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Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 3 - 2021
Question 3
Read the information supplied and answer the questions which follow. International Accounts Q2 2020 Ireland's economic interactions with the rest of the world Good... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 3 - 2021
Step 1
Calculate the Balance of Payments for Q2 2020.
Answer
To calculate the Balance of Payments (BOP) for Q2 2020, we can use the following formula:
-
Total Exports = Visible Exports + Invisible Exports
- Visible Exports = €56bn
- Invisible Exports = €52bn
- Thus, Total Exports = €56bn + €52bn = €108bn
-
Total Imports = Visible Imports + Invisible Imports
- Visible Imports = €23bn
- Invisible Imports = €53bn
- Therefore, Total Imports = €23bn + €53bn = €76bn
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Balance of Payments = Total Exports - Total Imports
- BOP = €108bn - €76bn = €32bn
Thus, the Balance of Payments for Q2 2020 is €32bn.
Step 2
Step 3
Explain two reasons why international trade is important for Ireland.
Answer
- Access to Resources: International trade allows Ireland to access raw materials that are not available domestically. This is vital for industries that require specific resources to produce goods, thus enhancing the overall production capacity of Irish businesses.
- Market Expansion: Trade opens up larger markets for Irish exporters. Many businesses are limited by the small size of the domestic market, so accessing international markets is crucial for their growth and survival.
Step 4
Explain the term tariff and name one other barrier to trade.
Answer
A tariff is a tax imposed on imported goods, making them more expensive compared to domestic products. This tax is intended to encourage consumers to buy locally produced goods and restrict imports.
Another barrier to trade is quota, which limits the amount of a specific product that can be imported, thus protecting domestic industries from foreign competition.
Step 5
Explain the term multinational company (MNC).
Answer
A multinational company (MNC) is an enterprise that operates in multiple countries, having headquarters in one nation while maintaining facilities, offices, or production in others. For example, a business that is headquartered in the United States but also has operations in Ireland and other locations is considered an MNC.
Step 6
Outline two reasons why multinational companies might relocate to Ireland, following Brexit.
Answer
- English Speaking Nation: Ireland is the only English-speaking country remaining in the EU, making it an attractive location for MNCs looking to access the European market seamlessly.
- Access to the EU Market: Many MNCs currently operating in the UK will prefer to relocate to Ireland to continue having access to EU markets without tariffs or other trade barriers.