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The rate of price inflation in Ireland is generally higher than in other EU countries - Leaving Cert Economics - Question c - 2008
Question c
The rate of price inflation in Ireland is generally higher than in other EU countries. (i) Explain the underlined term. (ii) State and explain two reasons why pric... show full transcript
Worked Solution & Example Answer:The rate of price inflation in Ireland is generally higher than in other EU countries - Leaving Cert Economics - Question c - 2008
Step 1
Step 2
State and explain two reasons why price inflation in Ireland is generally higher than in the other EU countries.
Answer
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Labour Costs / Wage Levels: In Ireland, employers face higher labour costs due to minimum wage laws and regulatory requirements. These costs compel businesses to increase their prices to maintain profitability.
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Costs of Energy: The rising costs of energy, especially due to the increase in international oil prices, significantly contribute to higher production costs, which are then passed onto consumers through increased prices.
Step 3
State and explain the effects which higher price inflation in Ireland may have on: - Ireland's exports to the EU;
Answer
Higher price inflation may lead to a decline in Ireland's exports to the EU. As prices for Irish goods increase, they may become less attractive to consumers abroad, resulting in decreased demand for exports.
Step 4
State and explain the effects which higher price inflation in Ireland may have on: - Ireland's imports from the EU;
Answer
Conversely, higher inflation may lead to an increase in imports from the EU. As prices for domestically produced goods rise, consumers may turn to importing cheaper alternatives from the EU, creating higher demand for imports.