Photo AI
Ireland as a small open economy relies on international trade - Leaving Cert Economics - Question 7 (a) - 2018
Question 7 (a)
Ireland as a small open economy relies on international trade. (i) Explain the term open economy. (ii) State and explain three economic reasons why Ireland engages... show full transcript
Worked Solution & Example Answer:Ireland as a small open economy relies on international trade - Leaving Cert Economics - Question 7 (a) - 2018
Step 1
Explain the term open economy.
Answer
An open economy is one that engages in international trade, allowing for the import and export of goods and services. This interaction with other economies facilitates not only the exchange of products but also ideas, technology, and investment. In contrast to a closed economy, where trade is restricted, an open economy benefits from global market dynamics, which can enhance economic growth, consumer choice, and overall prosperity.
Step 2
State and explain three economic reasons why Ireland engages in trade.
Answer
-
Job Creation: Exports generate increased demand for goods produced in Ireland, thereby leading to the creation of more jobs. A robust export sector helps to maintain employment levels and boosts the overall economy.
-
Increased GNP / Economic Growth: Engaging in trade contributes to the Gross National Product (GNP) of Ireland. The revenues generated from exports help increase the income levels within the country, leading to a healthier economy and improved public services.
-
Attract Investment: Strong trade relationships can enhance confidence in the Irish economy, making it an attractive destination for both foreign and domestic investments. This influx of investment can further stimulate economic growth and increase competitiveness on the global stage.