. Holders of preference shares receive a fixed dividend that must be paid before holders of ordinary shares receive a dividend. Holders of preference shares have more chance of getting some of their capital back in the case of bankruptcy, they are repaid before other shareholders, but after owners of bonds and other debts. Security indicates either an ownership position in a corporation (a stock), or a creditor relationship with a corporation or a governmental body (a bond), or rights to ownership, such as hose, represented by option, subscription right or warrant. Thus, bonds guarantee to repay their face value after a certain number of years and pay a fixed rate of interest to the bond-holder in the meantime. The price written on the share, the nominal value, is hardly ever the same as the price it is currently being traded on the stock exchange. The market price depends on supply and demand and can change every minute during trading hours. Trades in stocks quote bid (buying) and offer (selling) prices. The spread or difference between these prices is their profit. Another type of securities is option actually, its a contract giving the holder a right to buy a designated security (this is a call option) or sell it (this is a put option) at or within a certain period of time at a specified price. In a number of companies apart from salary an executives compensation package can include share options, the right to buy the companys share at an advantageous price. Its a kind of benefits or perks.

17. Advantages and disadvantages of small businesses. The basic economic institution in different economics systems is the business, Businesses determine much of how the economy operates. Businesses produce goods and services, and they come in every shape and size. Although the vast majority of the worlds companies are small, in many countries the economy is dominated by large firms. Large business differ from small ones in a wide variety of ways. In many countries there are nationalized companies belonging to the state, as well as private companies. A private company might be a small firm with just one owner or a very large firm with thousands of shareholders ownig he firm. We can say that sole proprietorships and partnerships are small businesses.

Starting a business requires more than natural resources, labor, and capital. An entrepreneur must organize these resources. Many entrepreneurs start their own business as sole proprietorships. A sole proprietorship is a one owner business. The advantages of sole proprietorships (they are easy to organize, decisions can be made quickly, owners receive all profits, etc.) explain why so many people start business and try to run them alone. However, a sole proprietor sometimes encounters difficult problems in starting a business. One person has limited resources to start and operate a business. The owner has only personal savings and funds that can be borrowed. Because capital is lacking, most sole proprietors begin small and fill. Even those that succeed often stay small. A sole proprietorship also must deal with the problem of unlimited liability. According to the law, the owner and the business are one and the same. If the business fails, the owner must pay the debts. The personal property of the owner, such as a home or a car, can be taken to pay the debts of the business. No limit is placed on the amount the owner can lose. High profits can make an owner wealthy, but high losses can ruin an individual. Still another problem occurs because of the limited life of the business. If the owner of a sole proprietorship dies, an entirely new enterprise must be started. Of all new proprietorships begun each year, 70 per cent fail within five years. To increase their chances of success entrepreneurs often choose partnership is an association of two or more people in order to run a business. Partners generally contribute equal capital, have equal authority in management, and share profits or losses. In many countries, lawyers, doctors and accountants are not allowed to form companies, but only partnerships with unlimited liability for debts which should make them act responsibly. A partnership has many of the characteristics of the sole proprietorship. Partnerships are easy to organize, decisions can be made quickly, profits are shared with only a few people, and the owners are responsible for success or failure of the business. Like proprietorships, partnerships are not free of problems. Liability is still unlimited. Like sole proprietors, partners are responsible for the debts of the business, Liability then can actually be greater in a partnership than in a sole proprietorship, since each partner is responsible for all the business debts. Partnerships also have limited life. If one partner dies, the business must be dissolved.

raise the large amount of money needed. A corporation is a business, that although owned by one or more investors, legally has the rights and duties of an individual. Corporations have the right to buy, sell, and own property. Corporations may make legal contracts, hire and fire workers, set prices, and be sued, fined and taxed. A business must obtain a charter of incorporation from the state legislature to be legally recognized as a corporation. Corporations have some advantages over sole proprietorships and partnerships. First, a corporation has limited liability. Thus if the corporation goes bankrupt or is sued, the stockholders lose only the value of their stock. The stockholders, who are the corporations owners, cannot be held personally responsible for any money the corporation owes. Second, corporations have the ability to raise very large amounts of money. They use this money to change models, replace obsolete equipment, and build new factories. Corporations can raise money by selling bonds, as well as stocks. Third, a corporation has an unlimited life. That is the corporation continues to function despite death, transfer, or changes in ownership, management, or labor. the work of sole proprietor or partners can end abruptly in such circumstances. This stability attracts small investors. The fourth advantage of corporation is the ease of ownership transfer. Selling a small business may be difficult; selling shares of stock is relatively easy. The investor also has an advantage. The ability to get out of one business, by selling stock, and into another quickly, by buying stock, is quite useful to small investors. Corporations have disadvantages as well as advantages. First, complex forms must be filed with the state or federal government. A charter must then be issued, investors found, share sold, and manufacturing or sales begun. The procedure for setting up a corporation is more difficult than that for setting up a sole proprietorship or a partnership. Also, to succeed a corporation must pay stockholders regular dividends and must keep detailed records to satisfy appropriate government agencies. Second, a corporation's profits are subject to double taxation. A corporation must pay taxes on its profits before the profits are distributed to stockholders as dividends. The stockholders include this dividend money as personal income on their income tax forms. Stockholders pay taxes on this income. The government, then, has taxed the corporation's profits twice. Third in corporations with many owners or stockholders the individual share of profits in the form of dividends is comparatively small. In a single proprietorship or partnership, profits are divided among fewer individual. Therefore, individual incomes are often greater. Fourth, a corporation's owners do not directly control the business. Most individual stockholders take little interest in management decisions. In contrast, sole proprietors or partners manage their own business. The main concern go the owner-managers is the success of the business. Managers of large corporations, though, may not have invested their own money in the business. Career decisions may be different from, and more important than, decisions to improve the business. For this reason many corporations arrange for management to own shares of stock.

18. Advantages and disadvantages of corporations. Within a free market system, new businesses find easy access to the economy and opportunities to succeed. Nevertheless, the level of competition can be so high that success is very difficult. A partnership is not legal entity separate from its owners; like sole traders, partners have unlimited liability: in the case of bankruptcy, a partner with a personal fortune can lose it all. Consequently, the majority of businesses are limited companies (US - corporations), in which investors are only liable for the amount of capital that have invested. If a limited company goes bankrupt, its; assets do not cover the debts, they remain unpaid (i.e. creditors do not get their money back). Often one person does not have enough money to start a business. Combining the resources of a number of people and forming a corporation is a way to