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'The unemployment rate in Ireland in December 2010 was 13.6%.' (The Central Statistics Office) (i) Discuss two economic measures which the Government could take in order to reduce the level of unemployment in Ireland - Leaving Cert Economics - Question e - 2011
Question e
'The unemployment rate in Ireland in December 2010 was 13.6%.' (The Central Statistics Office) (i) Discuss two economic measures which the Government could take in ... show full transcript
Worked Solution & Example Answer:'The unemployment rate in Ireland in December 2010 was 13.6%.' (The Central Statistics Office) (i) Discuss two economic measures which the Government could take in order to reduce the level of unemployment in Ireland - Leaving Cert Economics - Question e - 2011
Step 1
Discuss two economic measures which the Government could take in order to reduce the level of unemployment in Ireland.
Answer
To effectively address unemployment, the Government of Ireland could implement various economic measures:
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Reduce Taxation: By lowering Value Added Tax (VAT), the government could ease the financial burden on consumers, thereby boosting demand for goods and services. Increased demand can drive higher levels of production and subsequently lead to job creation as businesses seek to employ more staff to meet the demand.
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Subsidise Additional Labour Employed: The government could subsidize the costs of hiring new employees by reducing Employer's PRSI (Pay Related Social Insurance) contributions. This would make it more financially viable for businesses to hire additional staff, helping to lower the unemployment rate directly by increasing employment opportunities.
Step 2
Discuss the economic effects of this financial support on the Irish economy.
Answer
The €85bn financial support from the EU and IMF has several significant economic effects on Ireland:
Positive Economic Effects:
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Pay Public Sector Workers: This support ensures that public sector workers can continue to receive their salaries, which stabilizes public confidence and maintains consumption levels in the economy.
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Maintain Public Services: Essential services such as healthcare and education can continue to be funded, aiding societal stability and well-being, which are critical for economic recovery.
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Continuity of a Banking System: The financial support allows banks to operate more effectively, ensuring that households and businesses can access credit, thereby facilitating economic activities.
Negative Economic Effects:
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High Cost of Repayment: The need to repay these loans may place long-term financial strain on the country, leading to higher taxes in the future.
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Taxation Increases/Expenditure Cuts: In order to repay the loans, the government may have to either raise taxes or cut public expenditure, affecting growth and stability.
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Loss of Economic Sovereignty: Economic policies may now be heavily influenced by the EU/IMF, potentially limiting the government’s ability to independently manage economic affairs, which could lead to decisions that are not in the best interest of the Irish people.