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Answer all parts of this question: (A) (i) Explain the term 'inflation' - Leaving Cert Business - Question A - 2006
Question A
Answer all parts of this question: (A) (i) Explain the term 'inflation'. (ii) Outline two benefits of low inflation for Ireland. (B) Outline three benefits of th... show full transcript
Worked Solution & Example Answer:Answer all parts of this question: (A) (i) Explain the term 'inflation' - Leaving Cert Business - Question A - 2006
Step 1
Explain the term 'inflation'.
Answer
Inflation is defined as an increase in the general level of prices of goods and services over a period. It signifies a decrease in purchasing power, meaning consumers are able to buy fewer goods and services than before with the same amount of money. Inflation is typically expressed in percentage terms and is a key indicator of economic health.
Step 2
Outline two benefits of low inflation for Ireland.
Answer
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Increased Competitiveness: Low inflation can enhance the competitiveness of Irish products in international markets as it helps keep costs stable, making exports more attractive.
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Stability in Costs and Wages: With low inflation, businesses can plan better as costs and wages tend to remain more stable over time, leading to improved financial forecasting and strategic planning.
Step 3
Outline three benefits of the European Union for Irish business.
Answer
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Access to Large Markets: The European Union provides Irish businesses with access to a vast market, facilitating easier exports and expansion opportunities.
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Economies of Scale: Being part of the EU allows Irish businesses to achieve economies of scale by increasing their production and distribution efficiency, reducing per-unit costs.
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Free Movement of Capital and Labour: The EU facilitates the free movement of capital and labour, enabling Irish firms to attract investments and skilled workers from across member states.
Step 4
Describe three environmental issues which affect Irish business.
Answer
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Pollution: Various forms of pollution such as air and water pollution can directly impact businesses by leading to stricter regulation and potential fines.
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Compliance with Environment Planning Laws: Businesses face challenges to comply with planning regulations aimed at protecting the environment, which can increase operational costs and complicate project approvals.
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Illegal Dumping and Waste Disposal: The issue of illegal dumping can harm businesses reputations and lead to increased costs in waste management and cleanup operations.
Step 5
Discuss three challenges faced by Irish business engaged in international trade.
Answer
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Competition: Irish businesses often face stiff competition from international firms, making it crucial to differentiate their offerings to capture market share.
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Establishing a Global Brand Name: Developing a recognizable global brand is a significant challenge, requiring investment in marketing and consistent product quality.
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Exchange Rate Fluctuations: Variability in exchange rates poses a risk for profitability, especially for businesses that import raw materials or export finished goods, as it can affect pricing and margins.