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6. (i) Explain the term invisible imports - Leaving Cert Business - Question 6 - 2021
Question 6
6. (i) Explain the term invisible imports. (ii) Outline the impact of a decrease in invisible imports on the Balance of Payments.
Worked Solution & Example Answer:6. (i) Explain the term invisible imports - Leaving Cert Business - Question 6 - 2021
Step 1
Explain the term invisible imports.
Answer
Invisible imports refer to services that are purchased by consumers or businesses within a country from foreign-based service providers. Unlike tangible goods, which are physically transported across borders, invisible imports involve transactions that typically do not require the movement of products. For example, when an Irish consumer subscribes to a foreign online streaming service, money flows out of Ireland as payment for this service.
Step 2
Outline the impact of a decrease in invisible imports on the Balance of Payments.
Answer
A decrease in invisible imports leads to less money leaving the economy. This reduction can have a positive impact on the Balance of Payments. Specifically, if consumers or businesses are spending less on services from abroad, it may help to achieve or increase a Balance of Payments surplus. Conversely, it could also help reduce a Balance of Payments deficit, contributing positively to the overall economic stability.