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Answer all parts of this question: (A) (i) Explain the term ‘inflation’ - Leaving Cert Business - Question 3 - 2006
Question 3
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 the... show full transcript
Worked Solution & Example Answer:Answer all parts of this question: (A) (i) Explain the term ‘inflation’ - Leaving Cert Business - Question 3 - 2006
Step 1
Explain the term ‘inflation’
Answer
Inflation refers to the rate at which the general level of prices for goods and services is rising, eroding purchasing power. It is typically expressed as a percentage increase over a specific period. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
Step 2
Outline two benefits of low inflation for Ireland
Answer
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Stable Purchasing Power: Low inflation helps maintain the purchasing power of consumers, allowing for more predictable financial planning and spending. This stability encourages consumer confidence and can enhance economic growth.
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Encouraging Investment: When inflation is low, businesses are more likely to invest in new projects and expansion, as they can forecast costs and pricing more accurately, leading to economic development and job creation.
Step 3
Outline three benefits of the European Union for Irish business
Answer
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Access to a Larger Market: Membership in the EU grants Irish businesses access to a single market of over 400 million consumers, facilitating the growth of exports.
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Regulatory Alignment: The EU helps streamline regulations, making it easier for Irish businesses to comply with trade laws and standards across member states.
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Funding and Support: The EU provides funding and resources for various business initiatives, including for innovation, research, and development, benefitting Irish companies.
Step 4
Describe three environmental issues which affect Irish business
Answer
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Climate Change: Businesses face risks from climate change impacts, such as extreme weather events and changing agricultural conditions, which can disrupt supply chains and increase costs.
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Sustainability Regulations: Increasing regulatory pressures require businesses to adopt sustainable practices, which can involve significant operational changes and financial investments.
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Resource Scarcity: The depletion of natural resources can lead to rising costs and competition for essential materials, affecting production and pricing.
Step 5
Discuss three challenges faced by Irish business engaged in international trade
Answer
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Competition: Irish businesses must compete not only domestically but also with global players, which can pressure pricing and market share.
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Establishing a Global Brand Name: Building brand recognition in foreign markets can be difficult, requiring significant investment in marketing and customer engagement.
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Payment Difficulties: International trade can involve complex payment processes and risks, including currency fluctuations and the potential for delayed payments.