Photo AI
Unemployment in Ireland is less than 5% but some economists are concerned because interest rates have risen and are forecast to increase - Leaving Cert Business - Question 3 - 2007
Question 3
Unemployment in Ireland is less than 5% but some economists are concerned because interest rates have risen and are forecast to increase. (A) Outline three benefits... show full transcript
Worked Solution & Example Answer:Unemployment in Ireland is less than 5% but some economists are concerned because interest rates have risen and are forecast to increase - Leaving Cert Business - Question 3 - 2007
Step 1
Outline three benefits of low unemployment to the Irish economy.
Answer
-
Increased Consumer Spending: With low unemployment, more people have jobs and disposable incomes, leading to increased consumer spending. This boosts demand for goods and services, stimulating economic growth.
-
Higher Tax Revenues: Low unemployment results in more people paying income tax, increasing government revenue. This can enable the government to fund public services and infrastructure projects, benefiting the economy.
-
Improved Standard of Living: A lower unemployment rate often leads to improved job security and a higher standard of living for citizens. This can enhance overall well-being and reduce socio-economic inequalities.
Step 2
Outline three effects of increasing interest rates on Irish business.
Answer
-
Higher Borrowing Costs: As interest rates rise, the cost of borrowing increases for businesses. This can lead to reduced investment in expansion or development projects as financing becomes more expensive.
-
Decreased Consumer Spending: Higher interest rates can lead to increased loan repayments for consumers, reducing their disposable income and consequently decreasing demand for goods and services, impacting sales for businesses.
-
Exchange Rate Strengthening: Increasing interest rates often lead to a stronger currency, which can make exports less competitive in international markets, negatively affecting sales abroad.
Step 3
Describe two ways in which the Irish Government assists business.
Answer
-
Subsidies and Grants: The Irish Government provides various subsidies and grants to support business startups and growth in key sectors. These financial aids can offset some operational costs and enhance competitiveness.
-
Enterprise Support Programs: The government implements programs such as training, mentorship, and business consultancy aimed at helping businesses improve their operations and management skills.
Step 4
Discuss two opportunities and two challenges for Irish business arising from the enlarged European Union.
Answer
-
Larger Market: The enlarged EU provides access to a market of approximately 500 million people, offering Irish businesses significant opportunities for expansion and customer base diversification.
-
Free Trade: Businesses can benefit from free trade agreements within the EU, leading to no tariffs or barriers. This enables easier access to international markets and reduces costs associated with exporting products.
Challenges:
-
Increased Competition: The enlargement may lead to more competitors entering the market, increasing the pressure on Irish businesses to innovate and remain competitive.
-
Payment Difficulties: With multiple currencies and banking systems, Irish businesses may face challenges related to payment processing, foreign exchange risks, and potential delays in transactions.