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You are given the following information about a country’s trade in a year - Leaving Cert Economics - Question 5 - 2015
Question 5
You are given the following information about a country’s trade in a year. Visible Exports £million 25,000 Visible Imports £million 24,200 Balance of Trade £milli... show full transcript
Worked Solution & Example Answer:You are given the following information about a country’s trade in a year - Leaving Cert Economics - Question 5 - 2015
Step 1
Step 2
Using the above data calculate the Balance of Trade and explain your answer.
Answer
Calculating the Balance of Trade involves subtracting visible imports from visible exports:
Visible Exports: £25,000 million Visible Imports: £24,200 million
Balance of Trade = Visible Exports - Visible Imports = £25,000m - £24,200m = £800m
This indicates a surplus of £800 million because visible exports are greater than visible imports.
Step 3
If the level of visible imports above increased by £1,000, calculate the new Balance of Trade and state if it is a surplus or deficit.
Answer
If visible imports increase by £1,000, the new visible imports become:
New Visible Imports = £24,200 million + £1,000 = £25,200 million
Now we calculate the new Balance of Trade:
New Balance of Trade = £25,000 million - £25,200 million = -£200 million
This indicates a deficit as imports exceed exports.
Step 4
Step 5
Is the export of beef from Ireland a visible export or an invisible export? Explain your answer.
Answer
The export of beef from Ireland is classified as a visible export. This is because it involves physical goods that are exported and can be quantified, as opposed to invisible exports which refer to services.
Step 6
State and explain two economic benefits of an increase in exports for the Irish economy.
Answer
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Employment Creation: Increased exports to foreign markets lead to heightened demand for goods produced in Ireland, which can lead to job creation in the manufacturing and agricultural sectors.
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Increased GNP/Economic Growth: Higher exports contribute to the Gross National Product (GNP) as they inject money into the economy, facilitating economic growth and increased government revenue.
Step 7
Explain the possible effects which this fall in the value of the euro may have on each of the following:
Answer
i) Ireland's exports to the UK: With a weaker euro, Irish exports become cheaper for UK consumers, potentially increasing demand for Irish goods.
ii) Ireland's imports from the UK: The cost of imports from the UK will rise, leading to decreased imports as they become more expensive for Irish consumers and businesses.
iii) Employment in Ireland: If exports increase due to higher demand while imports decrease, this could lead to job creation within Ireland, positively impacting overall employment levels.