Photo AI
Answer all parts of this question: (A) (i) Explain the term 'inflation' - Leaving Cert Business - Question 1 - 2006
Question 1
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 1 - 2006
Step 1
Explain the term 'inflation'.
Answer
Inflation refers to the sustained increase in the general price level of goods and services over a period of time. It indicates the decrease in purchasing power of a currency, meaning that each unit of currency buys fewer goods and services than before. Inflation is typically expressed as a percentage change, reflecting how much prices have risen compared to a previous time period.
Step 2
Outline two benefits of low inflation for Ireland.
Answer
-
Increased Competitiveness: Low inflation helps maintain stable prices, allowing Irish businesses to remain competitive in international markets. Stability attracts foreign investment as firms find predictable costs beneficial for long-term planning.
-
Stable Wages and Consumer Spending: With low inflation, wages tend to be more stable, which helps maintain consumer confidence. Consumers can plan their purchases better, leading to higher demand and increased consumer expenditure on goods and services.
Step 3
Outline three benefits of the European Union for Irish business.
Answer
-
Access to a Large Market: The EU provides Irish businesses with access to a vast single market, enabling them to expand their customer base and export opportunities without substantial trade barriers.
-
Economies of Scale: Businesses can achieve lower costs per unit by increasing production to meet the demands of the broader EU market, thus enhancing profitability.
-
Free Movement of Capital and Labour: The EU allows for the free movement of resources, meaning businesses can attract talent and invest in various member states easily, leading to better resource utilization.
Step 4
Describe three environmental issues which affect Irish business.
Answer
-
Pollution: Various types of pollution, including air and water pollution, can lead to regulatory challenges and affect business operations, requiring firms to invest in cleaner technologies.
-
Compliance with Environmental Regulations: Businesses face challenges in adhering to strict environmental laws and standards, which can incur additional operational costs.
-
Environmental Impact Assessments: Many projects require comprehensive studies to evaluate potential environmental impacts, leading to delays and increased expenses for businesses.
Step 5
Discuss three challenges faced by Irish business engaged in international trade.
Answer
-
Competition: Irish businesses face fierce competition from firms in other countries, necessitating continuous innovation and adaptation to maintain market share.
-
Establishing a Global Brand: Building and maintaining a recognizable brand internationally is challenging, requiring substantial marketing efforts and investment.
-
Exchange Rate Fluctuations: Businesses engaged in international trade are vulnerable to unpredictable currency fluctuations, which can affect pricing, profit margins, and overall financial stability.